Court Tells Board in Foreclosure Case: The Guy Paid. What Else You Want?
July 20, 2012 — The Clinton West condominium at 516 W. 47th Street, in the neighborhood you call either Clinton or Hell's Kitchen depending on how New York you are, seems a nice place to live. Built in 2003, the seven-story, two-building complex of about 80 apartments boasts granite kitchen counters, heated bathroom floors, an atrium lounge with WiFi, a fitness room and even a putting green. Behind this genteel façade, however, a battle brewed.
Edward Desmond of apartment S3G is a union electrician who since 2010 has been unemployed. That year, he fell behind on his common charges and notified the property manager — first Steven Katz of Rudd Realty, later his successor, Ellen Marrone of Midboro Management. As Desmond testified in court, Marrone reasonably and appropriately told him that if Desmond were to begin making his current payments, "it would be a show of good faith."
It was one of the last reasonable things anybody did.
Forwarding Arrears
On March 21, 2011, Clinton West, properly enough, sued to foreclose based on a lien it had placed for unpaid common charges "and other assessments" totaling $8,698.54. Desmond, though still unemployed, had somehow managed to begin making his monthly payments beginning January 2011, and on April 18, after making a withdrawal from his 401K plan, he mailed Midboro a check for $7,397.91. That represented his $821.99 monthly charges from April through December 2010.
That check was never deposited. Though Desmond had written on the memo line that the amount was only for the arrears — and though he never represented that the check was to satisfy both the arrears and the additional charges — his check was returned on May 4, 2011.
That might have been understandable if Desmond were trying to claim he was paying everything, including late fees, in full. But he wasn't: As written on the check itself, he was only paying his back common charges. And as we've written often in Habitat, condo boards generally work out a plan to satisfy arrears through a series of partial payments, and sometimes forgive late fees as a way to leverage those payments. Boards are happy to get arrears paid in installments. Yet this this board rejected a payment of the complete arrears.
Desmond, in response, asked the board's attorney for an explanation of the discrepancy between his $7,397.91 payment and the $8,698.54 the board claimed. He says the board never told him; the board says it did.
Take Two
Regardless, Desmond in early May sent another check for $7,397.91. For some reason, this one the board decided to deposit, which it did on June 8. Desmond contended in his testimony that the delay "was done so that I could not vote in the Annual Meeting (May 24, 2011) and election of new Board Members, for which I was running."
Why would that be? As Desmond further testified, he had "been very critical of the Clinton West Board of Managers," and that based on his "experience in the construction building trades, I have seen what the Board has done wrong and how I could help to do things right." And perhaps explaining the reason the board behaved as did, he told the court the board "personally dislikes me, and [is] using the resources of the Condominium to get rid of me." If so, that's a common board mistake — making things personal.
Claiming the board was running up nearly $10,000 in legal bills over the $1,291.63 difference, and was planning to charge him for those legal bills, Desmond told the court that if "someone owed me $1,291.63, I would take them to Small Claims Court; I would not waste this Court's time, or run up thousands of dollars in legal fees, for what amounts to be a personal vendetta directed at me from the Clinton West Board of Managers."
Madden Angry
Whatever the wisdom of racking up what was by now $8,071.69 in attorney fees over a disputed $1,300 above and beyond the actual, y'know, arrears, the board erred in trying to hide from the court the fact that Desmond had caught up on his common charges.
Judge Joan A. Madden, in her July 10, 2012, decision rejecting the board's request for summary judgment, scathingly wrote that, "Even though [the board's] Updated Tenant Ledger clearly shows that defendant made a $7,397.91 payment … [the board] simply seeks the relief … without mentioning such payment and acknowledging that defendant satisfied a substantial portion of the lien for unpaid common charges ... [or that the board] has been charging defendant for 'legal fees.' ... [The board's] silence as to the foregoing payment and charges is inexplicable."
For that reason and because of the relatively small amount of money remaining at issue, the court ordered both parties to appear for a settlement conference on July 27.
What's the takeaway from all this? If an owner in arrears asks reasonable questions, answer him in plain English. If an owner pays all his common-charge arrears and is otherwise up to date, be glad — that's your whole goal! Work out a payment plan for the small amount left over and don't run up $8,000 legal bills over thirteen-hundred bucks. Never make it personal — and never, ever try to keep stuff from the judge.
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