Keywords: Real Estate; Coops, Cooperative Apartment, Condo, Condominium Apartment, Lien for common charges, Lien for Maintenance.

The lien of a condominium is junior to the lien of the apartment mortgagee. The lien of a coop apartment corporation is superior to the lien of the apartment mortgagee.

Shareholder and unit owner defaults pose a serious cash flow problem to both the Apartment Corporation and the Condo Association.

A quick primer on Coop and Condo lien collection is appropriate.

A Coop apartment is deemed personal property under New York Law but a condo is deemed real property. This is a distinction with a great difference when it comes to collecting unpaid maintenance or common charges.

On the Condo side, the Condo Association can either sue for unpaid common charges, obtain a judgment and seek to collect the from any assets of the unit owner or judgment debtor, whenever found. Or, alternatively, the condo can foreclose its lien for common charges. The former procedure can take a few months while the latter can take a year or more downstate. Frequently when the unit owner is not paying common charges he/she is not paying the mortgage, too. If the mortgage is foreclosed and its lien is superior to the Condo Association's lien, then the condo can expect to loose the back charges. Move quickly.

On the other hand, a Coop can bring a summary proceeding in Landlord and tenant Court or Small Claims Court and receive a money judgment for the part due amount. If it is not paid within 10 days, the Apartment Corporation can sell the unit to pay the judgment. And even if the mortgage is not being paid, the Mortgagee's lien is subordinate to that of the Apartment Corp.

What remedies does the condo association have? We suggest that it request (make a motion) the court to appoint a receiver or move to compel the existing receiver to either place a tenant in the apartment or collect use and occupancy charges from the unit owner in possession.

In either case, cash flow is affected by the Shareholder's or the unit owner's default. However, in the case of the condo there is a strong risk of losing both the current income and any lump sum payment on foreclosure since the unit mortgage is prior (superior) to the lien of the condominium association for common charges.

It is imperative in either case that prompt and swift action be taken before a small delinquency becomes an expensive and/or uncollectible debt.