Condominium boards and property managers face a unique, often frustrating hurdle when trying to collect unpaid common charges: the unit owner counterclaim. When a board takes legal action to recover delinquent dues, it is common for the owner to push back with a laundry list of defenses and counterclaims to delay payment.

A recent post-trial decision from the New York County Supreme Court provides a vital playbook for boards on how to successfully navigate these disputes, crush frivolous counterclaims, and fully protect their building’s financial health.

The Breakdown: From Scattershot Defenses to a Complete Post-Trial Victory

In this case, a board of managers sought to collect unpaid common charges, assessments, water charges, late fees, and interest from a long-delinquent unit owner. Rather than paying, the owner retaliated by asserting eleven affirmative defenses and a counterclaim, challenging the board’s accounting and the validity of capital assessments for major building repair projects.

While the court initially handles early motions by narrowing down issues, this matter proceeded to a full bench trial. The result was an absolute victory for the condominium board. Following a multi-day trial, the court systematically dismantled the owner’s defenses, explicitly ruling that:

• The Business Judgment Rule Protects Board Decisions: The court deferred to the board’s good-faith choices to replace an aging elevator and repair the building’s structural roof. The owner could not escape his financial obligations simply because he disagreed with the cost or scope of the work.
• Professed Ignorance is No Shield: The court rejected the owner’s claims that he lacked information or hadn’t read the bylaws, noting that an owner cannot enjoy the economic benefits of a unit—including generating unapproved Airbnb rental income—while refusing to pay the common charges keeping the building afloat.
• The Entire Ledger is Enforceable: Because the underlying assessments were valid, the owner’s attempt to use an accounting expert to reduce his bill was rejected. The court ordered the owner to pay all outstanding balances, interest, and late charges.

The core takeaway is clear: owners cannot use scattershot legal tactics or stall strategies to avoid their primary financial obligations to their neighbors.

Your Toolkit: Powerful Collection Mechanisms Under New York Law

New York law equips boards with robust statutory weapons to combat non-payment. When properly leveraged by experienced counsel, these legal tools ensure that delinquent owners—not the rest of the paying residents—bear the burden of unpaid expenses.

• The Statutory Lien: The board of managers possesses an automatic statutory lien on a unit for any unpaid common charges and interest. This lien is incredibly powerful because it takes priority over almost all other liens, except for municipal taxes, a primary first mortgage, or specific government-backed subordinate mortgages.
• Dual-Track Recovery: Boards generally do not have to choose between a lengthy foreclosure process and a standard debt collection lawsuit. Depending on what your bylaws permit, you can simultaneously pursue a money judgment while maintaining your lien rights.
• Recovering Hidden Costs: Beyond base common charges, a properly drafted statutory lien and complaint can include interest, late fees, and—crucially—attorney’s fees. In this post-trial ruling, the court explicitly found the board to be the prevailing party and ordered the owner to pay the association’s legal fees.

Key Takeaways for Boards and Property Managers

To ensure your building is in the best position to win a collection dispute at trial, keep these proactive legal strategies in mind:

• Review Your Bylaws Early: Your ability to recover late fees and the steep legal fees spent chasing a delinquent owner depends heavily on the language in your governing documents. Some bylaws also explicitly require condo boards to aggressively pursue arrears as part of the board’s fiduciary duty.
• Keep Meticulous Ledgers: Cases are won or lost on documentation. Accurate, contemporaneous accounting of common charges, late fees, and professional management records makes it much easier for your legal team to prove its prima facie case and dismiss a defendant’s counterclaims quickly.
• Act Decisively: Allowing arrears to accumulate without recording a lien or initiating legal action weakens the board’s financial health. It also complicates recovery if a first mortgage lender steps in to foreclose.

Given the technical requirements of collection litigation and the potential for bad-faith counterclaims challenging board authority, engaging experienced condominium counsel early in the collection process is essential.

Here is the Board of Managers of the 5 E. 17th St. Condominium v. Peck decision: