Co-op Boards Getting Ready for the Reopening of Housing Court

The national debate on evictions is set to play out in New York, where the Civil Court’s residential landlord and tenant section, commonly known as housing court, is scheduled to reopen next month for the first time since March 2020. Co-op boards looking to enforce their proprietary leases must grapple with two questions: What if the courts do not reopen in September, despite this month’s U.S. Supreme Court ruling invalidating the current moratorium on evictions? And even if housing court does reopen, how much of a delay will co-ops face due to the severe backlog of cases after a 17-month hiatus brought on by COVID-19?

Two things are certain: When residential evictions resume, there will be many cases in line to be heard; and housing court will be able to adjudicate only a small percentage of them. Given this uncertainty, what should a co-op board do when faced with a significant arrears situation or a hoarder who is unable or unwilling to address her problem?

Get the ball rolling. First, there should always be a letter from management notifying the shareholder of the problem and asking that it be promptly resolved. Fortunately, with a little prodding, many shareholders do make good faith efforts to address their defaults.

Check the governing documents. When a shareholder does not respond positively, the co-op board and managing agent should ask the building’s attorney to review the corporate documents, especially the bylaws and proprietary lease or occupancy agreement, and to take appropriate action before the situation becomes dire.

Sometimes, a letter from a lawyer is sufficient. Other times, a formal default notice is required. That notice serves several purposes. It advises the shareholder and lender of the default and how much time they have to cure it. (Most proprietary leases specify 10 days’ notice for monetary defaults and 30 days for non-monetary ones.) The default notice also serves as one of the requirements for an eviction proceeding, if that becomes necessary.

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Seek outside help. Co-op boards should also consider who else may be contacted to address the problem. The shareholder may be unable to pay the arrears on his own, but he may have relatives who can assist. For hoarder and hygiene issues, Adult Protection Services or a private cleaning company often can be of tremendous assistance.

Finally, if all else fails, the co-op board may choose to file an eviction proceeding, realizing that the ultimate goal is to use the litigation as leverage to have the default cured, not to evict a shareholder from her home. Sometimes, in hoarding cases, it’s effective when a judge tells the shareholder that the apartment must be cleaned and access must be granted for regular inspections.

Think outside the courtroom. Co-ops also can address severe monetary defaults without going to court through what’s known as a non-judicial foreclosure under the Uniform Commercial Code. This process entails giving notice of a public auction of the shares of co-op stock appurtenant to the apartment. The notice must be served on several parties and advertised publicly, usually in local weekly newspapers for several weeks before the auction date. As an eviction is not part of the auction, it does not affect occupancy of the apartment but almost always generates a response and resolution of the arrears situation.

The upcoming weeks and months may bring further changes to the landlord and tenant courts in New York. Therefore, co-op boards should have their attorneys monitor the situation closely so that they can act appropriately in these uncertain times. 

Mark N. Axinn is chair of the Cooperative and Condominium Law Group at the law firm Phillips Nizer.