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Owner can't pay maintenance - anyone btdt?

Started by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007
Discussion about
One of the 6 owners in our coop can no longer afford to pay maintenance. The other 5 of us are going to have to shoulder things while we look into seeing if the delinquent owner's lender will pay overdue and pending maintenance going forward. Anyone gone down this road before? What are we in for? I think the delinquent owner will try to hunker down and fight lease termination, etc. But our coop is so small we can't try to work around this issue. Anyone?
Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

how about? call your lawyer.

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

Yup. Started that legal ball rolling this week. Just wondering if anyone has been through this before and has any thoughts, tips, empathy, warnings, etc.

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Response by The_President
almost 15 years ago
Posts: 2412
Member since: Jun 2009

this is one of the big risks of buying into such a small development... when one person defaults, it has a huge impact on everyone else.

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

It's a c-a-t-a-s-t-r-o-p-h-e. I don't even want to think about the legal fees we will incur sorting this all out. How common is this? What are the probably outcomes? The delinquent owner is being so casual about it too.. after the first maintenance went past due the excuse was 'I forgot', then after the second, and third.. the excuse was 'got laid off.. can't pay till maybe next month'... meanwhile the late fees went unpaid and the account is not past 60 days due. I just can't believe someone could be so casual about their asset and their credit standing. UGH.

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Response by maly
almost 15 years ago
Posts: 1377
Member since: Jan 2009

I wonder, does your coop contracts cover legal fees as well as unpaid maintenance? I thought coops were first in line in case of default?

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Response by spinnaker1
almost 15 years ago
Posts: 1670
Member since: Jan 2008

I don't get the whole catastrophe thing. Isn't there written, legal, contractual recourse for the corp? Sure it's a process but hardly unique (or catastrophic) I would think.

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

petlaw
about 10 months ago
ignore this person
report abuse
Our co-op is not zoned for business use, but one of our owners quit his job and is now running some kind of consulting business out of his unit. I think it's pretty much all by web/email, but is this legal?

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

Columbiacounty, yes - this is actually the same person who is not not paying maintenance.

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Response by takkyamaguchi
almost 15 years ago
Posts: 45
Member since: Feb 2009

Generally speaking, the co-op board will go through the Civil Court of the City of NY County to issue a "cooperative unit: non-payment notice of petition" to the delinquent shareholder. This notice prays for a final judgment of eviction, awarding to the Petitioner possession of the premises described as the unit the shareholder maintains. Should the delinquent shareholder fail to answer the notice for eviction, (which seems likely given the careless attitude), a final judgment by default will be ordered against that shareholder w/or w/o trial. The petitioner can then request that a warrant to be issued to remove respondent from possession of the premises. As expected, multiple opportunities will be given to the defaulting overtenant, (ex: law under FDCPA "fair debt collections practices act"),so the entire process itsself can be lengthy.

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

Spinnaker1, I'm sure there is a protocol that we will follow, but our coop is tiny, we have no reserve, and we are headed into our most expensive months (oil costs), so it will be painful. Our Board is pretty young, and we don't have a lot of experience with typical coop stuff (capital investments, etc.) let alone a lease termination/foreclosure.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

Here we go again, columbiacounty the angry old man with a silent gas problem trying to turn someone else's catastrophy into a way to promote his agenda of anger towards humanity and the whole world.

WTF, what even prompted you to do a search of old postings by Petlaw?

How about you post some of your old nasties? Like the time you chased a poster around for months accusing him of having a flat screen TV coming out of his butt.

Of all of the assholes on this board, including aboutready the toilet lady entitled to other people's things and money, and Rhino the violent animal who occasionally spouts homophobic comments, you truly are the worst.

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Response by evnyc
almost 15 years ago
Posts: 1844
Member since: Aug 2008

Judgy, judgy, hfscomm1, for someone who is essentially a stalker.

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Response by alanhart
almost 15 years ago
Posts: 12397
Member since: Feb 2007

hi hfscomm1

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

Difference is, I "stalk" jerks.
Columbiacounty goes and attacks people with legitimate concerns.

I'm more like Showtime's Dexter. Working on that analogy, columbiacounty is like Ted Bundy.

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

Thanks so much takkyamaguchi! I'm forwarding your post to our Board.

"the entire process itsself can be lengthy"

UGH. UGH. UGH.

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Response by positivecarry
almost 15 years ago
Posts: 704
Member since: Oct 2008

What firms lend to such a small coop?

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

positivecarry - Citibank, Chase...

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Response by nyc10023
almost 15 years ago
Posts: 7614
Member since: Nov 2008

spinny: that's one of the benefits of being in a much larger bldg. Pros of a small bldg: potentially more efficient mgt and lower costs if all the shareholders co-operate. Cons - situations like these.

