The Ins and Outs Of Illegal Sublets Sneaky Shareholders Create Hassles for Board Members

In today’s booming real estate market everyone is looking to turn a profit. Should co-op shareholders be any different? Everyone wants a piece of the pie but at what cost? Subletting cooperative apartments can be very simple if you follow the guidelines that the co-op’s bylaws have put in place, but it seems as if it’s not that simple. Are shareholders taking advantage by manufacturing family members to make money, or are the cooperative corporations making their shareholders jump through too many hoops?

Smuggling in Sublets

There are several reasons why co-op owners choose to sublet with or without the board’s consent. Families deciding to relocate, retire, or buy an additional home are only some of the reasons. Many probably look at their co-op unit as a good investment and a tool to make money. Some may see it as a safe haven for family members in need of housing. Problems arise when shareholders move people into their apartments without the knowledge or approval of the co-op’s board.

Now why would shareholders admit an illegal sublet? One reason is because they want to avoid going through the board for approval. There are often application fees and credit and background checks done on the proposed tenant. These fees fall on the shareholder. This process of approving someone may take several weeks and some shareholders may not want to wait.

There is also the chance that the board may not find the proposed tenant acceptable. That leaves the shareholder seeking another tenant and out the money they provided for fees. Then they have to repeat the process until the board approves someone.

There are other charges in addition to application fees. "Sometimes there’s a surcharge on the maintenance," explains Eric Goidel, a partner at Borah, Goldstein, Altschuler & Schwartz, a law firm with offices in Manhattan and Forest Hills. He says although it is not typical, charges can be as high as 50 percent of the maintenance on the unit.

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15 Comments

  • HI I have an apt in NYC(Manhattan) and I have had my cousin stay with me for the last 2 years while I travel for a living. I hve just been served with papers to go to court for illegal sublet. i was shocked. What is the worst that could happen. I wasnt aware of any wrong doings. Please advise. Thank you
  • can you prove that this is still your primary residence?
  • I have used my sisters coop as my primary residence for 12 yrs. she has never lived there now they're trying to force me out. is there any right for me after they've ignored this for 12 years
  • I know of a few agencies that work on landlord and tenant case but I have been working for the past 3 years with Crisis Control Group there number is 646-290-6463if I don't like the work its free. The usually provide a report as to all traceable information such as utility bills, driving records, deeds and thing like that they work with a landlord and tenant lawyers I think they can point you in the right direction after the investigation is complete they helped me get an attorney. There website is www.hqccg.com. Another good service I found but pricey Kern Informative.
  • As an original coop-up owner I had the right to rent my unit indefinately, 3years ago the board changed the rules saying that original and new owners had to be equal renting only 3 out of 5yrs.Is it legal to take away the rights of the original owners that bought with this understanding. They refer to the BC L law. I cannot find the the answer to clear this up. Now my long term tenant has to go. Thank you
  • Can a non-owner spouse remain in a coop apartment when the shareholder spouse vacates the marital residence but the parties remain husband and wife?
  • my aunt purchased a co-op through the shareholder @ a 5 figure price, which is in a contract that they both signed 8yrs ago. The shareholders name remained on the lease, but my aunt has been on the recertification papers every year. I moved in last year with my aunt and last week the shareholder came and changed the locks and has reported to the co-op that it's an illegal sublet. What grounds or what claim do we have that is in our favor, because now there is a want for us to vacate.
  • Shareholder for 36 years on Tuesday, March 01, 2011 1:42 PM
    The Board of Directors of which I am a member just approved subleasing (5 for and 3 against). So far guidelines have not been set up. 1. This property has always been a cooperative. 2. Subleasing has never been permitted. 3. How will subleasing affect each shareholders coop insurance, which we are required to have? 4. I feel that membership should be given the opportunity to vote on such a serious move as subleasing. 5. Does the Board have the right to make such a choice for the entire corporation? Thank you.
  • cause and effects of subleases on Tuesday, October 22, 2013 6:05 PM
    what's the fears regarding shareholders right to sublease their apartments, would it be a fear that they are unregulated by the system, unchecked, collections of monies are the issues avoiding payment of taxes and overcharge rents
  • When I purchased. my co-op the rules were that after 3 years residency you could sub let your unit. Now nine years later they say the board changed the rules and you cannot sublet without first trying to sell the unit which is now selling for less then what is word on the mortgage. I am trapped or is there a way out?
  • What's so wrong about a lady letting her grandson stay in the apartment while she's in another city? Is it better to keep the place empty, in today's economy where it's already hard enough to find a place to live? If the rent is being paid, and nothing's damaged, the landlord has no reason to care.
  • Is it legal for someone to sublet out an apartment that they have never owned nor rented??? I keep trying to find something about it online and I can't so somebody please help
  • What are the rights of a tenant, who is subleasing and has rental agreement and is not aware of the coop laws. How long can a tenant/subletter stay in the apartment in case the coop prohobits or has always prohibitted the shareholder/landlord to sublet?
  • If I decide to have my boyfriend over (probably something like once or twice a wekk), does this count as subletting?
  • Shareholder/Family members on Thursday, March 31, 2016 3:41 PM
    I've been a shareholder of the unit since 2008, this was my primary residence, my grandmother lived with me until she passed away in 2013. I was never charged any sublet fees while my grandmother lived with me. My grandmother had a dog and through the years as the dog occupied the unit, there were no complaints, no fees or any charges. The building has no pet policy but many shareholders owned small dogs and the policy was never implemented. In the year 2013, my grandfather moved into the unit with me, the dog became an issue, no dog policy was implemented and during the Board Meeting including other dog owners, everyone was told that "no new dogs allowed due to an overwhelming number of dogs in the building. Current dogs will be grandfathered in only if everyone starts to pay a monthly fee of $25". If I am the shareholder and the unit is my primary residence, why am I being charged a fee for my grandfather occupying the unit with me?