By Janet M. Meaney, CPM
Vice President - Barkan Management Company
I am a board member in a medium sized co-op. We have members with arrearages on a fairly regular basis. When should my manager be negotiating a payment plan, and when should she be initiating an eviction?
Also, how much should we be charged for legal costs for an eviction?
The cooperative must remember that a shareholder has a legal obligation to the corporation and that landlord-tenant law applies in non-payment issues. Except for certain instances where a court of law would decide differently, the shareholder is largely in the position of a tenant, rather than owner as in a condominium situation. The Board of Directors has a legal duty to the shareholders as a whole and should not be swayed by feelings of sympathy for an occupant's problems regarding non-payment of monthly carrying charges. Housing charges are established based on a set of operating expenses which is designed to ensure financial stability to the corporation.
Most cooperatives' monthly charges are due on the first of the month and are considered to be late if not paid by the first, although some co-ops may vary. Every cooperative should have in place detailed collection procedures in writing and designed to ensure prompt and efficient collection. Eviction procedures should also be well documented. Delinquency reports should be generated within the first week of the month and should be immediately reviewed by the Board or management. Late notices should be generated and if applicable, later charges should be assessed.
Negotiating payment plans is generally practiced, but can be very tricky if not handled properly. In addition, there is an associated risk to the cooperative in doing so. Generally, if a shareholder is in otherwise good standing but may be experiencing a temporary financial problem, a payment plan me be an alternative to the eviction process. The Board or manager must consider the nature of the reason behind the arrearage and whether or not the shareholder can afford the housing charges, otherwise the payment plan may be worthless and result in further lost time and money. The terms of the payment plan should be in writing with a reasonable payback term so as not to cause undue financial hardship to the cooperative. It is also advised that the payment plan should incorporate the current monthly charges to be paid in addition the arrearage, otherwise the likelihood of receiving the entire arrearage is reduced. The terms should also state specific due dates that if not met, would result in immediate eviction proceedings.
Given that the legal process for eviction falls under the Summary Process procedures, it is critical that the steps be taken promptly. Failure to do so could result in the loss of an entire month's income. Basically, 14-day notice actions (for non-payment) should begin no later than the tenth of the month and should be tracked carefully to ensure a timely court date. It is recommended that an attorney review the cooperatives' evictions procedures prior to implementation so as to avoid problems well into the process.
According to lawyers we consulted, the legal costs associated with an eviction for non-payment can range from as low as $250 to $1,500 or more, depending on the complexity of the case and the hourly rate of the attorney. What makes up the cost? Court filing fees alone are $60 per case in housing court and approximately $110 in District Court. In addition, as in tenant/landlord matters for non-payment, counterclaims such as breach of habitability are common and drive the costs higher as well as the potential for appeals and the involvement of legal services.
Janet M. Meaney, CPM is Vice President of Barkan Management Company in Boston. Barkan specializes in the management of resident-controlled housing, and its portfolio includes approximately 4,000 units in New England with corporate offices in Boston and Glastonbury, Connecticut.
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