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.