Condominium Could Not Recover Common Charge Arrears From Occupant Who Had No Relationship With the Occupant
The owner of a residential condominium unit allowed a relative to occupy the unit. For several years, the common charges on the unit went unpaid. The Condominium filed an action against the occupant seeking to recover the past-due common charges, amounting to more than $153,000. The occupant did not respond to the summons and complaint and was declared in default. Nonetheless, the court denied the condominium’s motion for a default judgment and dismissed the action, holding that the occupant had no liability to the condominium for the unpaid common charges.
The Condominium asserted two claims against the occupant, one for “unjust enrichment” and one for “account stated.” The theory of the unjust enrichment claim was that the occupant had enjoyed the benefits of residing in the Condominium without paying the common charges necessary to maintain the building. The court held, however, that “the Board has not alleged or otherwise provided facts demonstrating that [the occupant] had an obligation to pay those common charges in the first place.” The Board sought to rely upon the By-Laws, which provide that they are binding on occupants of units, as well as unit owners and lessees. However, the By-Laws imposed the obligation to pay the common charges only upon unit owners and did not provide that occupants were liable for common charges.
The account stated claim also failed. A plaintiff can sue on an “account stated” where it rendered invoices to the defendant, which were retained without objection. There was no evidence here that the invoices were sent to the occupant. The court observed that it had previously granted a judgment against another occupant of the unit, who had acknowledged an obligation to pay common charges, made partial payments of the common charges, and requested that invoices be addressed to him. The occupant who was the subject of this motion had done none of these things.
The court further held that even if the Board had pleaded a valid cause of action against the occupant, its proof of the amount owed was insufficient. The Board had submitted a copy of the “arrears ledger” reflecting unpaid common charges, but it did not submit an affidavit from the managing agent to authenticate the ledger and attest to its accuracy. The ledger page was not “sufficiently clear and self-explanatory to support awarding a six-figure default judgment.” Accordingly, the Board’s complaint against the occupant was dismissed. Board of Managers of Two Columbus Ave. v. Leschins, 2021 N.Y. Misc. LEXIS 3989, 2021 N.Y. Slip Op. 50658(U) (Sup. Ct. N.Y. Co. July 14, 2021).
Although the Board was denied the default judgment it had sought, it may be able to recover the past-due common charges by other means, such as by foreclosing on its common charges lien. In addition, where a tenant is paying rent to occupy a unit but the unit owner is not paying common charges, a board may be able to invoke Real Property Law § 339-kk and demand that the tenant make all rental payments directly to the condominium. When a condominium or cooperative unit falls into arrears, the board or the managing agent should discuss collection options with counsel, preferably before a large balance of arrears mounts up.