A developer stopped paying common charges. Here is what the condo board can legally do.

Seven of the fourteen units at 111 West 28th Street, a condominium in Manhattan's Flower District, have not paid common charges since October 2024. The board is in state Supreme Court seeking more than $500,000 in arrears from the developers who control those units, according to Habitat Magazine. New York's Condominium Act gives the board a lien and the right to foreclose. The October 2025 amendment to Real Property Law §339-aa added a mandatory 90-day pre-filing notice period. And §339-z puts the board's lien behind any first mortgage on the unit, which may mean the board collects nothing from a successful foreclosure sale. This post walks through each layer.

How the common charge lien works in New York.

Under Real Property Law §339-aa, a condominium board may place a lien on any unit for unpaid common charges and assessments. The lien attaches when the charges fall due and runs with the unit's title. The board may then foreclose that lien "in like manner as a mortgage of real property" using the judicial foreclosure procedures in Article 13 of the Real Property Actions and Proceedings Law. At the end of a successful foreclosure, a court-appointed referee conducts a sale and distributes proceeds in lien-priority order.

There is no administrative shortcut available to a condo board in New York. The board cannot garnish income, seize accounts, or deny access to common elements for arrears. (A declaration that expressly permits amenity restriction is an exception; many declarations do not include that language.) The two mechanisms are: record the lien, which clouds the unit's title and surfaces in any title search a buyer runs, and commence a foreclosure action if the lien is not satisfied.

A contested New York Supreme Court foreclosure action routinely takes two to four years from filing to sale. An owner who disputes the arrears calculation, files counterclaims, or simply does not respond promptly can extend that timeline. Throughout the entire period, the delinquent unit receives building services and access to common areas, and the unpaid charges keep accruing. Courts do not issue interlocutory orders compelling payment of disputed common charges; the board must wait for a final judgment.

The October 2025 amendment: 90 days before the board can file.

Governor Hochul signed Senate Bill S7413 on October 16, 2025. It amends Real Property Law §339-aa to add a mandatory pre-filing notice requirement before any lien foreclosure action for common charge arrears may be commenced.

At least 90 days before filing, the board must deliver written notice to the delinquent unit owner at two addresses: the property address and any other address the owner has on file with the board. The notice must be printed in 14-point type, identify the property, state the board's intent to commence a foreclosure action, and specify the exact dollar amount owed.

Any defect in these requirements may be raised as a defense and can result in dismissal of the action: wrong timing, a missing address, an incorrect dollar figure, type set at 12 points instead of 14. The board would then need to re-serve a corrected notice and wait another 90 days before re-filing.

The amendment applies to all actions commenced on or after October 16, 2025, regardless of when the arrears began. A board facing charges that have been unpaid since 2023 is still subject to the 90-day clock the day it decides to act.

The legislative rationale was consumer protection: giving homeowners who have fallen behind a window to cure before losing their units. For a household that fell behind on common charges during a financial hardship, that purpose is defensible. For a solvent developer who controls multiple units and has made a deliberate decision not to pay, the 90-day clock extends an already-long process by three months before the board can even file.

First-mortgage priority: §339-z puts the bank ahead of the building.

The board's common charge lien attaches to the unit but does not sit at the front of the creditor line. Real Property Law §339-z governs priority: the lien takes precedence over all encumbrances on the unit except (1) real estate taxes, and (2) unpaid sums on a first mortgage of record or a subordinate mortgage held by certain state development agencies.

In practice, if a unit carries a first mortgage, the lender holding that mortgage is paid before the building in any foreclosure distribution. If the unit's outstanding mortgage balance plus foreclosure costs exceeds what the unit sells for at auction, the board's common charge lien recovers nothing. The board wins the legal action and gets no money.

For developer-held units, first-priority debt is common. Construction projects routinely carry project-level or unit-level financing that may remain outstanding long after a certificate of occupancy is issued. Units that the developer retains rather than sells may carry commercial loans or mezzanine debt secured against those specific units. That debt does not appear in a consumer mortgage context but sits ahead of the board under §339-z. A thorough title search on each delinquent unit, before any foreclosure decision is made, is the only way to know whether a successful foreclosure action will produce proceeds for the building or for the lender.

What the board's toolkit actually looks like.

