Rules and Problems Subletting in Co-ops and Condos

Although many co-ops and condos in New York City might not like it, shareholders and unit owners often rent out their apartments to subletters. Board control over subletting can vary—from stringent in most co-ops, to giving the board the first right of refusal in condos. But sometimes, residents try to sidestep the board and allow a subletter to move in. And even with board approval, having a renter, or several renters, in the building could pose problems.

Subletting in Co-ops

Co-op boards are somewhat notorious for the control they exercise over shareholder approval. The same goes for the matter of subletting, which is almost always frowned upon in co-ops.

"In co-ops, the board usually does have the right to approve or disapprove sublets. Most boards prefer to have owner-occupied apartments as opposed to a transient population. Normally banks that issue underlying mortgages for the buildings require a certain minimum owner-occupancy/investor ratio. If it's too much on the investor side, banks will typically not approve that loan, or the building will not be approved for financing or it will affect the terms of the loan. Most proprietary leases in paragraph 15 provide the board has the right to accept or reject a sublet for any reason. However a shareholder has the right to appeal that rejection by seeking the approval of the affirmative vote of two-thirds of all shareholders of record to override the decision of the board," says Ronald Sher, Esq. a partner at the law firm of Himmelfarb & Sher, LLP, in White Plains.

There are certain times when boards will make an exception and allow a shareholder to sublet, if the shareholder needs to travel for business for an extended period of time. But the board will usually limit the time a shareholder can sublet his or her apartment, as well as the number of years he or she can sublet overall.

"Boards have the right to impose certain conditions or allow sublets on an emergency or hardship basis, such as medical reasons or a change of employment, where a shareholder expresses an intent to return to the building. Boards have the right to impose and implement a sublet fee that can be calculated on any formula the board chooses, such as a percentage of maintenance fees or rent collected. They can request that the shareholder also submit a consent letter from their existing lender consenting to the sublet, since most banks who hold mortgages or loans for shareholders have a recognition agreement that requires a board to obtain the consent of a lender prior to permitting a shareholder," says Sher, who also serves as the general counsel to the Council of Westchester Cooperatives and Condominiums.

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6 Comments

  • It is a very good article. Is it possible to introduce me more for the topic of the Occupancy Rules of Condo? Regards, Stanley
  • No consequences for abusive board on Thursday, October 02, 2008 1:55 AM
    Can you help me find someone please? Please note following (which is my situation) and respond if you have any comment. It seems Arthur Weinstein is the ONLY person on earth with any answers, or who cares but how does one go about hiring him?! Re. "Co op board-antix redux" Nov 2006 Doug Hedding. “True Gotham” I will bet anyone London to a brick, I know the board about whom you are referring. I would like to know who it is. How can I find out? Re."Winner" Jan 26, 2008 I would also DESPERATELY like to know the name of your attorney??? I been looking for the exact right person for many months to commence litigation against board who have done so many unconscionable things to me and others in the building (along with the complete assistant of the management company. Some illegal most just disgustingly unethical and its clear the entire building is completely intimidated by them as its like living under marshal law in there). We also have the luxury of paying a fortune for that privilege Its out of control and that board (or at least most of them - including and especially the president and vice president). Because not just I but all the shareholders deserve to have happiness and feel secure in their own homes and if necessary I am willing to do something about it despite warnings about how difficult it will be. It will be worth a try if nothing else so they will they will at least be forced to modify their actions. Because they have gone unchallenged for so long they are increasingly arrogant and cocky, resulting in increasingly more sloppy explanations (if any) they give for their antics. This nearly drove me to an early grave but now I just record it and save it as more fodder for a suit as soon as I can find the right lawyer. BUT IT MUST BE THE EXACT RIGHT PERSON. PLEASE "WINNER" can you helP me? Please anyone can you help? Every real estate law firm Ive researched either specialises in litigating AGAINST shareholders, or DEFENDING shareholders, I have found some who litigate against LANDLORDS but not one who has any literature about any shareholder litigation cases. Is this because its so rare? . Ive been searching in vain to find one lawyer who has the brass to even give an ear to my case (which because of this boards unceasing acts is only being strengthened by the minute). Its painfully obvious there is no money in defending anyone against a board or that lawyers don’t have the confidence to even want to know about it. I know when I find the right person there will be fireworks for this board!!! Written By :"victims of board abuse" On September 11, 2008 1:31 PM Re. "Anonymous by Choice" Feb 20, 2008 Are shareholders entitled to be privy to any pending or PAST litigation attempts/successes against boards or managing companies?
  • A friend recently encountered an unfortunate situation with his last apartment and I hope that someone may have some advice. He had recently sublet an apt from the owner in a co-op building with the signing of a two year lease. The lease was expected to be extended another year with full support from the owner and the co-op board. Upon review of the lease, the board noted that the owner was not paying appropriate sublet fees and after months of fighting, the owner refused to pay any of the fees. A new lease was never signed, but reverted to a default month to month basis in which the tenant continued paying rent and the owner continued to accept it. Eventually, the board of the co-op threatened to take over the apartment from the owner siting breach of proprietary terms of the owners contract if the owner did not begin to pay the sublet fees or evict the tenants. A formal eviction was issued and the tenant struggled to find another apt and was moved out within 45 days of the original eviction date. The tenant feels that the owner did not operate in good faith in the sublet contract by refusing to resolve issues with the board that would have permited the extension of our lease. Is there any legal recourse available to him against the owner in this situation for uprooting his and his children's lives, causing unnecessary stress, inconvenience and loss of work time? Thank you.
  • What is considered under a hardship regarding our condos which are "Owner Occupied" since 2006
  • What can be done to take action against an aggressive coop Board, that seemingly ignores provisions in the Propriety Lease that control the spending of money and not carry out the vote by the coop? Is there a statue of limitations in dealing with what seems to be a violation of the Propriety Lease by the Board?
  • I own 2 investment units in a condo. The board has been taken over by a nut who is terrorizing the building. Recently the board imposed a $750 application/interview fee on prospective tenants and then just raised it again to $1500. Can they do this? What can I do to stop it?