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January 4, 2017

New York Law Journal

By: Eva C. Talel,

Condominium and co-op boards are responsible for establishing and collecting the "cash requirements" necessary to own, maintain and operate the building. Without this money, whether in the form of common charges or proprietary rent, a board cannot pay bills, make necessary repairs to the building and otherwise fulfill this fundamental board responsibility. If apartment owners don't pay on time, the fiscal health of the community may be jeopardized. Further, a shortfall in a building's cash requirements may necessitate the imposition of assessments on the remaining apartment owners or incurring of the costs and expense of borrowing money from an institutional lender.
However, there are steps that boards can take to compel or encourage timely payments by owners. The New York Condominium Act governs the remedies a condominium board can utilize to recover payments from delinquent owners, and expressly provides that boards can place a lien on the owner's apartment for unpaid common charges. Co-ops, which in this respect are governed by the laws applicable to their landlord-tenant relationship with apartment owners, may bring a summary proceeding against an owner who does not pay proprietary rent.  Further, under the terms of the proprietary lease, a co-op board is generally permitted to terminate the proprietary lease of a delinquent owner for non-payment of rent. There are also monetary impositions and social/peer pressures which boards can utilize to encourage prompt payment.
This column examines the legal ramifications of imposing monetary charges, such as late fees, interest and the like, for non-payment or late payment of proprietary rent (maintenance) or common charges. We also discuss the statute and case law relating to New York criminal usury, as they may apply to such charges, and analyze recent case law addressing potential defamation claims if the names of owners in default are published, made public or otherwise disclosed.

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