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Yes, Paule,
It's legal. In fact, it's for the good of the co-op.
Banks have the legal right to deny a mortgage to someone who wants to buy into a co-op when the proportion of owner-occupied apartments falls below a certain amount (often 70%). Protecting future shareholders (as well as current shareholders who would have a hard time selling if their buyers couldn't get a mortgage) is one of the primary jobs of the board.
Another reason to limit sublets is to maintain the feeling of the building as that of a primary home instead of a hotel or dorm, with strangers moving in and out. As lovely as subletters may be, they don't have the same long-term interests of the building at heart as owners.
And speaking of long-term interests, the New York State law that creates housing corporations (i.e. co-ops) establishes them for the long-term interests of those who own and live in the building. Subletters are not in that category.
“We also enacted a policy stating that 80% of all apts must be owner-occupied at any point in time. ”
BP, I am interested to know how that policy is worded. Our co-op is currently considering revising our policy and I’m wondering how to phrase such a provision. For example, say someone wants to sublet but that 80% owner-occupancy baseline has already been reached. Do you have language stating that the SH who has been subletting his or her apartment the longest must end that subtenancy?
GK, our policy says: "No less than 80% of all units must be occupied or in "non-use" by shareholders of record at all points in time. "Non-used" units are any that shareholders keep vacant and unoccupied. No more than the other 20% of units may be sublet as long as the 80% term stated above is maintained. Any exception requires absolute need confirmed by verifiable documentation from a shareholder. Any exception also requires case-by-case evaluation and unanimous approval by the Board of Directors, and in compliance with any terms as the Board may deem appropriate in each case."
GK, we've never hit the 80/20 point yet but we came close a few times. We left the policy so that if a shareholder wants to sublet and we've hit the 80/20 point, the board has a right to decide if we allow one more sublet and on what basis (for how long and per what other terms we set, if any).
We don't want to make the shareholder who's sublet the longest stop so someone else can sublet. Now especially, sublet rent may be a critical necessity for some people. We'd rather evaluate a case as it comes up if we ever get to the 80/20 point - but not start making exceptions for everyone, otherwise the policy loses all its meaning and effect. Each coop board can determine what its sublet policy should be, as they see the needs of their building and shareholders. The by-laws and proprietary lease of course should always be checked first before establishing any new/revised policies.
Thank you so much, BP.
I can’t imagine that our building would ever hit the 80/20 point.
The “non-use” part of your policy surprises me. Here, we would much rather see a unit occupied than unoccupied. (Mind you, our building is fairly small.) In our experience, vacant units are not a good thing.
GK, we prefer that units are occupied too, but we have one vacant for 9 years and one for 16 years. Every year, our prop mgr sends a letter to the SHs to ask what their plans are for the units. One SH never replies. The other SH says she can't decide whether to sell or sublet and she'll do something soon but meanwhile she never does. We also have a few SHs who only live here part-time (usually half the year and the other half in a sunny clime) so their units are empty for months.
Our building is nice but not a luxury property. But we have 8-10 SHs out of 60 who pay their bills but don't seem to care if their unit is vacant all or part of the time. We put "non-use" in our sublet policy to include these empty units in our total count of units.
I manage a Cooperative in Park Slope that has a rule similar to this. They limit the apartments to 7 at a time to be sublet. When someone wants to sublet their apartment who is not currently, the Shareholder with the longest sub-tenancy is told that they have until the end of the current lease to sublease and then they must cease.
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Paule - I agree with Steve that subletting for 2 yrs after which time a Sh must sell or occupy an apt is in a coop's best interests. Our by-laws allow subletting indefinitely. To help offset this without going thru the hassle of trying to amend the by-laws, we enacted a policy that all SHs must be a resident for 2 yrs before they're permitted to sublet. We also enacted a policy stating that 80% of all apts must be owner-occupied at any point in time. We allow sublets for only 6 mos or 1 yr at a time and our sublet fee for all new and renewing tenants is equal to 2 mos maintenance.
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