Q&A: Escrow Account

 I’m a condo owner in New York City. I have written to the management company of  our condo regarding some issues I have been having, but the management company  has not taken any action to remedy the situation. I would like to make my  maintenance payment into an escrow account until the issue is resolved or until  the management company starts to attempt to remedy the situation. My question  is, can I just set up an escrow account?  

 —Questioning Condo Owner

 

 

 

A “Putting one’s monthly common charges into an escrow account offers no legal protection to  the unit owner if the condominium decides to begin foreclosure proceedings  because it has not received its common charges,” Stewart E. Wurtzel, Esq. of the Manhattan-based firm of Deutsch Tane Waterman & Wurtzel, P.C. “The establishment of an escrow account simply ensures that the unit owner has  the money available to pay the common charges and doesn’t spend it; it does not preclude the condominium from bringing suit to recover  monies owed nor does it compel the condominium to address the unspecified  problems that the unit owner is having with management. Unlike maintenance in a  cooperative or rent in a rental building, the obligation to pay common charges  is basically absolute. The condominium would have the right to file a lien for  the unpaid charges and commence foreclosure proceedings against the unit owner  to recover those charges; if the charges remain unpaid prior to enforcement of  the judgment, he/she runs the risk of losing title to their home.  

 “The statutory warranty of habitability does not apply to condominiums and there  is no abatement of common charges or set-off right available to a condominium  owner even if the same condition would warrant relief to a tenant shareholder  in a cooperative or a tenant in a rental building. Accordingly, if the unit  owner is suffering from water leaks or inadequate heat, the unit owner is not  entitled to withhold common charges and seek an abatement, but may sue the  condominium for breach of its obligations under the bylaws and seek an  injunction compelling the condominium to repair the conditions. The unit owner  also has the right to sue or counterclaim against the condominium for damages  as a result of the breach of the condominium documents if the conditions  complained of constitute a violation of the condominium’s obligations. However, the condominium would probably be entitled to summary  judgment for its claim of unpaid common charges while the claims the unit owner  has against the condominium would continue to be prosecuted after the  condominium has its foreclosure judgment and seeks to enforce it. This means  that the unit owner would have to pay the judgment obtained by the condominium  to avoid foreclosure before they could obtain a judgment in their favor for the  breach of the condominium documents.  

 “The unit owner also has to be aware that the condominium bylaws probably grant  the right to the condominium to recover its legal fees as a result of the unit  owner’s default. Again, unlike the statutory rights granted to tenants in a  cooperative or rental, the unit owner does not have the right to recover its  legal fees against the condominium even if he or she successfully sues the  condominium for the damages the owner suffered as a result of the breach of the  condominium’s obligations.”  

 

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