Non-Judicial Collection of Co-op Maintenance Arrears

Cooperatives may pursue collection of maintenance arrears from co-op shareholders without going into court. The Landlord/Tenant courts are currently closed except for emergency matters; however, non-judicial foreclosures do not require any court filings. Our firm has been successfully handling these non-judicial foreclosures for over twenty years for our co-op clients around the five boroughs.A non-judicial foreclosure is a procedure in which the shareholder/tenant is served with a Notice to Cure, Notice to Terminate and, if needed, a Notice of a Public Auction Sale. If the arrears are not resolved, the apartment is auctioned off at a public auction conducted by a New York State licensed Auctioneer, with the highest bidder prevailing at the auction. This is not a court proceeding and has been sanctioned by the New York Courts. The upset price at these auctions are generally in amounts sufficient to satisfy all debts to the co-op on the unit. This usually results in payment to the co-op of what it is owed on the unit. The successful bidder at the auction is responsible for evicting the shareholder/tenant, and takes the apartment AS IS.

The vast majority of these matters are resolved before auction, by either the shareholders or their lenders paying all outstanding sums due in full, or by negotiating a settlement agreement with the shareholders for payment of the outstanding sums due. Where there is a loan on the unit, the bank often pays the co-op in full to protect its loan which is subordinate to maintenance charges.

It is generally our experience that these non-judicial foreclosures are cheaper and quicker than Landlord/Tenant proceedings. In a rare circumstance, after a non-judicial foreclosure is conducted, the shareholder may challenge the procedure in court. Such a challenge may result in litigation and additional attorneys= fees which, if the co-op is successful, the shareholder may be held responsible to pay. Landlord/Tenant court is often cumbersome and more expensive than the non-judicial foreclosure procedure, and often requires court appearances by either a member of the board or managing agent. Our firm also handles Landlord/Tenant cases.

Procedures for Collecting Condominium Common Charges

The steps to assist condominiums in collecting outstanding common charges are different than those for a co-op. The first step to collect outstanding common charges is to file a lien against the unit. The City is currently accepting these liens for filing. We advise all our condominium clients that these liens should be filed as soon as possible if there are significant arrears, especially where there is a mortgage. Condominium common charges are subordinate to the mortgage and real estate taxes. If there are any other liens or judgments filed before the condominium’s lien is filed, those may take precedence over the condominium’s lien for common charges.

If the owner still does not pay after the lien is filed and served, the next step is to initiate a court proceeding to foreclose on the condominium’s lien. Our firm is experienced in handling these types of cases. Standard condominium by-laws make the unit owner responsible for costs and legal fees in connection with such a court proceeding.

THE REPRESENTATIONS, OPINIONS, AND INFORMATION SET FORTH ON THIS WEBSITE DO NOT CONSTITUTE LEGAL ADVICE AND DO NOT FORM AN ATTORNEY-CLIENT RELATIONSHIP. NOTHING CONTAINED ON THIS WEBSITE SHOULD BE CONSIDERED AS LEGAL ADVICE. EVERY CASE AND MATTER IS DIFFERENT. AS SUCH, PRIOR RESULTS DO NOT GUARANTEE FUTURE OUTCOMES. BE SURE TO SEEK AN ATTORNEY’S ADVICE BEFORE MAKING ANY DECISIONS ABOUT ANY LEGAL MATTERS REFERENCED ON THIS SITE. THIS WEBSITE IS INTENDED TO PROVIDE GENERAL INFORMATION ONLY. IN ADDITION, THE LEGAL EFFECTS OF COVID-19, ESPECIALLY AS ARREARS ARE CONCERNED, ARE UNKNOWN AT THIS POINT.

If you need to contact an attorney at our firm, please CLICK HERE. Your message will be responded to promptly.