Page 14 - CooperatorNews New Jersey Fall 2021

14 COOPERATORNEWS NEW JERSEY
—FALL 2021
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real property and/or the personal estate.
Receivership
William D. McCracken, a partner with get the repairs done. It’s also used in in-
Manhattan-based law fi rm Ganfer Shore stances where a property can’t operate
Leeds & Zauderer, defi nes receivership as because of dysfunction, or lack of formal
follows: “A receiver, most broadly, is an organization.” Barnett also cites a small
offi cer of the court appointed to step into association in Dorchester, Massachusetts.
the shoes of an owner or other interest-
ed party. Th ey are appointed for various been paying invoices as they came in, so
reasons, but usually it’s when the current the court instituted a receivership.”
owner or steward of the property is put-
ting the value of property at risk.” Th e re-
ceiver could be requested by a creditor, a ruptcy protection. He represented the
group of tenant shareholders, or even an management company. “Sometimes there
individual owner. Th ey will petition the are such problems that the court says we
court to appoint a temporary receiver to need to get things on track to straighten
put everything at the property on an even things out, so let’s bring in a receiver. In
keel.
Acco r din g
to Jennifer Bar-
nett, a partner
with
Marcus
Errico Emmer
& Brooks, a law
fi rm located in
Braintree, Mas-
sachusetts, “Th e
appointment of
a receiver is to
preserve assets
for all parties
who have an interest in it.” She adds that tion may suggest otherwise. Receivers
it’s only used where it appears that in its themselves are appointed by the court,
absence, the property would be subject to and answer only to the court. Th ey aren’t
damaging waste or loss.
When Is a Receivership Used?
Receivership is designed to rescue or outcome. Th at being said, however,
real property from irresponsible man-
agement—whether intentional or unin-
tentional. “Somebody has to take control man frailties. Many attorneys are reluc-
when you’re in a diffi cult situation,” says tant to push for receivership out of fears
Scott Piekarsky, an attorney with Phil-
lips Nizer, located in Hackensack. “When than the entity that caused the problem.
a property has no money—if funds were Receivership fees can be high as well—so
stolen, for instance—vendors can’t be it’s not always a simple solution.
paid, maybe there’s no manager, and no
insurance coverage due to a lapsed poli-
cy because the premium wasn’t paid. A the board isn’t protecting the value of the
mechanism is necessary to stabilize the property, the appointment of a receiver
property for the health and safety of resi-
dents, and to rescue a situation. Th at’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 receivership
is no other alternative other than to seek a is based, says McCracken. “To the best of
receiver. It’s a drastic remedy.”
“It’s appropriate when a property can’t makes sense where there is a substantial
be run eff ectively and something is need-
ed to operate the building,” says Barnett. newly formed condominiums.”
On a more micro level, she says, “I’ve seen
it brought against unit owners with seri-
ous problems like hoarding, bedbugs, etc.” plains that a receiver might be appointed
Barnett also recalls a situation in which
a municipality brought action against an
association over lack of elevator repairs.
“Th e association said they didn’t have
money to do repairs,” she says. “We got
them to the table with a receivership to
“No bills were getting paid. Th e client had
Piekarsky recounts a case some years
ago where an association fi led for bank-
New Jersey this is
known as a ‘special
fi scal agent.’ We
got the property
on track in a year’s
time, and then had
new elections for a
new board.”
One important
factor to keep in
mind is that receiv-
ership is designed
to be impartial—
though its reputa-
beholden to any other interested party
which might seek to infl uence the process
receivers, like those who send properties
into fi nancial turmoil, are subject to hu-
that the receiver will be no more honest
Co-ops vs. Condos
If you are a shareholder in a co-op and
may be an improvement over the current
so as a replacement for the board, at least
In a condominium it’s harder. A condo
board doesn’t control the real property
my knowledge, for a condo a receiver only
block of unsold units—as in newly built or
Th e other question is: who are you ap-
pointing a receiver for? McCracken ex-
RECEIVERSHIP...
continued from page 1
“Sometimes there are such
problems that the court says
we need to get things on track
to straighten things out, so
let’s bring in a receiver.”
—Scott Piekarsky
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