3 options for collecting arrears in condo common charges

| Mar 3, 2021 | real estate litigation |

For condo owners, common charges not only pay for the upkeep and maintenance of the building but for all of the amenities and services the building offers. Whether due to different priorities, lack of funds or forgetfulness, condo owners sometimes fail to pay common charges when due.

If common charges for many owners fall into arrears, the board may have difficulty paying operating expenses or otherwise maintaining the building. If a formal letter does not induce payment, the board may typically exercise one or more of the following options.

1. A common charge lien

If a condo owner refuses to pay common charges, the board may file a lien against the unit. While the ultimate goal of filing a common charge lien may be to initiate a lien foreclosure (which is similar in many ways to a mortgage foreclosure), that process may not be necessary. Rather, the threat of a lien may be enough to induce payment. After all, before the condo owner may sell, he or she must pay all common charges, including usually legal fees, late fees and/or interest and have the lien removed.

2. Rent collection

If the condo owner is renting the Unit to a tenant, the board may also be able to collect the rent from the tenant directly. That is, rather than paying the landlord, the tenant pays the rent directly to the Condominium until there are no more delinquent common charges.

3. A lawsuit

The condo’s bylaws are effectively a contract that requires the owner to pay common charges. If the owner fails to do so, he or she is in breach of contract. New York law provides that the obligation of a condominium unit owner to pay common charges is absolute and not subject to setoff. Consequently, to secure payment, the board may take whatever legal action that is allowed by the by-laws or law..

Filing a lawsuit may compel the condo owner to pay common charges. Depending on the value of the outstanding balance and other factors, it may even be possible to litigate the lawsuit quickly in small claims court.  In New York City, a condominium can sue for up to $10,000 in outstanding charges in a single small claims suit.