The rules are almost always different for co-ops, and that is most certainly true for occupancy issues. One of the initial reasons for the co-op ownership structure, both on the part of the those already living there and those buying in, was to keep tight control over who your neighbors are. While much has changed over the decades relative to this concept of “exclusivity” and accompanying discrimination, boards still have a good amount of control over occupancy, particularly with respect to subletting.
Picture this: supposing your employer has just offered you the unprecedented opportunity to live in Paris for a year in a corporate apartment in the heart of the 6th arrondissement. The deal even includes a car. But you promised your 22-year-old daughter that she can move back in with you for two years before she goes to medical school. She’s even landed a job doing research at Sloan-Kettering. So she needs to save everything she can for medical school and rentals don’t come cheap anymore.
This, can she live in your co-op while you and your spouse are off doing the ‘ex-pat thing’ for a year? Sadly, the answer is a flat-out-NO!
Julie Schechter, a co-op/condo attorney and associate with Montgomery McCracken Walker & Rhoads in Manhattan, explains: “Technically, it’s like a sublet. It’s usually paragraph 14 of the proprietary lease that deals with use and occupancy, but usually per standard language, which appears in most proprietary leases, an apartment can be occupied by the shareholder and the shareholder’s family. It runs off a list, basically it’s immediate family. It will say ‘brother,’ ‘sister,’ ‘child,’ ‘parent,’ ‘grandparent,’ or whatever. That language has been interpreted as the ‘shareholder and’, with the word ‘and’ being taken to mean simultaneously living with the shareholder while the shareholder is living there but not in the shareholder’s absence.
"Putting your child in your apartment while you are away? No good," she continues. "It would require board approval and the board might even consider it a sublet and charge a fee.” Of course, the corporation bylaws would have to provide for sublet fees. In Schechter’s experience, they usually don’t.
Co-ops, unlike condominiums, are governed under the same laws and regulations as rental properties since the ‘ownership’ of your unit rests on shares that provides a proprietary lease, but a lease nonetheless. Would a landlord take a similar position? Probably not. Landlords are primarily interested in one thing: collecting their rent. As long as you’re paying, they’re not asking too many questions. You could probably do this in a rental without a subletting agreement. But clearly co-ops have a much stricter occupancy policy and for good reason.
“They might not want a young, single person who isn’t an owner living in their building,” says Schechter. “They won’t say that of course. They might have parties or make noise. The main push back you’ll get is that the co-op doesn’t want ‘rotating occupancy.’ There is a belief that people who own take better care of the property than people who rent”—pride of ownership—“and so if you are putting someone in your apartment who doesn’t have equity in the building they might not treat it as well.”
The question begs itself as to whether co-op owners should add their adult children to their proprietary lease to avoid these kinds of problems with the co-op. The answer is that it might not be so easy.
“Adding your adult child to the proprietary lease is not a difficult process,” says Schechter, “but I would recommend to boards that they still review the situation. I think a mistake a board might make would be that they would say, ‘Okay, more-is-more. Having more people on the hook for the maintenance is a good thing.’ That’s a mistake because though the parents might be financially stable, the child might have a lot of debt, which might lower the overall financial stability of the unit ownership. Secondly, if the parents die and the child is on the lease, the apartment automatically passes to the child. No board approval would be required. If for some reason they might want to reject the child, they can’t.”
Bottom line: check with your co-op board and managing agent before you turn over the keys to your pride and joy.