Court Allows Condominium To Enforce Lien For Unpaid Common Charges And Late Fees, But Reduces Excessive Late Fees
A unit owner in a residential condominium failed to pay common charges and other moneys owed to the Condominium. The Condominium filed, and sought to foreclose upon, a lien for the unpaid common charges, assessments, electric charges, late fees, and attorneys’ fees. The Condominium moved for summary judgment. Board of Mgrs. of the Park Ave. Ct. Condominium v. Sandler, 2015 N.Y. Misc. LEXIS 3284, 2015 N.Y. Slip Op. 51316(U) (Sup. Ct. N.Y. Co. Sept. 11, 2015).
The court agreed with the Condominium that the unit owner was liable for the unpaid common charges and other items owed, although further proceedings were necessary to determine the amount owed. The court rejected a series of defenses asserted by the unit owner, which it described as “mostly conclusory and boilerplate, and to that extent inadequately pled,” and concluded that the complaint properly set forth a claim to foreclose on a condominium lien.
Among other defenses, the unit owner asserted that the Board of Managers must choose between seeking a money judgment for the amounts owed to the Condominium and foreclosing on the unit. The court held that no such election of remedies was required and the Condominium could pursue both remedies. Next, the unit owner alleged that she had already offered to pay all outstanding common charges, assessments, and electric charges. The court held that this offer did not forestall the Condominium’s claim for late fees, interest, and attorneys’ fees as authorized under the By-Laws where a unit owner fails to pay common charges or other charges on time.
The unit owner alleged that the late charges were “unauthorized, unreasonable, and unjustified.” The By-Laws of the Condominium authorized the Board of Managers to impose late fees on unpaid common charges. The By-Laws provided for late fees in the amount of 4% of any common charges that were more than 10 days late, and further authorized the Board of Managers to set “alternative late fees” by resolution, which authority the Board exercised by authorizing “a late fee of up to $800 per month.” In various months, late fees of $200, $300, $400, or even $800 per month were imposed on the unit owner for late payment of common charges of between $1175 and $1266 per month. The court held that a defense of “usury” would not be available, because the fees “are not connected to a loan, but . . . based upon a default under the by-laws.” However, the court stated that “the 25 per cent rate set forth as criminal usury” in the New York Penal Law “provides a guide as to what constitutes excessive fees.” The court concluded that “[g]iven that some of the late fees significantly exceeded the usury rate, they are unreasonable and confiscatory in nature and cannot be enforced.” However, the court allowed the original late fee of $0.04 per dollar owed, which the unit owner conceded was proper under the By-Laws.
The court appointed a referee to calculate the full amount owed by the unit owner, including interest, the proper amount of late fees, and reasonable attorneys’ fees.