Massive business closings, layoffs and furloughs have rendered many co-op shareholders and condo unit owners unable to pay their mortgage as well as their maintenance or common charges.
This diminished income stream places great stress on co-ops and condos, which have financial obligations of their own, including (but not limited to) insurance premiums, payroll, utilities, and in the case of co-ops, mortgage payments and real estate taxes, just to name a few.
Normally, co-ops would resort to serving rent demands and prosecuting nonpayment proceedings in housing court, and condos would commence foreclosure actions to collect arrears from defaulting unit owners. However, given the humanitarian demands of the moment — not to mention the effective closure of the court system and the moratorium on foreclosure auctions and evictions for the foreseeable future — co-ops and condos must resort to alternative methods for collecting arrears and maintaining their financial stability during this crisis.
But, given the reality at hand, it is important to remember that condo and co-op boards have fiduciary obligations to their associations and corporations and therefore cannot waive or discharge the financial obligations of their members, since doing so would result in shortfalls that would have to be made up by the non-defaulting unit owners. However, a balanced, multi-faceted and holistic approach can and should be taken to address this issue, both globally and on a case-by-case basis.....
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
