CONDO ARREARS PART 2, P.2

Not everyone is convinced this is practical. "Why would a unit-owner sign such an agreement?" asks attorney Steven R. Wagner, a partner at Wagner Davis, noting that a delinquent owner could drag out foreclosure proceedings for years while keeping the apartment. "If there's any equity in the apartment," the attorney says, "there's no way anyone with a modicum of intelligence would sign a Deed in Lieu of Foreclosure."

"I wouldn't sign that in a million years," says one delinquent outer-borough apartment owner, speaking on condition of anonymity. "I've been on a payment plan with my board ever since they sent me papers four years ago," when he was five months behind. "We've been able to work it out on a friendly basis," he says, and he's been diligent not to let the arrears amount exceed 90 days' worth.

An attorney who strongly advocates the use of DILFs says that his firm has "done a lot of these, once every two weeks at least… We won't give them a payment plan unless they give up their rights." He declined, however, to name any boards that have ostensibly used a DILF. "[W]e negotiate the deal, so a board member really can't add anything," a representative of the firm wrote in an e-mail turning down Habitat's request for comment. 

Another way to go is to hire an expediter for at least the initial paperwork. "We'll file the lien, go into court, notify the owner, take care of all that part of it," says Anthony Giaimo, executive vice president of New York Condo Lien. "It's much, much cheaper using us than involving an attorney," he says, noting that his upfront fee, which the board pays, gets added to the amount of common charges owed. "We're a legal service," he describes, though he confirms, "No one here is a lawyer, per se."

Foreclosure, for Closure

If lien pressure, a payment plan, small-claims court, limiting access to amenities, and public shaming don't work, foreclosure remains an option. It's no panacea — a condominium association is usually third in line to get paid, after federal/state/local taxes and the bank, whereas a cooperative corporation is generally first. There are costs to a foreclosure, such as advertising and auction fees, and if the apartment's equity is less than the mortgage, it can be quite difficult to find a buyer. The condo association may then file a DILF, though whether that amount will cover mortgage payments, real estate taxes, and, ironically, the common charges is an open question.

But not pursuing foreclosure gives a free pass to unit-owners who are abusing the system — and tells all the other owners that as long as they pay their mortgage, it's okay not to pay their common charges. And legal expense works both ways, after all — unless the delinquent owner has a lawyer provided at low cost by a union, fighting foreclosure may be too expensive and time-consuming for an owner, who may decide it's cheaper and easier to pay what he or she rightfully owes.

"It's persistence," says Roz Sackoff, president of Bayside Mews, a 142-unit condominium in Queens' Bay Terrace neighborhood. "You must be persistent. Document everything in writing. Get your property manager to make those calls. If that doesn't work, send the documentation to your attorney."

Indeed, you may have to take action whether you want to or not. "I've rarely seen condominium bylaws that don't require the board to take action," says Wagner. "You can bring an action for foreclosure. You can bring action for money judgment. You can do both in the same lawsuit. If you do nothing, you are violating your fiduciary responsibility."

SEE PART 1

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