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Appellate Division Enforces Condominium By-Law Authorizing Appointment of Receiver After Owner Failed to Pay Common Charges

Last month, we reported on a lower-court decision in which the court enforced a condominium’s bylaw providing that if the condominium sued to foreclose on a common charges lien, it would be entitled to the appointment of a receiver to collect the common charges on the unit while the litigation is pending.

More recently, the Appellate Division has issued a decision to the same effect.  In Board of Managers of Honto 88 Condominiums v. Red Apple Child Development Center, 2022 N.Y. App. Div. LEXIS 1245, 2022 N.Y. Slip Op. 01233 (1st Dep’t Feb. 24, 2022), an owner of commercial condominium units failed to pay its common charges and the condominium sued to foreclose on the resulting common charges liens.  The condominium moved for a temporary receiver and a lower court granted the motion.

The appellate court agreed that “[t]he motion court providently exercised its discretion in appointing a temporary receiver in this action to foreclose on common charges liens on commercial units, as authorized by the condominium bylaws….  The court properly determined that [the unit owner’s] significant stake in the condominium, history of arrears and litigation against [the condominium], and failure to make certain undisputed payments while receiving rental income warranted the appointment [of the receiver] to prevent financial hardship to the residential unit owners.”