Page 6 - New England Condominium June 2022

6 NEW ENGLAND CONDOMINIUM -JUNE 2022 NEWENGLANDCONDO.COM possession, etc.” This contrasts sharply condo unit will be stayed for a minimum ration can terminate the lease after send- with condo unit owners, who are the of 60 days—and up to 180 days at the ing a notice to cure. If that doesn’t resolve lords of their realm, much as single-fam- ily homeowners. “Conceptually,” says Mc- Cracken, “it’s impossible and unfeasible to tion order with the sheriff to execute the avoided. “You don’t want to be there,” he evict a condo owner” in the same way a eviction until after the stay expires. That says. Landlord-tenant courts tend to favor co-op board can remove a non-paying or gives unit owners at least 60 days to pay tenants, and judges will often rule against otherwise chronically problematic share- holder. Rules and norms can vary somewhat the association can proceed with evicting from region to region. “In Illinois,” says him or her. The actual eviction is executed Kris Kasten, a partner at Bartzen Rosen- lund Kasten, a law firm based in Chicago, condo is located. Upon taking possession is fairly similar from state to state, there “condo associations have a statutory right of the unit, the association may then lease are notable exceptions. In Massachusetts, to evict a unit owner for nonpayment of it,” and use those rental proceeds to pay for example, the situation is a bit differ- common expenses. The prospect of being the owner’s arrears. evicted from one’s condo unit has proven effective in getting non-paying owners to used to collect unpaid assessments and to firm based in Braintree. “If an owner does pay—which makes an eviction action the primary method for assessment collec- tion. After taking possession of the con- do unit through an eviction action, the association may then lease the unit, and the rent collected goes toward paying the judgment amount. Once the unit owner’s account is brought current, the unit owner may file a motion to vacate the eviction order and regain possession of his or her unit.” It should be clearly noted that the owner still owns the unit in this scenario. How it Works The process for getting a resident out for whatever reason can vary from state to state. For example, the path to ejec- tion from a co-op in New Jersey is set through individual communities’ bylaws and proprietary lease terms, says Piek- arsky. “There are default provisions for non-payment. Shareholders can also be removed or ejected if they have broken rules and regulations and the offenses are egregious enough. The corporation can cancel a shareholders’ lease and stock to remove him or her.” As is the case in most disputes in New Jersey, ADR—alternative dispute resolution—is required before litigation can commence. Piekarsky notes that in condos, financial reasons—chronic arrears, default, etc.—are really the only grounds available for removing a unit owner in New Jersey, though he notes that associations can get injunctive relief and restraining orders if an owner’s offenses are behavioral rather than financial. In Illinois, when an eviction is used to collect unpaid assessments in a condo as- sociation, the first step in evicting a unit owner is to serve that owner with a statu- torily required demand letter. Kasten ex- plains that “if the defaulting owner fails or refuses to pay the amount demanded within the time prescribed in the letter— typically at least 30 days—then the condo association may file an eviction action. Upon filing the eviction action, the case proceeds in the manner that litigation gen- erally does; the defendants must be served with a summons and complaint, and the etary behaviors, such as breaking house plaintiff must prove its case, whether at rules or having a guest who isn’t allowed trial or an ex parte prove-up proceeding. under the lease.” However, an eviction order involving a judge’s discretion. That means that the the issue, then they go to court—which condo association cannot place an evic- the judgment and avoid the eviction. If the a landlord—including a co-op board—on owner fails to pay within the stay period, the narrowest procedural grounds. by the sheriff of the county in which the faulting or chronically disruptive resident In a cooperative setting, evictions are Marcus, Errico, Emmer, & Brooks, a law deal with other violations of the govern- ing documents. Unlike the process in a for evicting a Massachusetts condomini- condo, the co-op procedure is more like a um owner: The first step is to send the unit typical landlord-tenant eviction. The first owner a Statutory Notice of Delinquency. step is to serve the member with a notice This is typically done when the unit ac- informing the shareholder that their pro- prietary lease or occupancy agreement in no event earlier than 60 days. will terminate as of a set date, and de- manding they vacate the apartment on or owner does not respond with a payment before that date. The notice includes the plan, the board will order a title search basis for termination of the lease, such as and review to confirm not only the holder non-payment of assessments or carrying of the first mortgage on the unit, but any charges. If the default is not cured in the other parties in interest—a bank that has time prescribed (e.g., the assessments are granted the unit owner an equity