Q: We live in a condo building in Manhattan with fewer than 10 units. The last Local Law 11 inspection found that our facade needs significant repair and maintenance, which could cost $300,000 or more. The condo board has determined that an assessment will be charged to all owners to pay for the work. Obviously, this will be a hardship for everyone. What recourse does the building have if any of the owners refuse to pay and additionally are in arrears on their common charges? Are we allowed to garnish the rental payments they receive from sub-letters? What are our legal options?
A: Local Law 11 requires facade inspections every five years in buildings taller than six stories, followed by repairs to correct any unsafe conditions. This can get expensive, especially in buildings where there are few owners to share the cost of repairs. Some owners might have cash available to pay their share upfront, but not everyone.
“If you know these people can’t pay, let them pay over time,” said Lisa A. Smith, a partner who practices real estate law at Smith, Gambrell & Russell, LLP.
The board can incentivize owners to pay all at once, and charge a small amount of interest to owners who need to pay over time. But everyone in the building needs to be offered the same options. Hopefully, enough residents will want to pay upfront to avoid the interest so that the building has enough income to start the project.
Your condominium can seek a loan for the project if the building’s bylaws allow it, either by getting a mortgage on the super’s unit (if it is owned by the building), or by using the income stream from the common charges as collateral.
For unit owners who are in arrears over common charges, the condo board has several avenues it can pursue. If the unit is being rented out, the board can send a letter to the tenant demanding that they pay their rent to the board, instead of to the unit owner. But this has not been entirely enforceable in court, said Steven D. Sladkus, a real estate lawyer in Manhattan.
“While some tenants comply with that demand, others do not,” Mr. Sladkus said.
Instead, the board can sue a delinquent owner for money owed to the board, or file a common charge lien against the unit and begin a foreclosure action.
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