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Q. I just received an assessment of $8,800 from my condo board for an elevator replacement project. What happens if I can't afford to pay? What are my options?
A. The short answer: Try your best to work out a payment plan with your board, say our experts.
"While most condomimium bylaws require the board to pursue collection against unit owners in arrears, board members will generally try to work with unit owners who have financial exigencies, particularly if there is not a pattern of arrears," says co-op and condo attorney Scott Greenspun of Braverman Greenspun, who recommends reaching out proactively before the first payment is due.
That said, your board "is under no obligation to make any separate accommodations, and making payment arrangements can be more challenging in condominiums with a small number of unit owners or ones that have financial instability," says Greenspun.
Other options include refinancing your mortgage and taking cash out, getting a second mortgage (home equity line of credit), tapping into your IRA or other savings, or getting loans from friends or family, says Roberta Axelrod, real estate broker and asset manager at Time Equities, who sits on many boards as a sponsor's representative.
In the worst case, says Axelrod, "you may be forced to sell your unit to pay the assessment from closing proceeds."
Note that if the assessment were for property damage to the building--such as a fire or water damage from a broken pipe--your own apartment insurance would cover it to the extent your building's master coverage is exhausted, says apartment insurance broker Jeff Schneider of Gotham Brokerage. Maintenance or upgrades, such as an elevator replacement, typically are not covered, however.
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