line of not paid), then the cooperative may file an credit, for example—who might need to eviction action. Upon filing that action, be notified of the arrearage. the case will proceed like most litigation does, as mentioned above. However, co- operatives are not subject to the statutory for six months over the first mortgage, the 60-day minimum stay that condos are. In- stead, stays on co-op eviction orders are expenses has a complete priority over any usually closer to seven to 14 days—though second mortgages. In other words, should depending on the circumstances, a judge the unit be sold to satisfy a judgment, might impose a longer stay. Once the stay the junior mortgage(s) would completely expires, the cooperative can place the evic- tion order with the sheriff to execute it. McCracken says there are a number so they can decide what steps, if any, to of scenarios that could set an eviction in take in order to protect their mortgage. motion in a co-op setting. “Nonpayment of maintenance is the most common. Ac- cording to a co-op recognition agreement, unit owner or their lender, the associa- in all co-op mortgages, the co-op board tion can file a complaint in district court can notify the lender in a case of monetary or superior court. This must be done at default and the lender will pay defaulted the point when the unit owner’s account co-op fees to protect their position. Evic- tion can also be used for multiple defaults preserves the six-month limited priority under the proprietary lease for non-mon- Under the proprietary lease, the corpo- McCracken advises against, if it can be The View from Massachusetts While the process for removing a de- ent, explains Ellen Shapiro, a partner with not pay his or her monthly assessment fees, after the account has been in ar- rears or had an outstanding balance for 60 days, the board can start a statutory lien enforcement process which can lead to the sale of the unit if the owner does not pay. Although that is not an eviction, if the owner vacates, it does have the same effect. However, if the owner does not vacate, then the suc- cessful bidder—the new owner—has to evict the past owner.” Shapiro goes on to outline the process count is either 60 or 90 days in arrears, but If payment is not received and the unit It’s important to notify these institu- tions because, unlike the limited priority condominium’s lien for unpaid common ‘wipe out.’ Notice of the unit owner’s de- linquency is given to second mortgagees If all of the above does not compel the payment of the arrearage, either by the is six months in arrears, since the filing period the association’s lien has over the first mortgage. While the specific terms of art may differ, the option to use an eviction—or an eviction-type proceeding—to remove a tenant is available in both co-op and condo settings to different extents and for different reasons. No matter what the process is called, however, like all legal proceedings, it’s lengthy, acrimonious, and almost always very expensive. There- fore, booting an owner or shareholder out of an HOA or building should be consid- ered as a last resort. Boards of co-op and condominium properties, their manage- ment, and legal advisors should make all due efforts to settle the matter with an owner or shareholder privately and one- on-one before proceeding with the ‘nu- clear option’ of eviction. n A J Sidransky is a staff writer/reporter forNew England Condominium, and a pub- lished novelist. He can be reached at alan@ yrinc.com. REMOVALS... continued from page 1 a cause that immediately precedes the damage or injury, and “without which or in case of the presence of supervening events, no damage or injury would have resulted.” An example of direct loss would be if a tornado struck your town and took the roof off your building; your direct loss would include the damage to the struc- ture, as well as to any equipment, furni- ture, inventory, etc. Indirect loss is “an expense caused by damage or injury to insured individuals or property that is beyond the scope of the covered damage. This expense is at- tributable to the covered loss, but is not part of the covered loss itself.” If that same tornado destroys the roof of your store, not only are there rebuilding costs, but the business cannot operate until the damage is fixed. Income lost during the rebuilding—and after it, if customers stick with the alternatives they found in the meantime—represents indirect loss. Partial loss refers to damage to an in- sured property that is not total—meaning that it does not prevent the property from performing its function, nor does it ex- ceed the coverage limit of the insurance policy. A fire that destroys one room, but not the entire house, would be an exam- ple of partial loss. Catastrophic loss refers to a loss that is random and extremely serious—one that has a devastating effect and cannot be foreseen, and therefore very difficult to make whole without insurance. Catastro- phe insurance exists to prevent individu- als and businesses in the event of a ma- jor severe event that results in losses that are much larger than usual. Examples of catastrophic loss would be the damage and destruction caused by hurricanes or LOSS, INSURANCE... continued from page 1 “Conceptually, it’s impossible and unfeasible to evict a condo owner.” — William McCracken continued on page 8