Counsel to real estate lenders are frequently tasked with assessing the relative risks of and available mitigants to competing claims on the lender’s collateral. The risk of a municipal tax lien priming the lender’s mortgage or a ground lessor’s remedies threatening the ability of a lender to enforce its mortgage are routinely addressed through tax impounds or mortgagee protective provisions in the ground lease, respectively. If the loan is secured by a condominium unit, the lender must contend with and address appropriately the rights granted to the board of managers under the condominium statute and the specific condominium documents. This article addresses some unique aspects of condominium structures which require closer examination on a case-by-case basis.
Unpaid Common Charges
Among the unique qualities of a condominium structure is the right of the condominium’s board of managers to impose common charges and assessments on the unit owners of such condominium as necessary to finance the costs of upkeep and capital improvements to the condominium building. In the event of a unit owner’s non-payment, the New York Condominium Act provides that each condominium’s board of managers has a statutory lien on each unit within such condominium for the unpaid common charges plus interest thereon.
