Here’s How Condo Boards Can Collect Arrears

Different powers. If a shareholder in a housing cooperative refuses to pay monthly maintenance charges, the co-op board can terminate the proprietary lease and evict the shareholder. But a condominium board has no such power since there is no lease to terminate and no way to evict for nonpayment of common charges.

While a condo board can file a lien for unpaid common charges, the lien can sit on a property for years. A condo could sue the unit-owner for the money owed or commence a foreclosure action, but both take time and money. In the latter case, if there is a mortgage on the property, the lender’s lien is superior to the lien of the condominium, which means the lender would get paid while the condo board would possibly receive little, or nothing.

So what can a condo board do when a unit-owner refuses to pay common charges yet continues to live in the unit?

Case study. For the answer, turn to the case of Heywood Condominium v. Steven Wozencraft. Wozencraft bought a unit at the Heywood Condominium in Manhattan in 2007. Within a year, he stopped paying his common charges. 

The condominium’s house rules provided that if a unit-owner was in arrears more than 60 days, the condo had the right to curtail the following nonessential services: the doorman would no longer call the apartment to announce a visitor, and no one would be allowed up to the apartment unless the unit-owner personally escorted the visitor from the entrance to the unit; the doorman would not accept packages for the unit-owner; and the doorman would not honor any authorization to enter the apartment or to release keys to the apartment.

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Objection! Wozencraft objected that withholding services was improper, but the court was not sympathetic, as it realized that the only reason the services were denied was that he had stopped paying his common charges.  

It is interesting to note that the bylaws of the condo also provided that each unit-owner was responsible for the payment of common charges and assessments, and dissatisfaction with the quantity or quality of services was not grounds for failing to pay common charges. Therefore, Wozencraft’s position that he was not receiving services and therefore he should not have to pay the normal common charges was dismissed by the court. 

Take action. Since condo boards do not enjoy the same remedies as co-op boards, condo boards should review the house rules and bylaws to ensure that they have all of the remedies that might be available. Careful review of the provisions in regard to the non-payment of common charges is very important, and it should be clear in the governing documents that if a unit-owner is in arrears, nonessential services, including the use of amenities (such as a gym, pool or rooftop garden) will not be available to that unit-owner. It is also advisable to review all remedies in the governing documents involving other day-to-day violations of the house rules and bylaws, such as smoking, noise and odor complaints.

Andrew P. Brucker is a partner at the law firm Armstrong Teasdale. The statements and views in this article are his own and not necessarily those of the firm.