Removing a Condominium Owner A Complex Legal Process

Removing a Condominium Owner

Removing a disruptive, abusive, non-paying, or otherwise problematic tenant from a rental building is relatively easy. Doing the same thing in a co-op is also possible, though substantially harder. But removing a condo owner from the premises (and effectively wiping out his or her equity position as a member of the condominium association) is very difficult indeed, and subject to very narrow legal interpretation—yet is doable under certain circumstances. 

While theoretically a co-op shareholder could be evicted for non-monetary issues (prolonged patterns of harassment; ceaseless petty litigation against neighbors or the cooperative corporation; and criminal activity are a few examples), the same is virtually impossible in a condominium setting. Condominiums are pure real estate, not shares in a corporate entity. As a matter of fact, from a legal standpoint, even the word ‘eviction’ cannot be used relative to removing a condo owner, though it can be applied to removing a rental tenant in a condominium unit—a point we will return to later. The closest we can come to a legally recognizable term for this type of action is a removal.

Generally speaking, points of law on this subject are consistent from state to state with only slight variations. The important distinctions relate to whether the person being removed is the owner of a unit, or that owner’s tenant. In both cases, laws are consistent on the most basic matters. Some states’ statutes have slightly differing approaches and nuances, another point we will return to later.

Removing a Condo Owner

Attorney Michael Kim, principal at law firm Michael C. Kim & Associates in Chicago, explains that unlike any other state in the nation, Illinois law actually does provide for the eviction of condominium owners. “In Illinois we have a unique remedy for eviction for collection of unpaid monetary obligation,” he says. “It is primarily for uncollected monthly assessments, but could also include fines and charges of other kinds that the owner has failed to pay. In most jurisdictions you cannot get someone out with an eviction case—you have to go through a lien foreclosure. In Illinois, we do have that remedy as well, but we use it sparingly.”

Kim explains further that the eviction does not transfer title for the property; it merely transfers possession. The statute was challenged in court many years ago, was upheld, and found to be constitutional. It’s similar to a landlord-tenant eviction remedy, but has distinct procedures of its own. When an owner is evicted under the statute, there is a 60-day stay issued during which the owner can cure the offense by bringing his accounts current. If that occurs, the eviction order is vacated. If not, the owner is evicted from the premises. This procedure can be used to collect unpaid fines as well. Once the condominium association has taken the unit, they can lease it out and collect rent on it. If the unit is already leased out to an acceptable tenant, the association can choose to let that tenant remain and take an assignment of rents from them.

Julie Schechter is an associate with Armstrong Teasdale, a law firm based in Manhattan. She explains that, unlike the cooperative corporation, a condominium association has recourse against a unit owner only for monetary defaults issues—almost exclusively nonpayment of common charges. Owners cannot be removed for bad behavior. She outlines the process as follows:

“When a condominium is owed common charges, the board can file a lien against the owner’s unit. Once the lien has been filed, the board has two options: it can bring an action to recover the money due, or it can foreclose on the lien. A lawsuit to recover the money due is less expensive and faster than a lawsuit to foreclose the lien, but neither is very fast. If the board is successful in a lawsuit to recover the money due, it will obtain a money judgment that can be enforced against bank accounts or other assets of the unit owner. The assistance of an enforcement official—specifically a city marshal or sheriff—is required to enforce the judgment.”

 Alternatively, “an action can be brought to foreclose the lien that is similar to a mortgage foreclosure action,” Schechter continues. “If the action is successful, the result is a judgment to sell the unit and apply the proceeds to payment of the debt. It is important to note that in the event there is a first mortgage on the unit, the bank’s lien is superior to the condominium’s lien. There may be one other step that can be taken to encourage the unit owner to pay the money due. Depending on the particular community’s bylaws, rules, and regulations, it may be possible to suspend certain non-essential services that the unit owner receives.”