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Response by drdrd
almost 15 years ago
Posts: 1905
Member since: Apr 2007

This is a good lesson for all of us to not live so close to the edge; save for a rainy day, etc. I also think of the person on another thread who wants to buy now AND quit his job & go freelance. In defense of this hapless tenant, however, how would you want him to act? He lost his job (do you KNOW he quit?) & is trying to keep going; would a nervous breakdown in the common hall be more to your liking than his trying to put a good face on things & soldier on?

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

i would speed up the process with your lawyer.

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Response by evnyc
almost 15 years ago
Posts: 1844
Member since: Aug 2008

"Difference is, I "stalk" jerks." - so that makes stalking all right?

"Jerks"=anyone you don't approve of=you are an intolerant jerk, hfscomm1.

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Response by petlaw
almost 15 years ago
Posts: 16
Member since: Feb 2007

drdrd - imho delinquent owner should have put the unit on the market as soon as the writing was on the wall and downgraded lifestyle. no shame in that. but by sticking head in sand, is dragging us all into a mess, let alone possibly facing ruined credit...

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Response by w67thstreet
almost 15 years ago
Posts: 9003
Member since: Dec 2008

Do you have a romper room for yourselves, and how many of you guys are still in diapers?

All I will say in addition is being an adult means seeing and planning for the future. What the 6 unit owners did is akin to buying an escalade and having to sell it when gas spiked to $4. Gallon. I have no symphathy for you guys. Can you forward this to the board also? Next!

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Response by inonada
almost 15 years ago
Posts: 7685
Member since: Oct 2008

Petlaw, you should hear NYCMatt's view on this, in particular on the idea of not being able to downgrade one's lifestyle. Will drive you nuts!

Basically, the coop owns the place and is in front of the line to get paid back before lender, can tack on legal fees, etc., etc., no? It's just a matter of waiting some time and going through some legal hassle. Can you do something like having some third party float whatever the guy owes plus legal fees plus a kicker to the person providing the money and simply kick it all back to the unit to get paid out in front of the bank? If terms are attractive enough, I'd do it. Or are there limitations on what liens may be placed?

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Response by nyc10023
almost 15 years ago
Posts: 7614
Member since: Nov 2008

Does your co-op have a line of credit or something to pay lawyers with, etc.? Or maybe have an informal chat with this guy and ask him if he needs to rent the unit out or if he plans to sell?

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Response by kmbroker
almost 15 years ago
Posts: 116
Member since: Jan 2008

if this person has a mortgage there should be a recognition agreement ,otherwise known as an aztec form. This form states that the bank is responsible for maintenance payments and that the bank can then go after the shareholder. A coop board that I was on had this problem with a shareholder, we contacted his bank and we were promptly paid then they went after the shareholder. This is one of the advanatages a coop has over a condo

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

nothing is going to happen until you get your lawyer going. and that process will take time. that's why its so important to get started immediately. you're going to be out of pocket for some period--i for one, would want to shorten that period.

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Response by mjsalisb
almost 15 years ago
Posts: 177
Member since: Sep 2006

Also can suggest Council of New York Cooperatives and Condominiums. This is a topic near and dear to this group's heart. Attended a seminar as the recession was deepining on this topic and the key is to make sure you are billing all possible fees and interest charges so as to maximize your recovery when the inevitable happens.....unit is sold and Coop stands first in line for recovery.

They had one or two war stories involving recoveries from failed sponsors that took ten years....but they did get the money....with interest....

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Response by printer
almost 15 years ago
Posts: 1219
Member since: Jan 2008

w67, showing your lack of class yet again. perhaps they should be like you and just ask daddy to cut a check for them.

this is a very unfortunate situation for all involved - i would bet the delinquent tenant feels terrible and is being non-chalant as a defense mechanism. does he still have equity in the place?

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

unfortunate? no, predictable. this is why i keep urging caution. if you have a toothache, you go to the dentist. if you are in partnership with someone who is not living up to their end of the deal and is not willing to discuss a solution, you go to to a lawyer. unless you want to carry them yourself.

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Response by somewhereelse
almost 15 years ago
Posts: 7435
Member since: Oct 2009

Doesn't exactly help the case for buying....

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Response by w67thstreet
almost 15 years ago
Posts: 9003
Member since: Dec 2008

printer, aka Heloc boy, you are f'ing right. I know that I stopped taking money from my parents at 21, when I got my first banking job, paid my way thru grad school, and never looked back.... so, i laugh when I saw that article about 50yos getting "allowance" to live in nyc... so you by all rights have the ability to mock me, cause =
1) you stopped taking money from your parents at 20yo, 11 mo, 30 days... you beat me by a day!;
2) you will in no way take any money from your parent's estate when they pass... you'd give it all to charity (FYI, worked in a law office in college as an intern, never saw ONE person turn down estate $... even if they never saw their parents in 30yrs);
3) you were born an aids orphan in poland and had to prostitute yourself for food;
4) you did not live above your $100K/salary in the last 10 yrs by heloc(ing) the hell out of your 300% gain in your nyc and hamptons home.

