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24 COOPERATORNEWS CHICAGOLAND  —EXPO 2021  CHICAGO.COOPERATORNEWS.COM  Innovating for You,  Your Business &  Your Customers  (888) 734-4567  |     1   All offers of credit are subject to credit approval.   To learn more, talk with a banking professional today:  Craig Huntington  President  (888) 734-4567  chuntington@  Joanne Haluska  , CMCA, AMS  Senior Vice President  East Coast  (216) 314-9100  jhaluska@  ■  Innovative Software Integrations with ConnectLive™   ■  Lending Services    1  ■  No-Fee Lockbox  ■  Full Banking Services   ■  Online Banking  ■  Dedicated Customer Service   ■  Scan to Lockbox   Diane White  , CMCA  Vice President  Association Financial Partner  (312) 823-2181  dwhite1@  8/19  (6) a court exercising its own equitable   powers.”  Sima Kirsch, an attorney who repre-  sents numerous condominium associa-  tions in Illinois drills down a bit further.    “A Receivership is an extraordinary legal   remedy that results when a chancery court   divests the owner, through the board, of   control of their property and puts it un-  der the control of a court-appointed in-  dependent agent—the receiver, acting as   a neutral, which may be an individual or a   management company. The receiver may   be authorized to manage assets or to act   as a liquidator of the association.”  “A Receivership is ordered, among   other  reasons,  to  preserve  property  and   maximize value during a lawsuit if it is   found  that  the  property will  be  further   dissipated,” ex-  plains  Kirsch.  “A  receiver may   be  appointed for   purposes  of liq-  uidation  or to   restructure; each   has different out-  comes for  those   involved.  Each  individual state’s   statute  desig-  nates  who may   bring the action.   The rules for re-  ceivership of dif-  ferent  entities,  excluding condo-  miniums, HOAs,   or  co-ops, are   different. When   an  association  is assigned a re-  ceiver, the associ-  ation is generally   dysf unc t iona l   and/or the property is distressed and no   longer solvent or close to insolvency. This   could be due to different factors includ-  ing failure to maintain a properly consti-  tuted board or there is no board, unex-  pected or higher than expected building   repairs due to failure to properly budget   and maintain appropriate reserves, mem-  bers not paying their HOA dues coupled   with poor collection habits, or the asso-  ciation paying for expensive legal fees in   a lawsuit due to a breach of fiduciary duty   or arising from an association that lacks   proper governance and policies and rules   to protect the association or a combina-  tion of the above.”  Other Uses  Receivership can have multiple uses.    “Sometimes it can be used when dealing   with a corrupt co-op board,” says William   McCracken, a partner with Ganfer Shore   Leeds & Zauderer, a New York based law   firm. "We have had occasions where the   best solution is a receiver—for instance,   a co-op board controlled by an entity not   looking out for co-op,” perhaps a sponsor   or investor, “and there is no other alterna-  tive other than to seek a receiver.  It’s a   drastic remedy.”  On a more micro level, “I’ve seen it   brought against unit owners with serious   problems like hoarding, bed bugs, etc.,”   says Jen Barnett, an attorney with Mar-  cus, Errico, Emmer & Brooks, located in   Braintree, Massachusetts.  “I recall that a   municipality brought an action against an   association over lack of elevator repairs.    The association said they didn’t have   money to do repairs.  We got them to a ta-  ble with the receivership to get the repairs   done.  It’s also used in instances where a   property can’t operate because of lack of   formal organization or disfunction.  It’s   appropriate when a property can’t be run   effectively  and  is   needed to operate a   building.”   Barnett   cites a small associa-  tion  in  Dorchester.    “No bills were get-  ting paid.  The client   had been paying in-  voices as they came   in, so court institut-  ed a receivership."    Scott Piekarsky,   a partner at Phillips   Nizer in Hacken-  sack, New Jersey re-  counts a case some   years ago where an   association filed for   bankruptcy protec-  tion.  He represent-  ed the management   company.   “Some-  times there’s  such   problems the court   says  we  need to get   things on track to   straighten things out, so let’s bring in a   receiver.  In New Jersey this is known as   a special fiscal agent. We got the property   on track in a year’s time and then had new   elections for a new board.”    One important factor to keep in mind   is that receivers are appointed by the   court and answer only to the court.  They   aren’t beholden to any other interested   party which might seek to influence the   process or outcome.  Receivership is de-  signed to be impartial.  Its reputation,   though, may appear otherwise.  Receiv-  ers, like those who send properties into   financial turmoil, are subject to human   frailties.  Many attorneys are reluctant to   push for receivership out of fears that the   receiver will be no more honest than the   entity that caused the problem.  Receiver-  ship fees can be high as well.  Co-ops vs. Condos  If you are a shareholder in a co-op and   RECEIVERSHIPS...  continued from page 1  “We have had   occasions where the   best solution is a   receiver. For instance,   a co-op board   controlled by an entity   who’s not looking out   for co-op, and there is   no other alternative   other than to seek a   receiver.”                   —William D.                              McCracken  

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