The White Gloves Come Off: Delinquent Condo Dwellers Feel the Pain

Such tactics may make genteel Gold Coasters draw a disapproving breath, but they are being adopted by a growing number of buildings in New York. And for buildings that embrace medieval life in more than their “baronial living rooms,” there is even public shaming.
“Some buildings will put notices of who’s delinquent in the halls, the elevator, at the front desk,” co-op and condo board attorney Jeffrey Reich told The Observer. “What you might call Scarlet Letter techniques.”

Depriving guests of luxuries is increasingly popular with boards, Mr. Reich said, especially at condos. Co-ops are in a “first lien” position, meaning that they collect before the mortgage-holder. Not only do they get paid first, but banks will often pay a delinquent resident’s maintenance charges. Condo boards, on the other hand, get paid last and must either collect the scraps following foreclosure proceedings or win a money judgment against a delinquent tenant.

Moreover co-ops, unlike condos, did not engage in the amenities arms race of the early ’aughts that brought swimming pools and golf simulators, acres of shared terraces and media rooms rivaling movie theaters—felicities that can easily push maintenance costs above $1,000 a month, even for modest units (and unlike co-op charges, theirs don’t include the property tax bill). Also, resentment builds much faster when you see your deadbeat neighbors sunning themselves by the pool.

“If one or more shareholders aren’t paying, the cash requirements still have to be met,” said Eva Talel, an attorney at the law firm Strook, Strook & Lavan, which advises hundreds of building boards and is the in-house counsel to REBNY. “It’s not just a matter of frustration—it can really become a matter of economic hardship, especially in smaller buildings.”
Restriction measures, Ms. Talel added, are not intended to be punitive—it’s just another means of getting the maintenance paid—but she admitted that they might feel that way.

“I haven’t heard of any fisticuffs on account of people having to go down to pick up their Chinese food,” Ms. Talel said. “But I expect that people are not happy when it happens. And that’s the idea.”

Fisticuffs no, but temper tantrums? Definitely.

“They create scenes,” sighed Midboro Management president Michael Wolfe. Midboro is careful to notify residents before they’re cut off, to eliminate surprises, Mr. Wolfe said, and publicizes the policy so that those with deactivated keycards will be less likely to rap at the doors with sob stories of mysterious demagnetizations. But still, there are scenes.
One of the on-site managers related to The Observer how one man last week became “very upset and screamed at the people in the pool to let him in: ‘I’m an owner here, how can you not let me in?’

“Usually, they’ll try to bluff their way out of it, but if it’s hot enough, they’ll come back with a check,” Mr. Wolfe quipped. “It is an effective tool. When the amenities are gone, certainly, life isn’t as pleasing as it might be. Also, it’s embarrassing.”

And what are the most “effective” amenities to cut-off?
“I think parking is the most painful, although I hate to use the word painful,” Mr. Wolfe struggled to find a softer word choice, finally settling on “the most motivating.”

Other management companies said that they have seen similarly promising results.

“People are angry, but sometimes things get resolved, or at least resolved quicker, when they don’t have access to the amenities,” explained David Wurtzel, the president of Cooper Square Realty.

And even the loss of small luxuries can be nettlesome. A resident of Chelsea condo Chadwin House who hadn’t paid his common charges for years and had a unit in foreclosure, pleaded with the judge to restore his doorman services if he started paying his monthly fees again, according to Robert Holland, a lawyer who represents the Chadwin House board.

“He was complaining that the doorman wouldn’t open the door for him or accept his food deliveries,” Mr. Holland said. The judge was sympathetic. The man started paying around $500 a month common charges, although, given that he still owes more than $40,000 to the board—a debt that remains unresolved—it’s hardly a fairy-tale ending.

Paul Brensilber, president of Jordan Cooper & Associates, the management company that oversees not only Wellington Tower, but a handful of other buildings that have taken a hard line on amenities, has mixed feelings about the practice.

“It’s never a good thing to have owners fighting against owners. It adds a lot of tension to the relationship between neighbors,” he said. “And while, from a sporting perspective, it’s interesting to watch, it puts the building staff in a bad position.

“If the goal is to get paid, I haven’t seen that yet,” Mr. Brensilber added. “But foreclosures take forever and a few shareholders can dramatically impact a condo’s budget. Other owners have to increase their common charges to make up for lost revenue. It’s ugly.”

The White Gloves Come Off: Delinquent Condo Dwellers Feel the Pain