Seriously, 6 grown adults buy into a co-op, they HAVE NO RESERVE and are shaking in their boots cause 1/6 can't pay CC. It'll cost between $10K to $50K, to remedy this crap.... and as the aztec letter states, banks take a 2nd lien position vis-a-vis co-op, so the co-op board will be made whole... so we are just talking about carrying $50K for 2 yrs (max), and you get to charge interest on this crap..... so 5 adults who can't carry $10K for 2 yrs... and these morons BOUGHT? Knowing this I GUARANTEE you 4/5 unit owners in this co-op wears diapers.

printer... seriously, when and how much was your last heloc? So you got to be a "player" for a few yrs, lived well above your income/career... grt.. you know that saying better to have loved once..... i hope all those prada shoes were worth it... dork.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

somewhereelse
about 2 hours ago
ignore this person
report abuse Doesn't exactly help the case for buying....

Thanks for throwing your two cents in to the ring. That was an insightful comment.

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Response by printer
almost 15 years ago
Posts: 1219
Member since: Jan 2008

so you were 21 when daddy decided that investing further in you was a total waste of money and decided to throw in the towel and 'hire' you as his errand boy? wow, i thought he would've given you a longer leash than that.

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Response by NYCMatt
almost 15 years ago
Posts: 7523
Member since: May 2009

"mho delinquent owner should have put the unit on the market as soon as the writing was on the wall and downgraded lifestyle. no shame in that. but by sticking head in sand, is dragging us all into a mess, let alone possibly facing ruined credit..."

Um, it's impossible to "downgrade" one's "lifestyle" when they have no job and no proof of income for a smaller home in which to "downgrade" INTO.

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

so...then what?

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

good catch columbiacounty. gloomy angry posts without solutions should be your bailiwick.

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Response by 30yrs_RE_20_in_REO
almost 15 years ago
Posts: 9687
Member since: Mar 2009

a) An awful lot of Coops - especially small one's - have no fucking clue where any of the Aztec Recognition Agreements are

b) An awful lot of banks will not pay the maintenance simply because the Coop asks.

c) There's some REALLY interesting language and case law regarding Recognition Agreements and Coops foreclosing without informing the lender that they are doing it.

____________________

David Goldsmith
DG Neary Realty

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Response by columbiacounty
almost 15 years ago
Posts: 12708
Member since: Jan 2009

so...perhaps---they should call their lawyer.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

30 - columbia is still angry you came back to streeteasy after he thought you went away in a "huff"

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Response by somewhereelse
almost 15 years ago
Posts: 7435
Member since: Oct 2009

> Thanks for throwing your two cents in to the ring. That was an insightful comment.

This coming rom hfs.

Funny.

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Response by w67thstreet
almost 15 years ago
Posts: 9003
Member since: Dec 2008

printer...." you mama/daddy" WOW... what a comeback, stop it, you're gonna make me cry.

Now to the question at hand, how much and where'd ya spend all that heloc money? FLMAO. I answered your question, now if you so kindly reciprocate with something else besides how you feel sorry for these new Co-op owners in diapers that would be dandy!

What did you do besides live above your means the last 10 yrs based on the bubble, heloc boy? Refresh my memory, r u the head hunter? or just 1 of millions who wonders what happened to the "good ole, heloc days?" come on little boy... teach me something...

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Response by inonada
almost 15 years ago
Posts: 7685
Member since: Oct 2008

I dunno, w67th, depends on how you played that HELOC. Take out a $100K HELOC, spend it, go underwater, sweat it out for a decade => "Eh". Take out a $100K HELOC, refinance and extract another $250K, another $100K HELOC, refinance with neg am while extracting another $150K, pick-a-pay $0 a few years until you hit your %110 limit, then stop paying and wait 2 years for foreclosure while your 5 coop neighbors cover your monthlies, bank all the money in the process to use the float for renting for the next 7 years until your credit clears up 'cause it's a non-recourse / one-shot state => "Playa".

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

somewhereelse
about 1 hour ago
ignore this person
report abuse > Thanks for throwing your two cents in to the ring. That was an insightful comment.
This coming rom hfs.
Funny.

