The M Condominium in Brooklyn needed to raise funds to repair and restore several storm damaged building systems. The Board did not want to impose special assessments on the unit owners. In order to raise the money necessary to do the capital repairs, the special assessments would be too high and would impose unfair financial burdens on the unit owners.
Unlike co-operative apartment corporations, condominiums cannot have mortgages on their buildings. The M Condominium found a different method to raise the funds for the capital repair work. The M Condominium entered into negotiations with a major lending institution to borrow against the income stream of the common charges paid by the unit owners.
To navigate through the legal aspects of this novel method of financing, the M Condominium hired Himmelstein, McConnell, Gribben, Donoghue & Joseph. Since this is a novel method, few law firms have had experience with the legal documents involved. But Himmelstein, McConnell, Gribben, Donoghue & Joseph’s real estate transactional partner, carefully reviewed the legal documents, negotiated their terms with the lending bank’s attorneys and fully explained the legal implications of the documents to the Condominium’s president.
Essentially, the M Condominium would have available to it $350,000 for the capital repairs. The work could be done and funded on the Condominium’s own schedule. Interest would accrue only as the funds were used and not on the full amount. Payments on the loan would come from the common charges paid by the unit owners. Our attorney’s job as the Condominium’s attorney was to make sure the legal documents entered into: Promissory Note, Loan and Security Agreement, Legal Opinion of Borrowers Counsel and Condominium’s Resolution to Borrow would accomplish this financing method with the necessary protections for the Condominium and the unit owners.
The result: within three weeks of the commitment of the lending bank to do the deal, the Condominium, with our attorney’s help and expertise, closed the deal. The Condominium now had access to the funds for the capital repair work at numbers that were affordable to the unit owners.