ARREARS AND SUBLETS: BE FIRM BUT FLEXIBLE

"We believe you should be flexible, especially in this economy," says Mack, whose building has a restricted sublet policy (a year minimum and two years maximum, after which time it is reviewed and renewed at the board's discretion). "We chose to live together; we are a community. You have to kind of remind yourself about that every once in a while. Everyone has busy lives and we don't see each other [socially] a lot, but at the same time, we're a community."

Molloy sees community differently. "I understand what [losing a job] is like," she says. "However, we can't just make exceptions for one person where other people are probably in the same circumstance."

Boards should allow sublets in

cases of hardship or job relocation.

Two board presidents, two contrasting responses. Is one too soft, the other too harsh? When do the needs of the many outweigh the needs of the few (and vice versa)?

Alvin Wasserman, director of Fairfield Property Services and manager of Molloy's co-op, observes that the current recession has created an unusual number of arrears problems and requests for subletting, and many boards are wondering how to cope.

Owner or Investor?

To some, being firm is a question of ownership. Are you committed to the building as a home or are you just an investor? Mack (at right), a resident of the Flatiron District property since 1979, says the board would take a hard line "if a shareholder were speculating, and he bought a place here but didn't live in it. If someone like that fell behind in maintenance, then we'd say, 'You have to pay or move out.'"

Molloy comes by her position from personal experience. "I moved into the building in May of 2003, and I lost my job in January of 2004," she explains. "I found work — I waitressed [and] I worked in offices to stay afloat and pay my mortgage. It came to a point where I wanted to sublet. But because it was not allowed in the community, I didn't even approach the board," she recalls. "I was sure there were plenty of other people who were in my situation, and I understood that sublets could get out of control. … But rules are rules." She eventually retrained herself for a new career as a teacher and is much happier.

Jeff Weber, a principal in Weber-Farhat Management and the manager of Mack's co-op, notes boards should look at the economics of the situation when they are weighing how tough they should be.

Lynn Whiting (at left), director of management at The Argo Corporation, agrees. "With arrears, if you're going to make a policy to get them to pay you back, that really has to be looked at on a case-by-case basis. As part of the monthly meeting, we review an arrears report, which lists who hasn't paid. And it's almost always the same cast of characters; with some people, it's just their nature. You pay, and then you don't pay for three months, and then you pay something. If someone is chronic like that, I'd be less likely to be lenient. But with someone for whom it's an aberration and who makes a good faith attempt to pay something, then I'd say boards should be flexible."

Peter Lehr, director of management at Kaled Management, adds that if you are faced with a rash of sublet requests, you should be a little stricter. "You don't want subletting to get out of hand," he says. "But if you have only one or two real hardship cases, you can be a bit more flexible. You can work with them."

At Mack's co-op, for example, a shareholder in arrears offered a solution: He would sublet his apartment for six months to someone who could pay in full, while he worked out his financial problems from cheaper digs. It seemed like a workable plan to the board — which had to okay the shorter-than-normal-term sublet — and the directors felt they would get the co-op its money without defaulting the owner with his lender.

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