Good comeback.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

hello

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Response by dwell
almost 15 years ago
Posts: 2341
Member since: Jul 2008

"a) An awful lot of Coops - especially small one's - have no fucking clue where any of the Aztec Recognition Agreements are"

too funny, 30yrs :)

Petlaw: IMO, bottom line: yr coop must be very vigilant with this because you are a small coop. This guy could really drag the building down. IMO, the 5 remaining owners must be very on top of this & know what your lawyer is doing in court; You should call your lawyer once or twice a week to find out what's going on. You don't want your little coop to be a cash cow for the eviction attorney. You want to wind this matter up asap. However, it's possible that this guy could file for bankruptcy in order to stop the eviction & then you gotta to to BK court. So, legal fees may mount. Maybe you guys should hire a private investigator who can find out what assets this guy has & what his intentions are. IMO, if you can find out what he's thinking (& what his assets are), you may be able to wind this up faster. Good luck.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

alamefart, thanks for not ignoring me. Now that columbiacounty is ignoring me, I feel so lonely. I also suspect that aboutready is ignoring me again, like she also was before until she unignored me. Like Rhino who also ignored me and then unignored me.

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Response by hfscomm1
almost 15 years ago
Posts: 1590
Member since: Oct 2009

hehe, that tickles

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Response by dwell
almost 15 years ago
Posts: 2341
Member since: Jul 2008

Pet:

Just read you have no reserve. Oy. IMO, legal fees will be at least $10k & could hit $30k or higher depending on how hard he fights. Plus, you are out his maintenance. Make sure your atty is a Landlord-Tenant attorney who represents landlords. Good luck

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Response by w67thstreet
almost 15 years ago
Posts: 9003
Member since: Dec 2008

You may pretend to dunno, but I dono, you're a smart cookie iknowsomething. You're gonna go places on se. ; )

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Response by somewhereelse
almost 15 years ago
Posts: 7435
Member since: Oct 2009

"Um, it's impossible to "downgrade" one's "lifestyle" when they have no job and no proof of income for a smaller home in which to "downgrade" INTO. "

Sure there is.

Its called... GET A ROOMMATE.

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Response by hfscomm1
over 14 years ago
Posts: 1590
Member since: Oct 2009

columbiacounty is back! Just saw him post 15 minutes ago!! Look at him go nuts above.

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Response by columbiacomm1
over 14 years ago
Posts: 59
Member since: Jan 2010

Hello

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Response by apt23
over 14 years ago
Posts: 2041
Member since: Jul 2009

Wow inonada. Trying to calculate how much of my moral baggage I would have to jettison to have you as my financial advisor. certainly tempting just for the fun and intrigue of it all.

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Response by SomeonewhoKnows
over 14 years ago
Posts: 157
Member since: Jul 2008

Takkyamaguchi's advice about the technical logistics of the next steps is correct. But you, as the co-op, have absolutely nothing to fear or be concerned about. Every penny you spend on any collection efforts (through the legal system or otherwise) against the defaulted shareholder will be recouped, either from the bank (who will, in 99% of cases, pay the maintenance off themselves), or through a foreclosure sale, in which the successful purchaser will not be able to close until and unless they pay off all of your legal fees.

Yes, you may have to carry the burden in the interim if this is one of those (exceedingly rare) cases in which the bank, for whatever reason, decides not to fork over the maintenance. And yes, it may take a considerable period of time (at least a year, if not more, is not unreasonable). But ultimately, you will recoup all your money.

There is really nothing to be concerned about, other than the hassle in the interim.

If you need referrals for a few very competent and experienced attorneys who handle these types of situations, please feel free to write me at thoughtfulrepose@yahoo.com . I can recommend at least 3 or 4 firms that know what they're doing and can guide you through the process at reasonable prices.

In the alternative, lean on the co-op's (hopefully already pre-existing) counsel to handle it. But as someone above warned - make sure that he/she is experienced in these matters, because otherwise, the technical requirements can be maddening. Don't make a tedious process worse by relying on someone who's learning as they go along.

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Response by PMG
over 14 years ago
Posts: 1322
Member since: Jan 2008

"But you, as the co-op, have absolutely nothing to fear or be concerned about."

In all likelihood, one of your five neighbors is about to sell their unit at a distressed price; don't worry, it won't affect the value of your home very much.

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Response by SomeonewhoKnows
over 14 years ago
Posts: 157
Member since: Jul 2008

No...in a co-op, the neighbors can turn down a potential sale for any reason whatsoever - including concern that a 'firesale' would reduce the value of other shareholders' units.

It's true that a co-op in a situation like the one described by the OP has to carry the load for the defaulting shareholder for a period of months if the bank doesn't want to get involved. But at the end of the day, they will collect every cent of their maintenance, legal fees, late fees, etc. The co-op actually comes out ahead.

Like I said, nothing to worry about.

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