I will assume that your board has to approve the purchasers and prepare what I will call a Buyers Package of some sort? That package should include whether or not the unit is in arrears and how much is owing. The buyer should have known this before purchasing and have made some arrangement with the seller; e.g. seller pays all; buyer pays all; they split it. If you do not have a process like this, then you will have to make an arrangement with the seller. You mention that the arrears is for several years; as a result and since you have not collected, you may have to write off a portion of those arrears as they are deemed noncollectable (in Toronto, Canada, we have a 2 year debt statue) - is there a limitation in New York? I would consult with a lawyer; which is what you probably should have a long time ago so that the arrears were not $25,000.

Thats a very odd situation. Is the bank that approving the short sale the same bank granting a loan to the new buyer? I recall having to provide numerous pieces of documents to the new buyer's bank (i.e., common charge letter, waiver of first refusal, etc.) Like others have said, play hard ball if you are on the board. If you do not provide assurance to the buyer's bank to make them comfortable, the loan won't get done and no sale will take place. Make sure those liens are filed.

Also, amend those bylaws, get 2/3s of the voting shares, that is typically all you need - make sure the bylaws clearly state the board can issue rules. Then as the board, issue rules to get this fixed and in order. You should get an attorney to help you out if you don't have one already.

This is a question you should ask your condo's attorney. IMHO your board should not agree to any reduction or forgiveness of arrears. The unit owner received full benefits during the time they didn't pay and also put an extra financial burden on the rest of the condo community.

This is an issue which needs to be worked out between seller and buyer. Your attorney will make sure the condo is fully reimbursed for all the months of arrears, and will know how to "convince" the two parties to the sale that they need to make the condo whole before the sale can be closed.

The person who owes several years of maint, was sued, then liens, then died, then estate took over and more liens all re-filed vs estate. On-going saga. We have a lawyer involved. They owe the bank if you add in all late payments and legal fees two or three times of condos current market value.

We stopped legal action a few months ago as we were told a short sale was pending and we would be paid back maint in full. Now we have back-peddling where the claim the bank wont pick up arrears, seller does not want to and buyer wants a deal.

Normally the condo should get paid I feel and bank should take less based on fact buyer has to pick up arrears.

So in general in condos in NY who pays arrears in a short sale?

Has the board already approved the sale?

If not, and the sale price is really below market price as you say, maybe it's worth looking at exercising the right of first refusal and buying at that price and reselling it later? Depending on the numbers involved, this might (or might not) be the best way to extract some value from the situation.

Our Condo building does not have the right of first refusal and we don't approve sales. The only reason we are involved is we have liens on property for back maint and seller/buyer want to transfer title via a short sale and dismiss the liens. He wants clean title.

In NY the banks dont have to pay any outstanding arrears. Many banks refuse to pay any back due maint. In this case it is one of the mortgage crisis era CMO/MBS bundled mortgage loans.

In a normal condo sale in the building condo is not really involved at all. Basically the management agent is just asked for proof maint is current and the latest financials and offering plan. The board itself often has no clue who is buying unit nor do we really care. Our condo was set up that way. Although now we think we should add the Right of First Refusal but we have to figure out what is involved.

Your board doesn't have first right of refusal *or* approve sales?

Could you let me know which building this is? I'd love to buy an apartment in your building, live maintenance free, and then sell the apartment a few years down the track.

We do not have right of first refusal and we don't approve sales and we dont approve renters. And have no rental restrictions.

We do sue folks, go for garnishments, file liens etc. Once we got a judgement to take the furniture and car of a unit owner. His wife quickly paid up.

If a buyer is paying cash and not getting title insurance it can be transferred with liens attached. We had folks do it.

On a side note is it unusual my condo in NY does not have a right of first refusal and we dont approve buyers or renters? We also do not have the ability to fine people. Not in our by-laws. We do go after non-payers full throttle and we only have 3 percent arrears and those 3 percent all have liens and judgements in place.

I've never heard of a condo without right of first refusal - would be interesting to know just how uncommon it is.

Obviously it's rarely exercised since the association rarely has much of a reason, nor the spare cash, to make a purchase, but it's a useful fallback in extreme cases. What would be your current course of action if a parolee murderer / pedophile took a liking to one of the apartments in the building?

We don't approve sales so I would never know who is buying into building. Usually we get a request from an owner or a realtor for outstanding maint a few days before closing. Our condo lawyer does not attend closing.

I had someone move in who was actually wanted by Police, we also have no rules on smoking, pets, etc. Two chain smokers, with two pit bulls out on Parole for Murder can buy in building. I have no clue who buyers are.

