Maintenance 7 months arrears, what can board do?

Sadly, not much.

I've heard of buildings with shareholders as much as TWO YEARS in arrears, still trying to evict. As hard as it is to evict a renter in this city, it's even harder to evict a shareholder-tenant.

The building is just going to have to suck it up and wait. And not piss off the shareholder by harassing him or her.

Just asking, is this shareholder a dreaded "pied a terre"?

this is why coops are concerned with financial wherewithal AND character, when asessing new tenants

coop i lived in had a lawyer who just stopped paying--she had plenty of money, that wasnt the problem--just a lowlife--alleged her apt was uninhabitable, and then wouldnt let anyone from the building in to verify and/or repair--went on for over two years at great expense, lawyers etc--we finally "settled" for less than our legal fees--never saw a dime of 2+ years of maintenance--i sold shortly after "settlement"--wonder what other garbage she produced for her fellow shareholders

i would never buy in a loosely run coop--simply dangerous

It must be against the law, Im surprised coops don't require a 2/3 month deposit on maintenance

oh, and that building was 50% down + 48 x mtge and mntnce in liquid assets--one can easily see why coop borards try to look out for human pieces of shit

if someone has a history of litigation or other flags, there is risk
sad, because some who litigate are decent, just got screwed by someone else

I know almost nothing about coops. In a condo, if an owner has significant unpaid common charges, your attorney send them a letter, letting them know that they've got a certain amount of time to pay and that they will also be responsible for late charges and collection costs. lIf they don't, then you will initiate foreclosure proceedings against them, file liens, etc. Send a copy of the letter to anyone who has a security interest in their unit (their lenders). A lot of times that will eventually work, because either their lenders will put pressure on them or they want to avoid the credit impact of negative public records. But foreclosure proceedings take forever, and the building only gets up to their common charges and expenses from whatever is left after the bank is paid. So if they paid too much, or borrowed most of it, you may not really have much to gain. Are liens, foreclosure or even a simple lawsuit not possible in a coop?

Stillif,

Seven months arrears will give you plenty of options to notice and sue them in housing court. Nothing works quickly there and tenants can always get lots of time to settle up before a court will evict them.

One thing that might help would be to notify their lender, I assume they dont own the place debt free given the financial situation. Such notice could be as simple as a letter/phone call from the managing agent and doesnt cost to retain a lawyer and make a court filing.

Default notices from their lender might make them nervous enough to catchup on what they owe to the coop.

>>It must be against the law, Im surprised coops don't require a 2/3 month deposit on maintenance<<

I've heard of some co-ops requiring certain shareholders to deposit a set amount of maintenance funds into an escrow account upon purchase. I don't know how common this is, though.

Frankly, I'm surprised that a savvy co-op board would admit a family where both shareholders are freelancers.

STILL -- 1. consult a lawyer 2. see #1

The coop *probably* has more remedies than have been mentioned, chief among them to get the bank to pay the arrears *IF* there is a mortgage on these shares. The coop can also foreclose on the shares (an awkward choice, but a choice) and sell the unit to pay the arrears if the shareholders don't pay sooner. I am not sure why a coop would let itself get stuck with multiple shareholders in arrears, but that's another story.

About getting the bank to pay (if there is one), this is what I posted on a similar thread about 2 weeks ago:

"The standard 3-party Aztech Recognition Agreement (cites to sections of version with link below) provides that (if arrears are 3 or more months) A) Coop advises mortgage holder of default, B) lender has option to pay maintenance arrears [Para. 2.c.1], but C) if arrears not cleared Coop can foreclose, and D) has higher priority than lender [Para. 2.e]."

"In practical terms, this *usually* means that for individual shareholder defaults (as opposed to sponsor bulk defaults) the Coop can be kept whole from a cash flow perspective while a shareholder defaults. Someone with direct experience here may have a different perspective, but my understanding has been that banks prefer to call the shots about whether/when to foreclose, so they will keep the Coop happy by paying maintenance to avoid the Coop instituting foreclosure to recover what is usually a trivial amount compared to the loan balance."

Search "Aztech Recognition Agreement" in SE Discussions to find that thread, and the link to the official Aztech form.

Whatever the co-op does, if they are hamstrung if they don't want to sell the unit at current market (or below) prices. Imagine forcing an eviction, on a negative equity apartment, and then not approving a sale based on price!

Of course if the board allows that much slack, they probably aren't likely to 'protect pricing' either.

stillif:

1. your board has two good and quick options
2. first, notify the unit owner's lender
3. they will usually pay because a coop eviction will eliminate its collateral
4. second, start a non-payment proceeding under RPAPL 711
5. Manhattan has a special, dedicated condo/coop part, Part C
6. should not take long
7. you should also consider calling my L&T attorney and friend Stan Seitel
8. decades of experience, extremely honest, good natured and caring
9. his office # is 212-226-6620

stillif:

I should add. The old days of interminable delay no longer exist. Now tenants
have to oay one month's rent to get a second adjournment.

"3. they will usually pay because a coop eviction will eliminate its collateral"

No they won't ... particularly if they're a Chase or CitiMortgage. These behemoths have no interest in paying those pissy little maintenance payments, recognition agreements be damned (and just try to get someone from CitiMortgage Loss Mitigation in Missouri who even understands the difference between a "condo" and a "co-op", let alone a recognition agreement that requires they pay monthly maintenance in the event of a borrower default.

why not ask the person what's wrong...maybe he just lost his job..at least the board will know what they can expect.