Three statutory mechanisms are available. Each has specific limitations when the delinquent owner is the building's original developer holding multiple units.

The rent redirect under §339-kk is the most immediate tool: when a delinquent unit is leased, the board may direct the tenant to pay rent to the building instead of to the unit owner until the arrears are cured. No 90-day notice is required. But §339-kk only works when the delinquent unit has a tenant the board can identify and reach. Developer-held units that are vacant, used as storage, or occupied by the developers themselves are not covered.

What a board should do before filing anything.

The 90-day notice under §339-aa is a legal document that can be attacked on technical grounds. A board that serves the notice without counsel risks a defective notice and a dismissed action. The sequence matters:

1. Build a clean ledger. Document every missed payment with exact dates and amounts going back to the first missed charge. The ledger becomes the demand figure in the notice and then exhibit A in any litigation. An imprecise dollar amount in the notice is a defect.
2. Run a title search on each delinquent unit. Before deciding to foreclose, know what first mortgages are on record. If outstanding debt on the units exceeds their auction value, foreclosure may cost the board more in legal fees than it recovers.
3. Check for tenants in the delinquent units. If any developer-held unit is leased, §339-kk lets the board redirect rent immediately, without the 90-day pre-filing clock.
4. Have counsel draft and serve the 90-day notice. Address requirements, type size, and timing are all grounds for dismissal. One corrected notice and a second 90-day wait costs the building another four months and additional legal fees.
5. Document the board's process in its minutes. Courts in subsequent litigation will want to know when the board became aware of the arrears, when it voted to act, and what steps it took. Put every decision in the meeting record.

The structural gap NY law has not addressed.

New York's Condominium Act addresses sponsor obligations at the offering-plan stage: what a developer must disclose, what representations bind it, how the initial budget is set, and when voting control passes to unit owners. It does not create a separate or faster enforcement mechanism for the post-completion period when a developer retains a significant share of units and defaults on common charges.

The AG's Real Estate Finance Bureau, as this site has analyzed in detail, operates under the Martin Act and Real Property Law §352-e. Its authority reaches offering-plan fraud and material misstatements. Common charge arrears from a developer who holds unsold or retained units fall entirely outside that authority. A board whose developer-partner stopped paying has no faster path than civil litigation under the same statutes available against any other delinquent unit owner: no administrative proceeding, no AG referral, no housing court shortcut.

At 111 West 28th Street, the developers controlling seven of fourteen units are the same parties who built and sold the building. If those units carry outstanding construction or commercial financing, the board's common charge lien ranks behind that debt. The 90-day notice period added in October 2025 must run before the board can file. After filing, the litigation takes years. The seven occupant-owners absorb the shortfall in their reserves or their common charges, or both, while the process runs.

Reform proposals that might address this have not been part of recent condo legislation. S.71, the managing-agent licensure bill, and the co-op reform package did not advance before Albany adjourned in June 2026. No bill in the adjourned session created an expedited collection mechanism for developer-held unit arrears or modified first-mortgage priority for sponsor-controlled blocks of units. The gap remains in statute exactly where it was when the Condominium Act was first enacted.

Bottom line.

A condo board's primary collection tool for unpaid common charges is a lien and a foreclosure action under Real Property Law §339-aa. The October 2025 amendment requires 90 days' written notice before the board can file, with technical requirements that can reset the clock on a defect. The first-mortgage priority rule under §339-z means the board may prevail at trial and collect nothing. When the delinquent party is the building's original developer, holding a large share of units, these three features work together in the developer's favor: the notice period extends the clock, the litigation takes years, and the lien may come up empty. New York has not built a faster path for this scenario. The shortfall from developer-held unit arrears lands on the owners who are paying.

Primary sources: NY Real Property Law §339-aa (as amended by S7413, signed October 16, 2025); RPL §339-z (lien priority); RPL §339-kk (rental income redirect); Habitat Magazine: "Condo developers face foreclosure suit in Flower District" (June 2026); Rosenberg & Estis: "New Pre-Foreclosure Notice Requirements for Condominiums and HOAs" (2025).

Companion resources: what the Martin Act can and cannot reach against a condo sponsor, why the AG's authority ends at the offering plan, what owners can legally demand from the board, the LLC transparency act and sponsor disclosure gaps, sponsor control period abuses, and the AG complaint tool.