What To Do When “Temporary” Co-op Residents Grow Roots

A cold call. You may recall a story from the early days of the pandemic about the doctor who had traveled all the way from New Hampshire to New York City to help treat COVID-19 patients while staying in his brother’s co-op apartment – only to be turned away by the co-op board, even though the brother was out of town and the apartment was sitting empty.

That empty apartment was not uncommon. When the pandemic descended, thousands of co-op shareholders fled New York City to escape the virus and work remotely in quieter, less crowded places. However, not all of their apartments remained vacant. In many cases, children, siblings and other guests of the shareholders moved in – and never left.

Most cooperative proprietary leases prohibit the occupancy of apartments by non-shareholders unless the shareholder is also living there with them. In contrast to the less stringent rules governing condominiums, most co-ops are committed to the abstract but real principle of “cooperative living.” It is more difficult to build a community if the members of the cooperative do not actually live together. Shareholders who are in residence tend to care more about their buildings and their neighbors, and co-ops prefer residents to be shareholders so that those residents are contractually bound by the co-op’s rules.

When “temporary” turns to permanent. To return to the story of the doctor, it is possible that the co-op board was just trying to enforce its rules prohibiting the unaccompanied occupancy of apartments by non-shareholders, which would have been the normal course of action before the pandemic. During the pandemic, however, the board’s action came off to many as heavy-handed and insensitive.

Of course, March 2020 was not a normal time, and many co-op boards were reluctant to do anything about unaccompanied non-shareholders staying in apartments, in part because the arrangements seemed temporary and in part because the boards did not want to appear heartless. However, as the months have passed, many of these “temporary” arrangements have started to look more and more permanent – and motivated by reasons having nothing to do with the coronavirus. The shareholders and occupants simply find these living arrangements preferable.

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Culture is key. In recent weeks I have received a number of inquiries about these situations from my co-op board clients, and I advise them that they can be handled in different ways. For example, boards can require that the occupants be added to the proprietary lease so that they are subject to the rules of the co-op. Boards could also require the shareholder and the occupant to enter into an agreement in which the shareholder guarantees the occupant’s compliance with the rules of the building. Another option is to require a formal sublease, assuming that the co-op permits subletting. Of course, if a shareholder is not using the apartment in accordance with the proprietary lease, the board could also declare a default, though removing unlawful occupants from the building is more complicated in the pandemic era.

The right solution depends on the facts and circumstances of each case and the temperament – the culture – of the building. That culture can range from laissez-faire to by-the-book. A board might look more favorably on allowing occupancy for a shareholder’s adult child who grew up in the building and has an established reputation for being a good neighbor, as opposed to a total stranger who does not follow the building’s rules. A small building might be more concerned about the loss of community caused by absentee shareholders than a large building would. And a building with a high percentage of older residents might frown on an influx of young people. Or vice-versa.

The building’s culture should guide a board when it wrestles with how to treat those “temporary” pandemic-era residents who seem to be growing roots.

William D. McCracken is a partner at the law firm Ganfer Shore Leeds & Zauderer.