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.
