Condo foreclosures – bad news for neighbors

The NYTimes reports on condominium foreclosures in NYC, a rare but increasing phenomenon as jobs are lost. In New York, banks take priority over condominium association liens so unpaid common charges will probably never be paid. I don’t remember my Common Interest Ownership Act law these days but back when it was first enacted in Connecticut it gave first priority to association liens. Assuming that’s still the case, you don’t have to worry so much about your neighbor going under. But the article is interesting both for its general subject matter and for its report on the state of the real estate market in New York because, sadly, what happens in New York doesn’t stay in New York; it travels out to the burbs:

We’re seeing more, especially in the higher-end buildings where you never heard of foreclosures,” said Adam D. Finkelstein, a real estate lawyer with Kagan Lubic Lepper Lewis Gold & Colbert in Manhattan. Starting last quarter, his firm began filing two or three liens a month, up from two or three per year.

While the aggregate number of liens is still small (47 in Brooklyn and 67 in Manhattan in December, for example), they may be the first sign of trouble: Liens typically lag months behind defaults in common charge payments, and the bottom didn’t truly fall out of the city’s economy until last fall.

Moreover, barring a swift economic renaissance, lawyers, managing agents and condo boards are bracing for things to worsen significantly this year as job losses mount, severances and savings evaporate, and the new reality sets in.

“The world as we’ve been living in it for the last several years has changed seemingly overnight,” Mr. Finkelstein said. “We’re at the very beginning of this.”


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3 responses to “Condo foreclosures – bad news for neighbors

  1. anonymous

    Under the new socialist regime, bigger threat to Greenwich is foreclosed spec houses (or just foreclosed used dumps of unemployed IBers) becoming Section 8 rentals or group homes for post-jail kids

    Surely good causes to maximize economic and cultural diversity in Greenwich, no?

  2. Jack

    What is an unemployed IBers?

    • christopherfountain

      Unemployed Investment banker. What’s the difference between a pigeon and an IBr? The pigeon can still make a deposit on a Ferrari.