Page 12 - New England Condominium September 2021

12 NEW ENGLAND CONDOMINIUM -SEPTEMBER 2021 NEWENGLANDCONDO.COM YOUR BOARD’S ATTENDANCE IS NOT REQUIRED. BUT IT SHOULD BE. BOSTON CONVENTION CENTER, BOSTON — TUESDAY, NOVEMBER 2, 10-3:30 FREE REGISTRATION: NE-EXPO.COM THE NEW ENGLAND CONDOMINIUM EXPO 2021 WHERE BUILDINGS MEET SERVICES ous reasons, but usually it’s when the cur- rent owner or steward of the property is putting the value of property at risk.” The receiver could be requested by a creditor, a group of tenant shareholders, or even an individual owner. They will petition the court to appoint a temporary receiver to put everything at the property on an even keel. According to Jennifer Barnett, a partner with Marcus, Errico, Emmer & Brooks, a law firm located in Braintree, Massachusetts, “The appointment of a re- ceiver is to preserve assets for all parties who have an interest in it.” She adds that it’s only used where it appears that in its absence, the property would be subject to damaging waste or loss. When Is a Receivership Used? Receivership is designed to rescue real property from irresponsible manage- ment—whether intentional or uninten- tional. “Somebody has to take control when you’re in a difficult situation,” says Scott Piekarsky, an attorney with Phillips Nizer, located in Hackensack, New Jer- sey. “When a property has no money—if funds were stolen, for instance—vendors can’t be paid, maybe there’s no manager, and no insurance coverage due to a lapsed policy because the premium wasn’t paid. A mechanism is necessary to stabilize the property for the health and safety of residents, and to rescue a situation. That’s when a receivership is necessary.” “Sometimes a receivership can be used when dealing with a corrupt co-op board,” adds McCracken. “We have had occasions where the best solution is a receiver. For instance, a co-op board controlled by an entity who’s not looking out for co-op”— perhaps a sponsor or investor—“and there is no other alternative other than to seek a receiver. It’s a drastic remedy.” “It’s appropriate when a property can’t be run effectively and something is need- ed to operate the building,” says Barnett. On a more micro level, she says, “I’ve seen it brought against unit owners with seri- ous problems like hoarding, bedbugs, etc.” it’s not always a simple solution. Barnett also recalls a situation in which a municipality brought action against an association over lack of elevator repairs. the board isn’t protecting the value of the doesn’t get kicked out on the street. You “The association said they didn’t have property, the appointment of a receiver consent to guardianship in order to pro- money to do repairs,” she says. “We got may be an improvement over the current tect their interest. It is focused on a per- them to the table with a receivership to board. If a receiver does step in, they do son instead of real property.” get the repairs done. It’s also used in in- stances where a property can’t operate temporarily. Once appointed, the receiver ney, conservatorship is more of an emer- because of dysfunction, or lack of formal would make the decisions on whether to gency situation, says Barnett. If someone organization.” Barnett also cites a small keep the managing agent, the corpora- association in Dorchester, Massachusetts. tion’s legal counsel, and so forth. “No bills were getting paid. The client had been paying invoices as they came in, so board doesn’t control the real property risk) and the family won’t intervene, a the court instituted a receivership.” Piekarsky recounts a case some years ership is based, says McCracken. “To ago where an asso- ciation filed for bank- ruptcy protection. He represented the man- agement company. “Sometimes there are such problems that the court says we need to get things on track to straighten things out, so let’s bring in a receiver. In New Jer- sey this is known as a ‘special fiscal agent.’ We got the property on track in a year’s time, and then had new elections for a new board.” One important factor to keep in mind is that receivership is designed to be impar- tial—though its repu- tation may suggest otherwise. Receivers ally easier to substitute a receiver for a ciation or individual, depending on the themselves are appointed by the court, managing agent to run the whole prop- and answer only to the court. They aren’t erty. beholden to any other interested party which might seek to influence the process or outcome. That being said, however, receivers, like those who send properties into financial turmoil, are subject to hu- man frailties. Many attorneys are reluc- tant to push for receivership out of fears that the receiver will be no more honest than the entity that caused the problem. Receivership fees can be high as well—so Co-ops vs. Condos If you are a shareholder in a co-op and bers involved, so \[the struggling resident\] so as a replacement for the board, at least In a condominium it’s harder. A condo for themselves (or puts other residents at where most of the control of a receiv- the best of my there is a difference between a conserva- knowledge, for a torship and a guardianship. “If one can no condo a receiver longer handle one’s affairs, it’s a guardian- only makes sense ship—not a conservatorship. A conserva- where there is a tor is by consent; you haven’t lost your substantial block mind yet. Once you’ve lost your mind, it’s of unsold units— as in newly built called a civil commitment, where some- or newly formed one can be put in a facility to care for condominiums.” The other question is: who for—and different thresholds for invok- are you appoint- ing a receiver without saying that no matter the scale of for? McCracken the situation, it’s vital to consult compe- explains that a tent legal professionals licensed to prac- receiver might be tice in your area to help guide you through appointed for an the options available in your specific case, individual unit for instance, to make sure com- mon charges are is a court-appointed, highly qualified, paid. But in a co- op, it’s conceptu- Conservatorships Conservatorship (or guardianship, as get a property or estate running smoothly it’s also known in some states) is the ap- pointment of someone to protect the in- terests and estate of an individual. “It’s usually for mental health situations,” says McCracken. In a co-op or condo context, it’s usually considered when an elderly or infirm person cannot take care of them- selves. “We might seek a guardian to help them manage their affairs,” McCracken continues. “It’s a way to get family mem- Unlike something like power of attor- becomes disabled, she explains, or an el- derly person in a condo can’t properly care conservator may become necessary. In New Jersey, Piekarsky points out, a guardianship. There’s also something them.” Different states have different terms ing—these powerful legal tools, so it goes and determine the best way forward. In the long run, the benefit of receiv- erships and conservatorship is that there licensed and insured person looking out for the best interest of a struggling asso- legal mechanism employed. They are fi- duciaries, acting impartially on a court’s direction to fix a difficult situation and again. n A J Sidransky is a staff writer/reporter for New England Condominium, and the author of several published novels. RECEIVERSHIP... continued from page 1 “The appointment of a receiver is to preserve assets for all parties who have an interest in it. It’s appropriate when a property can’t be run effectively and something is needed to operate the building.” —Jennifer Barnett