Let the Bank Collect for the Board [VIDEO]

Hi, my name is Andrew Weltchek. I’m a partner with the law firm of Cohen, Hochman, and Allen. First and foremost, I hope that each and every one of you watching today is safe and healthy, your family and loved ones safe and healthy. That’s the most important thing and I’m sure the top concern on our minds at this time.

Today, I want to explain what happens if you can’t pay your co-op or condo common charges. Every month, the apartment owner of a co-op or condo has to pay to help maintain the co-op building and the condo building. If you’re unemployed or otherwise in financial distress and you can’t make those payments, what can you do and what can the board do? Or if you’re on the board, what do you do about the people who are unable to make those payments?

This is a matter of more than a little concern today. Lots of people are in that kind of distressed condition, and probably higher percentages will be unable to pay an H-building that is a co-op or condo than ever before, or certainly in the last few years. Now, strictly speaking, the board has the right to take the apartment back for non-payment. In a co-op, they would terminate the proprietary lease and evict the shareholder who is the occupant of the apartment. And in a condo, they would put a lien and foreclose it. But the question is, should they? The short answer is no.

Well, if you’re a board member, don’t you think you have a responsibility to make sure that the operating expenses of the building are covered? You do. But you also have a responsibility to not waste money trying to do it, because don’t forget that in a co-op, the co-op gets paid first. In foreclosure, the bank comes second after the co-op, so let the bank take care of the collection. If the unit, the shareholder who has that apartment is unable to pay their common charges each month or maintenance charges in a co-op, then they are also unlikely to be paying their mortgage.

The co-op board doesn’t need to pay a lawyer to threaten their neighbor. After all, these are people who live together with you in the building. They can wait for the bank to take care of that. Hopefully, there’ll be time for the apartment owner to work it out, take care of the bank and the co-op board. Or, God forbid, if there’s a foreclosure sale, then the co-op board will collect its money at the end. The same is not exactly true, but just as helpful in a condo, where they come second after the bank. But if the apartment is worth enough money and the mortgage is low enough, then the condo board should also wait. Again, these are your neighbors.

Let the foreigners let the banks go ahead and take care of getting the collection. You want to stay on good terms and give your fellow shareholders and condo unit owners the best opportunity to right their lives in a time of trouble, such as we’re facing now.

Again, my name is Andrew Weltchek. I’m a partner with the law firm of Cohen, Hochman, and Allen. As you can see, I’m talking to you today from my home office. You’re welcome to call me on my cell, which is 973 223 4567.

Andrew WeltchekAndrew Weltchek
Cohen Hochman & Allen
75 Maiden Lane, Suite 802
New York, New York 10038
Tel. 212-566-7081
Fax 212-566-7406
Cell 973-223-4567
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