’Til Death Do Us (A)part(ment)

Not long ago, a co-op owner at 90 Eighth Avenue in Brooklyn learned how important it is to read the fine print – and think about the inevitable. This woman bought her cooperative in 2003 with the help of her grandmother, who was living out of state but provided some of the financing. Both her name and her grandmother’s were on the proprietary lease and stock certificate. Several years later, the woman decided to move; but before the apartment could be sold, the grandmother died.

Unfortunately, neither the woman nor the grandmother had paid attention to the wording of the lease. They could have requested that it call for “joint tenancy with right of survivorship,” which would have meant the woman obtained full rights to the apartment if her grandmother died. Instead, the lease’s language was for “tenancy-in-common,” which meant the case had to go to probate court. After about six months, the woman was granted the right to the unit. Fortunately, an interested buyer had waited until the case was settled.

“It worked out in the end for everyone, but it could have been really bad,” says Dan Nickolich, treasurer of the co-op. He says the board didn’t have to take any action in the case because the woman had paid her maintenance while waiting for the resolution. “People just don’t think about this stuff,” he adds.

Few people want to contemplate their own deaths, but preparing for the future is even more important for residents of co-ops. That’s because of the unique language of co-op leases as well as the presence of boards, which are involved in admission in ways that condo boards are not.

Attorney James Samson, a partner in Samson, Fink & Dubow, says one thing residents should do is know what their lease calls for in case of death. Only married couples can have leases with “tenancy by entirety,” which means that if one spouse dies, their ownership interest evaporates, leaving the surviving spouse as the sole owner, he notes. (Nickolich reports that, at his co-op, the board would probably allow residents to change their lease’s survivorship rights to keep them in accord with what a resident would want to happen after he or she dies.)

It’s just as important for boards to be aware of the language of the lease, Samson adds. If the lease calls for “joint tenants with survivorship,” the board would know the apartment automatically goes to the survivor. If the board tried to deny admission, members could be opening themselves up to a lawsuit. “And worse, [in such situations,] they don’t just sue for the transfer [of the apartment], they sue for violation of their civil rights and therefore open the board up to personal liability.”

Samson also advises many of the boards he represents to revise their leases to acknowledge that New York City adopted the Human Rights Law, which provides protection for several groups, including domestic partners.

The board at 90 Eighth Avenue recently revised its lease to recognize domestic partners, explicitly permitting them to be jointly named on the lease. Nickolich says there had not been any problems denying admission to domestic partners, but the board wanted to get “up to speed.”

Another thing to consider is whose names are on the lease. In a case where the partners are married and both names are on the lease, co-op board consent is not required for the surviving partner to remain in the apartment, says co-op lawyer Steven Troup, a partner in Tarter Krinsky & Drogin. That standard is the same if, say, both the name of a parent and an adult child are on the lease.

If only one person in the marriage is named, then most leases dictate that the co-op board cannot “unreasonably withhold consent” for the surviving spouse to remain, says Troup, who represents about 40 co-ops and condos, mostly in Manhattan. The key to what is “reasonable” is the survivor’s financial ability. In theory, a husband can die and the wife can be granted the title to the apartment but not granted the ability to remain by the board. But Troup says he’s never seen that happen.

If the people in question are unmarried but living as domestic partners, whether gay or straight, Troup says they would probably be able to argue that the same standard should apply, and they should not have to face any more financial scrutiny than a surviving spouse from a marriage. The city’s Human Rights Commission pursued a key case in this vein in the mid-1990s. In 1992, it accused a Sutton Place co-op of discrimination against Harry Kirkpatrick, who wanted to occupy the apartment he shared with his partner, who had died from AIDS.

The co-op board denied Kirkpatrick admission, alleging that he had several other homes, and they feared he would use the apartment as a rental. The case was settled in 1994, after Kirkpatrick himself had died from AIDS, with the co-op agreeing to let Kirkpatrick’s new partner inherit the unit. The settlement also called for the co-op to amend its leases to explicitly allow transfer to domestic partners.

Still, Troup says, for additional protection, boards might want to look into the financial situation of a partner whose name is not on the lease. “In my opinion, a board would be acting irresponsibly if they just allowed it to go to anyone without knowing whether that person was able to meet their financial obligations,” Troup observes. New York City’s Human Rights Law prevents a board from denying admission based on a person’s sexual orientation, but it doesn’t prevent the financial scrutiny, he adds.

Other lawyers say boards should keep their distance in matters of estate. “Unless the co-op is in a tremendous financial bind it makes no sense to spend money to kick someone out unless they really have to,” says lawyer Andrew Berkman, the in-house counsel at Milstein Properties, which built and manages about 6,000 rental, co-op, and condo units in the city. If one partner dies, whether the couple is married or not, and the survivor can’t make the payments, the board can always take action to remove the tenant.

“The person will either do whatever he or she can to retain the apartment by making it up, or they’ll sell and take the money and run,” he says.

In some ways, the board would have a stronger case for removal if the person fails financially than if the board challenges their financial fitness beforehand. “Someone can always muddy the water with a discrimination claim,” he says, adding: “You will always have the real value of the apartment. Whether it’s held by the bank or a new buyer, the co-op board will get paid any arrears, interest, and late charges.”

If a resident dies without a will or the will is contested, Berkman also advises waiting until the matter is resolved in probate court. In many ways, the situation is simpler if the resident named on the lease dies and bequeaths the co-op to a relative in a will. In that case, the person must go before the full scrutiny of the board if he or she wishes to live in the apartment.

One attorney says problems can also arise is if one unmarried partner dies and there is no will, or the will doesn’t address the co-op issue, or the surviving partner is not named on the lease. In those cases, the dead person’s next of kin could claim the unit.

“Just because they are living together doesn’t mean anything,” he says. “If the next of kin – the executor – is some cousin from out-of-down and shows up saying, ‘I’m a family member, who is this?’ the other person is [in the court’s view] basically a squatter and can be evicted by a family member who wants to sell the apartment.”

Estate lawyer Remo Hammid says it would be a good idea for boards to send a letter to all residents reminding them of the importance of planning for the inevitable. “The smartest way to deal with any kind of contentious issue is to deal with it before the person dies,” he says. One factor that would allow boards to get less involved is that survivors don’t usually fight to occupy the apartment as much as they bicker over the proceeds of a sale, Hammid notes.

Several lawyers say estate-related issues will probably be on the rise for several reasons. There is the aging population. Board member Nickolich notes that, thanks to the rising cost of real estate, more and more buyers need financial help from parents and grandparents, who then end up on the lease.

Nickolich already has his own affairs in order. He says he and his partner, Robert McCue, are both named on their lease and have named each other in their wills. They learned, in part, from an experience of a lesbian friend, who had thought she had a good relationship with her partner’s parents. After the partner died, however, the parents tried to make a claim on the apartment the couple had shared. Fortunately, the couple had prepared a strong will, were both named on the lease, and had requested that their lease contain the phrase “joint tenancy with rights of survivorship,” which guaranteed the survivor could remain in her home. It is wise to be careful for, as Nickolich sagely notes: “Money does crazy things to people.”