Gallet Dreyer & Berkey, LLP | Dead Men Don't Pay
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  • Dead Men Don't Pay
    Winter 2019 | By: Michelle P. Quinn, Esq.
    As a landlord (especially in a Cooperative), you want to make sure maintenance is timely paid, as the building’s own financial obligations are dependent on that income.  Managing agents are keen to request that legal proceedings be started after two or three months of delinquency, as they should be.  But sometimes in that eagerness, some basic facts are overlooked or not even known.

    In order to pursue a nonpayment proceeding, all of the shareholders must be named both in the demand for payment and the petition.  This should be verified and supported by a copy of the proprietary lease, and not just what appears on the account history. 


    Dead or Alive?

    What kills a nonpayment proceeding, however, is naming a tenant who is actually deceased!  The administrator or executor of the estate of the shareholder must be named instead.  As absurd as it sounds, before a demand for payment is issued, a quick inquiry should be made.  You do not want to be several months into a nonpayment proceeding seeking a default judgment against the tenant only to find out later that they died.

    Another quick inquiry that should be made is whether there is a loan for the property.  Banks and other financial institutions are also entitled to notice of a shareholder’s delinquency, as set forth in a recognition agreement.  If the actual agreement is not on file, loan information (via a UCC-1 filing) is often on the Department of Finance website (ACRIS).  Frequently banks will pay a shareholder’s arrears in order to protect their investment, as the Cooperative has priority of payment.