Q&A: Condo Foreclosure

Q I am three months behind in my homeowner’s association payments. Can the condominium foreclose on my unit? My mortgage payments are up to date, and I called my lender who said, ‘no, they cannot foreclose.’ What do you say? I wrote a letter to the board asking for a payment plan in January of this year, but I have not received a response as of yet. I know I owe the money, but I was sick for a period of time. I am planning to pay the back fees with my taxes.

— Concerned Unit Owner

A “For the purposes of this reply, I am assuming that when you say, “homeowner association payments,” you are referring to the common charges of your condominium” says attorney Abbey Goldstein of the Kew Gardens-based law firm of Goldstein and Greenlaw, LLP. “The statement by your lender to the effect that the condominium ‘cannot foreclose’ on your unit is almost certainly untrue. Barring some exceptional provision in the condominium’s bylaws, a condominium has the right to foreclose in the event of non-payment of common charges. However, a condominium’s lien for common charges is subordinate to that of a first mortgage lien holder, typically a bank. In a weak economic environment where housing prices are falling, a condominium runs the risk that after the time-consuming foreclosure proceeding, there would not be sufficient funds derived from the sale of the unit to pay off its full lien after the bank mortgage is satisfied. Therefore, a condominium is often willing, if not anxious, to enter into a settlement with the unit owner whereby arrears are paid off over a period of time, rather than commencing a foreclosure proceeding.

“Particularly as you have been sick, one would think that the board of managers would be willing to entertain a payment plan of some sort. I would suggest writing a second letter, sent certified mail, return receipt requested. If you still have no response, continue paying as much as you can. A foreclosure cannot be commenced without notifying you, at which time you should seek legal advice.”

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