A primary rule of cooperative living is that everyone pitches in their fair share. This applies to monthly maintenance payments, special assessments, and any other monetary obligation that allows the association to maintain quality of life for the residents and their collective property. It follows that, should someone be unable or unwilling to pony up for their piece of the proverbial pie, ramifications will be felt from the board on outward. It's to the benefit of all parties involved to sort these situations out as soon as possible, as eviction proceedings – the worst-case-scenario, usually – can be painful and drawn out, leading to dangerously depleted reserves and serious morale problems among the remaining shareholders, forced to carry the weight of the delinquent.
It behooves a board to act rationally if a shareholder is in arrears; should someone fall a month behind, that is not necessarily reason to ring the alarm. But it is incumbent that a board stay aware of everyone's payment situation, such that it can act when the time comes.
“We look at our monthly sheets,” says Burt Wallack of New York-based Wallack Management. “If someone is a month in arrears, we normally send out a reminder, at which point, I'd probably say that nine out of 10 people just pay. If you have someone two months in arrears after we send out that first notice, we'll send a legal letter saying that they must pay. Finally, if they don't pay by the end of the second month or the beginning of the third, then we go to legal.”
In many cases, a little nurturing and sensitivity can go along way toward sorting out a sensitive situation. “In many cases, a shareholder is sick, or they've lost their job, or something similar is going on, and I would say that most boards have a level of patience in letting people work things out, whether that means getting their lives together or selling their apartments,” says Eliot H. Zuckerman, a partner with the law firm Smith, Gambrell & Russell, LLP, in Manhattan. “If the board thinks that there's no realistic hope that a shareholder will be able to get themselves back together financially, however, that person will have to sell their apartment, as the board can't let the shareholder continue indefinitely without paying, for the obvious reasons.”
Wallack concurs. “If I have a shareholder in truly dire financial straits,,” he says, “with work and their business, or personally, say with a divorce, I will speak to them and attempt to work out a payment schedule. And that probably works about 90 percent of the time as well. Even when we do have to go legal, via which their families will by necessity become involved, I will speak to them and try to ascertain when they'll be able to pay.”