The building has been very nice for many years. But it seems the last three years we are getting a lot of smokers, folks with large dogs, folks buying to rent units, folks buying in LLCs you name it as we are one of last condo buildings around that operates as a true condo. Not a quasi coop.

One other concern we have is so far no one owns more than 10% of units. But with no approving buyers we could end up with a owner who owns more than 10% of units and lose fannie eligibility and put us at greater risk if that owner defaults.

My condo is from all the way back in the 1970s. When condos were almost unknown. Everything was coops. As such the offering plan was barebones.

Condo act had many changes in the 1980s-1990s and offering plans included such stuff.

Our condo had very little turnover for many many years. Up till 1999 we had most of original owners from 1979. When prices took off folks started cashing out in the 2003-2008 bubble, we had original owners start dying off, then in 2009-2013 real estate crash. We had folks who over leveraged themselves start losing units.

My condo unheard of today. Owners are responsible for own windows, exterior doors, balconys and Heat and Water. Lucky for us we are not a high rise. And guess what do a renovation of your unit. No approval needed. As long as you dont touch condo elements or attempt to poke a hole in the exterior walls.

Some new buyers are confused when they call managing agent and say they have no heat, AC does not work, water heater is leaking, paint on their exterior door and window is pealing or balcony needs work. And managing agent tells them they are not responsible and neither is condo association. Some folks skim offering plan. And it is fairly unusual.

Normally the bank would but not that is not always the case. Here is a interesting blog, from California. It appears that if you had a lien on the unit, then the bank would have to pay. If not, it seems that it is their discretion.
Don't close the sale - you don't have to approve the sale of the unit. Play hard ball and negotiate 50% of the outstanding amount and write the rest off.
http://activerain.com/blogsview/1865631/who-pays-late-hoa-fees-on-a-condo-short-sale-

One mistake in that article. My condo bylaws clearly state if you buy a condo with condo liens attached the new owner assumes the liens/debt. Unless of course wiped out in bankruptcy.
We have and do sue new owners. And re-file liens after purchase in new owners name. We still try to sue and do a judgement and garnishment on old owner at same time. Remember a condo is real property. You can transfer title to a new owner without condo involved at all.

if this was not the rule in this case buyer would just buy the condo cash with no title insurance with the liens on property and flip me the bird.

"Occasionally an HOA, usually out of ignorance, may attempt to collect the unpaid dues from the new owner. If this occurs, the new owner may have to fight with the HOA to straighten out the record. If the HOA puts up a fight, the new owner may even have to hire a lawyer to clear up the matter."

If the seller and the buyer are being completely unreasonable about paying off the unpaid arrears, the board or it's agent can submit a bill in full at the time of closing a/k/a the required "closing letter" or "account ledger". This is required for all title transfers. All parties involved in the closing(buyer, ,seller. banks) will most likely revisit the matter rather quickly and come up with a much better offer to settle the arrears at the risk of the deal falling apart at the last minute. Hopefully of course, this would require the board's attorney or a board member to be prepared to get a call with a new offer to settle a greater portion of the arrears, so please be sure to have an idea of what your board will accept if this is the route you are forced to take.

If the seller and the buyer are being completely unreasonable about paying off the unpaid arrears, the board or it's agent can submit a bill in full at the time of closing a/k/a the required "closing letter" or "account ledger". This is required for all title transfers. All parties involved in the closing(buyer, ,seller. banks) will most likely revisit the matter rather quickly and come up with a much better offer to settle the arrears at the risk of the deal falling apart at the last minute. Hopefully of course, this would require the board's attorney or a board member to be prepared to get a call with a new offer to settle a greater portion of the arrears, so please be sure to have an idea of what your board will accept if this is the route you are forced to take.

The By-laws of your community/building may very well contain the language that pertains to common/maintenance charges that are in arrears and how much can be collected in the event of title transfer(sale). The board understandably wants to collect as much as possible on behalf of the community/building, but may very well have to depend on strong negotiating by holding firm with it's own attorney in how much money it is looking to recoup. Very important; in a condo, though board approval for re-sales is not required, the buyer's bank (even in a short sale) will still require a "closing letter" which the condo or management company submits at the closing which shows the arrears balance, so if the board is in a position where the buyer and seller are being completely unreasonable about paying off the arrears, the board can ultimately play the card of submitting a closing letter showing a bill in full for all arrears owed at the closing, and there may be some rapid negotiating at the closing table to settle up a good chunk of those arrears so that all parties in the room do not lose the deal. Good luck.