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Condominium Obtains Appointments of Receiver to Obtain Payment of Unpaid Common Charges

An appellate court has reaffirmed a Condominium Board of Managers’ right to seek appointment of a receiver when unit owners fail to pay common charges. Board of Managers of the 1835 E. 14th St. Condominium v Singer, 2020 N.Y. App. Div. LEXIS 5130 (2d Dep’t Sept. 23, 2020). In this case, the Board of Managers increased the unit owners’ common charges. The owners of two units refused to pay the increased common charges and sued the Board and its members on a variety of claims. The Board counterclaimed seeking a money judgment for the unpaid common charges. Subsequently, the Board commenced a separate action seeking to foreclose on common charges liens against the units, and moved for an order appointing a temporary receiver to collect a “reasonable rent” on the units while the foreclosure action was pending. The court granted the Board’s motion and appointed a temporary receiver.

The appellate court upheld the receivership. The Condominium Act provides that in an action to foreclose a common charges lien, “the unit owner shall be required to pay a reasonable rental for the unit for any period prior to sale pursuant to judgment of foreclosure and sale, if so provided in the by-laws, and the plaintiff in such foreclosure shall be entitled to the appointment of a receiver to collect the same.” Here, the By-Laws contained such a provision, and each unit had significant arrears. Accordingly, the Board was entitled to have a receiver appointed. The fact that a prior litigation between the parties was pending, in which the Board also sought a money judgment, did not change the result. However, the court stayed further proceedings in the foreclosure action, except regarding the receivership, until the prior pending action was resolved.