Page 16 - CooperatorNews New York September 2021

ARCHITECTURE
& ENGINEERING
SERVICES:
- Structural
- MEP
- Interior Design
BUILDING ENVELOPE /
RESTORATION / FACADE
INSPECTION SAFETY
PROGRAMS
CONSTRUCTION
DEFECT TESTING /
INVESTIGATION
ENERGY CONSULTING
FORENSIC TESTING /
LITIGATION SUPPORT
NYC SPECIAL
INSPECTIONS
5 YEAR CAPITAL
PLANNING
350 7th Avenue, Suite 2000
New York, NY 10001
(646) 292 - 3515
info@falconengineering.com
www.falconengineering.com
ENGINEERS, ARCHITECTS AND ENERGY CONSULTANTS
16 COOPERATORNEWS —
SEPTEMBER 2021
COOPERATORNEWS.COM
current owner or steward of the property association in Dorchester, Massachusetts.
is putting the value of property at risk.” “No bills were getting paid. The client had
The receiver could be requested by a been paying invoices as they came in, so
creditor, a group of tenant shareholders, the court instituted a receivership.”
or even an individual owner. They will
petition the court to appoint a temporary ago where an association filed for bank-
receiver to put everything at the property ruptcy protection. He represented the
on an even keel.
According to Jennifer Barnett, a part-
ner with Marcus Errico Emmer & Brooks, need to get things on track to straighten
a law firm located in Braintree, Massa-
chusetts, “The appointment of a receiver New Jersey this is known as a ‘special fis-
is to preserve assets for all parties who cal agent.’ We got the property on track in
have an interest in it.” She adds that it’s a year’s time, and then had new elections
only used where it appears that in its ab-
sence, the property would be subject to
damaging waste or loss.
When Is a Receivership Used?
Receivership is designed to rescue real gest otherwise. Receivers themselves are
property from irresponsible manage-
ment—whether intentional or uninten-
tional. “Somebody has to take control other interested party which might seek
when you’re
in a difficult
si t u a t io n,”
says
Scott
Piekarsky, an
attorney with
Phillips Niz-
er, located in
Hackensack,
New
Jersey.
“When
a
property has
no money—if
funds
were
stolen,
for
in s t a n ce—
vendors can’t
be paid, maybe there’s no manager, and
no insurance coverage due to a lapsed
policy because the premium wasn’t paid. the board isn’t protecting the value of the
A mechanism is necessary to stabilize property, the appointment of a receiver
the property for the health and safety of may be an improvement over the current
residents, and to rescue a situation. That’s board. If a receiver does step in, they do
when a receivership is necessary.”
“Sometimes a receivership can be used temporarily. Once appointed, the receiver
when dealing with a corrupt co-op board,” would make the decisions on whether to
adds McCracken. “We have had occasions keep the managing agent, the corpora-
where the best solution is a receiver. For tion’s legal counsel, and so forth.
instance, a co-op board controlled by an
entity who’s not looking out for co-op”—
perhaps a sponsor or investor—“and there where most of the control of a receiver-
is no other alternative other than to seek a ship is based, says McCracken. “To the
receiver. It’s a drastic remedy.”
“It’s appropriate when a property can’t ceiver only makes sense where there is a
be run effectively and something is need-
ed to operate the building,” says Barnett. newly built or newly formed condomini-
On a more micro level, she says, “I’ve seen ums.”
it brought against unit owners with seri-
ous problems like hoarding, bedbugs, etc.” pointing a receiver for? McCracken ex-
Barnett also recalls a situation in which plains that a receiver might be appointed
a municipality brought action against an for an individual unit for instance, to
association over lack of elevator repairs. make sure common charges are paid. But
“The association said they didn’t have in a co-op, it’s conceptually easier to sub-
money to do repairs,” she says. “We got stitute a receiver for a managing agent to
them to the table with a receivership to run the whole property.
get the repairs done. It’s also used in in-
stances where a property can’t operate
because of dysfunction, or lack of formal
organization.” Barnett also cites a small
Piekarsky recounts a case some years
management company. “Sometimes there
are such problems that the court says we
things out, so let’s bring in a receiver. In
for a new board.”
One important factor to keep in mind
is that receivership is designed to be im-
partial—though its reputation may sug-
appointed by the court, and answer only
to the court. They aren’t beholden to any
to influence the process
or outcome. That be-
ing said, however, re-
ceivers, like those who
send properties into
financial turmoil, are
subject to human frail-
ties. Many attorneys are
reluctant to push for re-
ceivership 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—so it’s not always
a simple solution.
Co-ops vs. Condos
If you are a shareholder in a co-op and
so as a replacement for the board, at least
In a condominium it’s harder. A condo
board doesn’t control the real property
best of my knowledge, for a condo a re-
substantial block of unsold units—as in
The other question is: who are you ap-
RECEIVERSHIPS...
continued from page 1
“Sometimes a
receivership can be
used when dealing
with a corrupt co-op
board. … It’s a drastic
remedy.”
—William D.
McCracken