Co-op Boards Need to Be Flexible on Sublet Rules

As we informed you in the December issue of Habitat, subletting in co-ops is a complex nest of rules, fees, benefits and potential problems. Three years ago a co-op in Westchester County, responding to hardships brought on by the housing market meltdown, lifted a sublet ban and allowed shareholders to sublet their apartments for up to two years.

After losing his job, one shareholder sublet his apartment two years ago and moved to Florida. The apartment is still worth less than the shareholder paid for it. With the sublease about to expire, can he allow the tenant to stay on a month-to-month basis while he tries to sell the apartment? What are the shareholder’s options?

“Let the board know (your) hardship,” Karin Posvar Picket, an associate broker at the Corcoran Group, advises in the Ask Real Estate column in the New York Times. “An owner who can’t pay maintenance is not good for (other) shareholders.”

A shareholder who goes into default and faces foreclosure or bankruptcy is not doing the cooperative any favors. As a result, many boards have found it wise to grant exceptions to sublet rules – such as the two-year limit at the Westchester co-op – “to accommodate those shareholders facing financial problems,” says co-op and condo attorney Ronald Sher, founding partner at Himmelfarb & Sher in White Plains.

Put another way, boards should not cut off their nose to spite their face.