Julia, that's far too compassionate for most people on this board.

They are freelancers. They can't really lose their job. They just can't get any work.

The solution to this problem is actually far, far simpler than most here have suggested.

Were your building a condo, the board would have to go through a complex, lengthy, and costly foreclosure proceeding - very much akin to what a bank would have to do with a borrower who defaulted on his mortgage - in order to sell the apartment, and thereby recoup the monies owed. This process can easily take a year and a half in NYC; more if the apartment owner shows up to court and contests the building's claims.

But in a co-op, the solution is incredibly simple. As the primary lienor (co-op maintenance is considered a 'lien' superior to that of a bank to whom the shares have been pledged as collateral; or, in the colloquial parlance, the bank that holds the shareholder's 'mortgage'), the co-op is required to advise the shareholder's lender of the default, and give the bank and opportunity to cure (as many others have mentioned here.) In virtually all instances, the bank will, in fact, pay off the shareholder's debt. If they do, problem solved. If they don't, the co-op can simply go ahead and foreclose on the shares, selling them via public or private means. And here's the (positive!) catch: because a co-op apartment is considered 'personal', as opposed to 'real' property, a different set of laws apply than those that govern real property foreclosures. As such, in contrast to the required method in a condo, the co-op board is *NOT* obligated to prosecute a lengthy foreclosure proceeding in order to sell the apartment and recoup the money it's owed. They simply need to give the shareholder ample notice of the impending sale, and then go ahead and do it. The entire process is completed in a matter of months, not years, and the co-op recoups every penny it's owed - including legal fees.

The co-op's attorney should absolutely be familiar with the process required to get this done. If not, feel free to inquire if you'd like recommendations of some attorneys who specialize in these procedures.

"In virtually all instances, the bank will, in fact, pay off the shareholder's debt."

Actually, that is not the case in this economy. If the bank is a Citi, Chase, or BofA, they will simply say "screw you" and refuse to pay ... because they can.

***
"If they don't, the co-op can simply go ahead and foreclose on the shares, selling them via public or private means. And here's the (positive!) catch: because a co-op apartment is considered 'personal', as opposed to 'real' property, a different set of laws apply than those that govern real property foreclosures. As such, in contrast to the required method in a condo, the co-op board is *NOT* obligated to prosecute a lengthy foreclosure proceeding in order to sell the apartment and recoup the money it's owed. They simply need to give the shareholder ample notice of the impending sale, and then go ahead and do it.The entire process is completed in a matter of months, not years, and the co-op recoups every penny it's owed - including legal fees."

In theory, yes.

In reality, not really.

You still have the tricky problem of actually EVICTING the shareholder. Oh sure, you can revoke his shares and his proprietary lease, but it's just that ... a LEASE. The shareholder can delay the entire process with a prolonged fight in housing court.

It could take YEARS.

Afraid I have to vehemently disagree, Matt.

Citi, Chase, BoA and every other lender will, in almost every instance, stand up, take notice, and pay up when advised that a borrower is late on his maintenance. They have every reason in the world to do so. They do not ignore such notices.

With regard to your second point, it is not necessary for the co-op to evict the shareholder before selling his stock and lease; that is the responsibility of the new owner of the shares. The OP's concern was recovering the debt owed to the shareholder, not getting the former owners evicted and the apartment vacant. A co-op need not, and seldom does, evict its defaulted shareholders before selling off the apartment to recoup its debt. Possession is the responsibility of the new owner (who, incidentally, must begin paying his own monthly maintenance payments to the co-op, regardless of whether he has possession of the unit he buys.)

Under NYS law, nobody - not a bank, not a condo, not a private lender, NOBODY - is in better shape to recover the money owed to them, and faster, than a co-op.

>Afraid I have to vehemently disagree, Matt.

Is that like strenuously objecting?
Oh. Well, if you vehemently disagree then NYCMatt should take some time to reconsider.

Took us about three months, after six months of a co-op tenant in arrears, to get the sherriff out and change the locks on the apartment. He paid up on the spot in cash! You have to be diligent and it's a pain but unless the tenant is really determined to never pay, and they themselves are of the lawerly bent, there are plenty of ways to get the building's money. A true bad apple though is incorrigible.

"Citi, Chase, BoA and every other lender will, in almost every instance, stand up, take notice, and pay up when advised that a borrower is late on his maintenance. They have every reason in the world to do so. They do not ignore such notices."

Not in the instance going on in MY building.

not in mine either--all sortsa BS re invented uninhabitability and other crap

and it was made clear to tenants not to FOCK with our deadbeat--board directed all to be cheerful civil and treat tenant as tho we had no knowledge

i wanted to share my thoughts with her, but she would have made that work for her in court

>i sold shortly after "settlement"--wonder what other garbage she produced for her fellow shareholders

That was in June or August 2007? Or your prior apartment?

>With regard to your second point, it is not necessary for the co-op to evict the shareholder before selling his stock and lease; that is the responsibility of the new owner of the shares.

The economic problem is that you are selling shares associated with an apartment with a tenant you will have trouble evicting. Therefore, those shares will be sold at a significant discount. How many co-ops want shares selling at a discount?

has anyone else noticed this from the OP? "however, there are many other units in arrears"

i wonder how common this is now?

Wow?!, WTF? Coop force field on! Come on. Power it up. Coop force field on! Godddddaaaammit! Turn that Fking thing on bf a coop prez gotta increase maintenance.