Pay Up! The Subtle Art of Collecting Arrears

 In the tough economic environment of the past few years, many condo owners have  faced job losses, pay decreases or just financial uncertainty. Unfortunately,  this sometimes leads to owners not paying their common charges.  

 “Obviously, delinquencies are always a problem for associations, but the current  state of the economy has certainly escalated this problem,” says Scott K. Penick, Esq. of McGovern Legal Services in New Brunswick. “We have seen quite an increase in delinquencies due to joblessness and  underemployment. It’s also resulted in our firm spending a lot of time developing new creative  solutions for collecting these delinquencies. The same old formula just doesn’t work these days,” he says.  

 Barbara Drummond, PCAM, CMCA, president of Prime Management Inc. in Barnegat  agrees with Penick. “I am seeing in a lot of cases what when the owners’ debt is greater than the value of the unit that’s when the percentage of people who are in default goes up,” she says. “I have seen a lot of that.”  

 Unpaid, overdue debt that is not collected can wreak havoc on a condominium  association. In small units, it can quickly cause the association to have  trouble meeting operating expenses. Even larger associations will eventually  feel the effects of the shortfall if multiple units fall into arrears.  

 “It affects the greater financial health of a building community,” says Steve Elbaz, president of Esquire Management, whose company manages  properties in Jersey City and Ocean Township. “When people come to buy an apartment, they review financials and if they see  people aren’t paying arrears, it raises red flags and in theory lowers the value of the  apartment.”  


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