Condominium Common Charges and a Troubled Mortgage Market

For condominium board members or concerned unit owners, a concise, clear summary of how to collect unpaid condominium common charges appears in the New Jersey Law Blog of Stark & Stark. To read the entire article by Robyn Nolan Howlett, click here.

Current headlines about the troubled mortgage market lead us to suggest just a bit of additional perspective. Overextended financing undoubtedly affects some condominiums as it does individual homes. That means, in some cases, the obvious option, foreclosure, is not such a good option. 

As pointed out in the article, the first mortgage has priority. If the owner’s equity has declined to zero, foreclosure proceedings will not recover the unpaid common charges. In fact, the equity need not decline quite to zero because the process of foreclosure may itself erode what little equity is left.

If the unit owner has personal property, which in legal jargon includes money in the bank, one of the other options mentioned in the article, a contract action, may be more effective. A better option still, also mentioned, may be to negotiate some sort of payment schedule so the unit owner can retain ownership and “catch-up.” It may not be an easy negotiation if the owner is also negotiating with a bank, but all parties may benefit by avoiding the costs and declines in value that accompany a foreclosure proceeding Still, whichever option is chosen, we concur with Ms. Howlett’s conclusion that prompt action by the Board is critical.

Losing Your Property Rights Through Inattention

I was recently reminded that property owners are still losing property rights through inattention – or embroiling themselves in costly lawsuits to retain their property rights. The legal mechanisms of “adverse possession” and “prescriptive easement” can have such consequences. And, the “best practice” for avoiding the consequences is amazingly simple: just pay attention to your property. 

The memory trigger for this commentary was an e-mail newsletter of “current developments” offered as a helpful service by a New York title company, First American Title Insurance Company of New York. A recent issue described still another adverse possession case on Long Island. An adverse possession case triggers strong memories in our firm because one particularly intense case lasted through 13 days of trial. 

Adverse possession, in plain language and greatly simplified, is the legal means by which a person can obtain title to real property without paying for it. The adverse possessor simply acts as if he or she owns it for a long enough period of time – for example, in New York 10 years, in Connecticut 15. A prescriptive easement is similar but involves not ownership but use – you can gain the right to continue a use in perpetuity on property you do not own. Although these concepts may sound odd and unfair to a person unfamiliar with real property law, they have sound bases in logic and, once examined, actually involve fair and reasonable principles of law. Ownership and the right to use property should not remain ambiguous or subject to challenge indefinitely so under appropriate circumstances the law provides a way to “settle” either title (adverse possession) or the right to use (prescriptive easement).

Of course, actually invoking these concepts is not so simple and there are rigid legal requirements subject to highly technical definitions and rules. For example, under New York law: To obtain legal title, the would-be adverse possessor bears the legal “burden” to offer proof that is “clear and convincing.”  This is a level proof somewhat less than “beyond a reasonable doubt” that we know about from criminal cases but certainly greater than the “preponderance of the evidence” required in most non-criminal legal disputes. If claiming the land without a deed or other documentary proof, the offered proof must demonstrate that possession was “hostile and under a claim of right,” “actual,” “open and notorious,” “exclusive,” and “continuous” for the statutory period (i.e., 10 years in New York). In addition, the would-be adverse possessor must demonstrate, with the same level of “clear and convincing” proof, that the property was “usually cultivated or improved,” and “protected by a substantial enclosure.”

To obtain a prescriptive easement, it is not necessary to show possession, only use. And, there are no requirements involving “usual cultivation and improvement” and “substantial enclosure.” Nor, does the use have to be exclusive. For example, you may be entitled to nonexclusive use of your neighbor’s path. However, a prescriptive easement cannot be obtained if the use is carried on by permission. If the other standards are met by the would-be prescriptive user, the owner bears the burden of establishing that the use was carried on by permission.

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