Q&A: Co-op Rules v. Sponsor Units

Q Our building is 75 percent shareholders, 25 percent sponsor units (renters). The  sponsor units fall under the Emergency Tenant Protection Act (ETPA) of 1974. My  question is, doesn’t everyone in the building, shareholders and sponsor units alike have to adhere  to the house rules and any fair and reasonable decision of the Board of  Directors? Do you have any case law that addresses this issue, as well as  statutory law?  

 —Board President in Yonkers

A “The tenant/shareholders in a housing cooperative are bound by the proprietary  lease, bylaws, rules and regulations,” says Albert Pennisi of the law firm of Pennisi Daniels Norelli in Rego Park,  Queens. “A tenant /shareholder (sponsor) must comply with the proprietary lease, bylaws  and house rules. However, a tenant/shareholder (sponsor) tenant under the  Emergency Tenant Protection Act (ETPA) or rent-stabilized tenants are not  tenants of the cooperative and therefore are not bound by the proprietary  lease, bylaws and house rules. If a tenant/shareholder (sponsor) tenants under  ETPA or rent stabilization violates their house rules, the cooperative must  proceed against a tenant/shareholder (sponsor), who then in turn must proceed  against its tenant.  

 “The issue becomes complicated when house rules are promulgated by the  cooperative, which the ETPA or rent stabilized tenant does not have to comply  with pursuant to his or her lease, (e.g. laws concerning placing rugs on 80  percent of the floors or any other rules of the cooperative, which are not  enforceable against the ETPA tenant pursuant to the Department of Housing and  Community Renewal regulations)—notwithstanding that the rules may be fair and reasonable decisions of the Board  of Directors.  

 The cooperative should consult with its legal counsel who is familiar with the  cooperative’s offering plan, proprietary lease, bylaws, rules and regulations, as well as  Department of Housing and Community Renewal regulations with regard to specific  rules and regulations and the case and statutory law with regard to the  aforesaid rules.  

 

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4 Comments

  • if i was to rent a sponsor unit in a co-op does that mean i can only rent the unit for 2 years or does a sponsor unit mean that the sponsor can rent the unit for as long as they want to . I am worried that if i rent the unit, I will have to move in 2 years as per co-op rules
  • Mark B. Levine, RAM (mblevine@ebmg.com) on Monday, April 16, 2012 10:03 AM
    @anunknownuser, the Sponsor, so long as they still have the complete rights of the Holder of Unsold Shares within the Offering Plan are usually not bound to any of the sales and leasing policies / restrictions of the Cooperative. Theoretically, the sublets for a Sponsor go on for as long as both parties want to continue the arrangement, not for how long the building rules and regulations are. Hope that helps.
  • If I foreclose on my yonkers co op mortgage, can building mgmt or the board take any action for non payment of maintance?
  • Question - my wife own shares of a coop and has had no problems renting the unit from the Board. Recently the Board claimed that it modified the proprietary lease and claimed Board Approval has always been required for subleasing and we had to agree to a time restriction the Board was now imposing. My understanding is that no such time restriction is imposed on the Sponsor Unit of the building. Can the Board's action be upheld in light of the App. Division's decision in Spiegel v. 1065 Seven Park Ave. Corp. Does it give the Sponsor more favorable treatment re: subletting their units vs my wife as a shareholder in the same coop building