Scott Piekarsky, Managing Member with the law firm of Piekarsky & Associates in Wyckoff, New Jersey, says: “In terms of getting a condo owner out of their unit, it’s not like a landlord/tenant situation. The only way to remove an owner is if he or she defaults and you can get a lien, foreclose the lien, get a sheriff’s sale, and dispose of the unit.” And it has to be for monetary default. “If it’s non-monetary, you can get sanctions and fees, and maybe some monetary relief, but it’s virtually impossible to remove someone if they own the unit.”

Removing an Owner’s Tenant

While it’s certainly possible, removing a tenant from an investor unit is not particularly easy either. Schechter explains: “Condominium boards lack legal standing to remove unit owners’ tenants, regardless of how offensive their behavior may be. Even if the tenant were to be in constant violation of a provision of the condominium’s bylaws or rules and regulations, the condominium is still unable to remove the tenant because the condominium is not in privity with the tenant. (Privity is a relationship between two parties that is recognized by law—typically blood, lease, or service. -Ed) The condominium unit owner, however, is in privity with its tenant and can take action to evict the tenant.” 

In New Jersey, explains Piekarsky, “the best leverage under most governing documents is when an association stands in the shoes of the owner. The owner has a renter; the renter is a problem, but the owner doesn’t take action. Many times, an association’s governing documents say the association may step into the owner’s shoes and take the necessary action. That’s the best leverage over a renter.”

New Jersey law also adds another layer to the resolution process in condominium disputes through alternative dispute resolution (ADR)—usually in the form of professional mediation or arbitration. New Jersey state law requires that all owners in condominiums be offered ADR before going to court. “The association can seek injunctive relief,” Piekarsky says. “I’ve never seen anyone forced out through injunctive relief, though. If they are a danger to themselves, others or the property, you can get a civil commitment, which would get the resident out.”

A Real-Life Example

Kim describes another method of removal unique to Illinois. It is called involuntary sale, and it can be used when a unit owner becomes the association member from hell. “ involuntary sale, if an owner commits serious material default—not necessarily monetary, rather breach of covenants—an association can notify the owner and give notice of 10 to 30 days to terminate their right to possession and ownership. If the owner doesn’t sell their unit in that period, the association can institute an involuntary sale proceeding. They can ask for a judicial sale with a restraining order to prevent the offending owner from redeeming the unit or buying it back himself at the sale.” Of course, all outstanding lien holders are protected under the sale, should it occur.

Not all situations end neatly. The rights of the owner are squarely in the path of an association trying to remove an offending resident, whether a unit is leased out or owner-occupied. Attorneys interviewed by The Chicagoland Cooperator are in general agreement that if there’s no monetary default, the path to removal of a problem owner is pretty much blocked. The optimal situation for an association is when the unit owner is in default on monthly common charges. The association then has the right to request a receiver to step in and collect rent from the tenant, which can then be turned directly over to the association for both current charges and to make up arrears.

A similar tactic for a non-paying owner is described by Schechter: “While a unit owner in a condominium cannot be removed for nonpayment of common charges, there are tactics that can be utilized by condo boards to accomplish the same result. For example, during a foreclosure action, a condominium can request the court appoint a receiver to collect rent from the unit. If the unit owner is still living in the unit and refuses to pay the rent ordered by the receiver, the condominium board can bring an action to remove the unit owner for failure to comply with the receiver’s order. If the action is successful, the unit owner can be removed.”

Overall, the power of a condominium association is limited when it comes to removing troublesome or non-paying owners and/or their tenants. Because of those limitations—and because the available legal remedies are so slow going—associations should act quickly, turning over potential problem situations to their attorney for resolution as soon as they’re aware there’s an issue. Dawdling will only cause unpaid charges or offensive incidents to pile up. Ownership comes with rights and responsibilities—as does the stewardship of board members. Both should be taken seriously and acted on with alacrity.

A J Sidransky is a staff writer/reporter for The Chicagoland Cooperator, and a published novelist.

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