Non-Owner Residents Managing Renters, Subtenants, and Short-Term Leasing

Aside from yourself, who exactly may live in your condo or co-op unit? While you as the owner might believe you have the sole authority to make that decision, most (if not all) condominium and co-op properties today have policies spelled out in their governing documents that determine the answer to that question.   

The Nature of Restrictions

Andrew B. Freedland, a shareholder with the Manhattan-based law firm of Anderson Kill, explains that the two types of ownership convey very different status on the nature of the leasing relationship.  “In a co-op, it’s a sublease,” he says, “because you [as a shareholder] are the tenant, and you are issuing a sublease.  The terms by which you are able to sublet are prescribed generally by the proprietary lease and based upon the framework set forth in that lease.  Also, most co-ops have a set of house rules that detail what procedures fit within that framework.”

Freedland goes on to explain the differences in condominium ownership.  “In a condo, it’s a direct lease, because you are the owner of the unit.  In those circumstances, that is governed by the bylaws of the condominium.  In a condominium, when you lease out your apartment, the board doesn’t have the same set of rights as a co-op board does,” to dictate whether you may rent out your unit—within certain limitations.  What the condo board does have is the right of first refusal.  They may refuse the rental – but are then are obligated to rent the unit from you in place of the tenant you selected.”

In effect, in a co-op, the board has the right to approve or reject your sublease.  In a condominium, the board has the right to waive their right of first refusal, thereby approving your tenant or renting it themselves.  “This very rarely happens,” says Freedland.  “I’ve never seen it.” 

Subleasing in co-ops is governed by the proprietary lease, and in condominiums by the association bylaws.  No statutory laws exist to prohibit leasing of a condo.  In New York State, there cannot be an “unreasonable restraint on the alienation of real property.”  That’s why, Freedland explains, the right of first refusal is there.  It’s not interpreted as unreasonable restraint.

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