Collecting Common Charges in Co-ops and Condos Your Best Avenues for Success

While for many laypeople cooperatives and condominiums are essentially interchangeable, from the legal point of view they are radically different institutions.

Much of this difference can be attributed to history. Co-ops have existed in one form or another for a thousand years; condos have only been around for 50. As one would expect, co-op law is therefore fairly stable and well-developed, while condominium law is still in something of a state of improvisation.

Apples & Oranges

Nowhere is the difference more clearly illustrated than in the most basic act of communal living: the compulsory collection of common charges. From a collections point of view, anything you may know about condos only gives you bad information about co-ops—and vice versa. In a co-op, eviction for nonpayment could happen in as little time as a few months, while the same process could take more than a year in a condo. A co-op eviction for nonpayment is essentially the same as an eviction from ordinary rental housing, and goes relatively quickly and inexpensively before the New York City Civil Court. For a condo, the proceeding starts in State Supreme Court and then may (or may not) eventually end up in Civil Court—or not, as the board chooses.

A condo eviction has its roots in mortgage foreclosure procedure and is subject to the expenses and complications associated with that process. For condos of modest means, this immediately leads to a problem. Since there is no profit motive in a condo, common charges are as low as the board can keep them. For as complicated and onerous as the process is, the amounts to be recovered in a condo common charge foreclosure are often not even enough to cover the legal fees associated with going after them.


Related Articles

Collecting Arrears

When Residents Don't Pay

Show Me the Money

Collections, Foreclosure & Evictions

Precedent-Setting Legal Cases

Important Lessons Learned for Co-ops and Condos

Financing Investor-Held Condominium Units

What You Should Know When It Comes to Loans and Choosing a Mortgage Expert

The Home Equity Line of Credit Is Making a Comeback

After the 2008 Financial Crisis, HELOC Financing Is Again Available

Don’t Raid the Cookie Jar

Capital Budgeting is Essential