When Roommates Are Big Business

With Airbnb and other short-term rental outfits whispering in people’s ears that they, too, can make big bucks by renting out rooms to New York City visitors, it’s not surprising that some co-op shareholders and condo unit-owners see dollar signs.

That’s the topic of the talk on our forum, “Board Talk”: “If a (proprietary) lease permits ‘sublets,’” says a participant in the blog,“can the board decide that sublets must be for a minimum of one-year? Do these short-term rentals not count as sublets?”

A fair question. What are the issues boards must consider in crafting policy?

Defining Terms

Let’s start with some definitions. In a co-op, “a subtenant is someone who’s going to occupy the premises without a shareholder,” says Marc Schneider, a principal in the law firm Schneider Mitola. “In a condo, because it’s real property (as opposed to shares in a housing corporation), the person renting from the unit-owner is a lessee” – a tenant, in other words, not a subtenant.

But it doesn’t really matter what the governing documents say, Schneider adds, if you’re talking about sublets of less than 30 days. New York State passed an amendment to the Multiple Dwelling Law in 2010, banning such short-term arrangements in rental buildings, cooperatives, and condominiums.

What about “roommates”? Real Property Law Section 235f, colloquially called the “Roommate Law,” guarantees that, in a rental situation, including under a co-op proprietary lease, a tenant may live with immediate family plus “one additional occupant, and dependent children of the occupant.” The only requirement is that the tenant must give the landlord the roommate’s name within 30 days.

While this doesn’t allow co-op boards to vet roommates, the law still helps boards, Schneider says, since “legislators crafted the law to prevent tenants from getting around subletting restrictions by claiming their subtenants were roommates.” If you claim someone is a roommate, you have to be living in the apartment yourself.

But the Roommate Law doesn’t apply to condo boards, Schneider notes, since the unit-owner does not have a lease with the condominium. There is no landlord-tenant relationship between the condominium and the unit-owners, so a condo board actually can prevent you from having a roommate. In most condos, however, you can freely rent out a room – unless the governing documents say otherwise.

An Apartment Is Not a Hotel

So can you have roommates for any length of time? “The court said the apartment has to be used for private residential purposes,” and not as a hotel or bed-and-breakfast, Schneider says, adding, “You’re not a roommate unless you’re a longtime occupant. Someone who’s just there for a day is not really a roommate.”

In any event, the 2010 law banned short-term rentals. The decision doesn’t appear to have been overturned. If, as the song goes, “A house is not a home,” then, you might also say, an apartment is not a hotel.