HOW TO TURN AROUND A TROUBLED BUILDING

The first red flag got raised at the closing in October 2002, when the new arrivals were surprised to learn they'd have to pay a $5,000 building-wide assessment before they could move in. They swallowed hard and forked it over.

"Our lawyer warned us about buying into the building," says Monica, 37, a petite, dark-haired woman with infectious energy. "She said it looked like the building was in distress — in bad financial condition. Our broker also said there might be problems, but [that] if we got on the board we could fix them. So we, being naive, decided to go for it."

There were, she found, "deep, systematic problems. It was a logistical, legal, financial nightmare." Because of ongoing complaints about shoddy maintenance, nearly half of the 35 units were in arrears. The seven most significant owed from $10,000 to $40,000 per unit.

"People were upset that these people weren't paying their maintenance," Mindt says. "There was bad morale in the building, we were hundreds of thousands of dollars in debt for water bills, legal costs, capital improvements. Plus, there was a lawsuit filed by a unit-owner on the first floor for repairs to her kitchen ceiling."

Mindt soon discovered there were also serious defects in the building's heating, plumbing and elevator systems; the super lived offsite and was frequently hard to reach; and the manager was incompetent. Remembering her broker's advice, Mindt decided the best way to fix the mess would be to get on the building's board of directors. A month after moving in, she attended her first annual meeting of the board — and to her surprise, found herself elected president.

Remember the Maintenance

"One of my highest priorities was to get the cash flow straightened out," she says. "Raising maintenance was one of the first things the board did when I became president. The maintenance when we moved in did not cover operating costs."

Even before they could pursue the money owed by the units in arrears, though, the three-member board needed to deal with the disgruntled woman on the first floor. Mindt hired a contractor, and work on the kitchen ceiling was completed in May 2003 — at which point the unit-owner sued for damages. The board countersued for unpaid maintenance.

Now the focus shifted. The board simply didn't have the money to pay an attorney to go after all the residents in arrears. Bruce Cholst, the condo's lawyer since 2001, recommended Steven Einig, an attorney with more than 20 years' experience in foreclosures, to pursue the seven units in significant arrears. But since there was no money to pay Einig on a conventional hourly basis, Cholst came up with a novel approach.

"We asked [Einig] if he'd consider handling the work on a contingency basis, on a leap-frog basis," Cholst says, "using the proceeds from each foreclosure to pursue the next one."

"Here," recalls Einig, "they were asking me to do something unusual, something I'd never done before. They asked me to take the work on a contingency basis, the way a lot of personal-injury lawyers do. The board was very reasonable and they were willing to pay court costs."

They were also willing to pay Einig one-third of any money he recovered, which is about what personal injury lawyers get. Einig, a 50-year-old native New Yorker, was intrigued. He frequently jogged through Central Park, and for years he had watched the revitalization of Harlem's housing stock with great interest. Now he had a chance to play a small role in that rebirth.

After doing his due diligence and deciding he had a high likelihood of success, agreed to work for Lido Hall on contingency. Because of spotty record-keeping by past managers, there was a "less than clear history" of the units that were in arrears, he says. But he had a plan, and, just as important, he had a resolute board backing him up.