Is Your Sublet Policy Letting You Down?

All happy families may be alike, but it’s safe to say that no two co-ops are exactly alike. And one area where boards need to tailor the building’s policy to its personality is in subletting. For some co-ops, subletting is anathema; for others, it’s a grudgingly accepted fact of life; and for others, when well regulated, it’s a welcome source of revenue both for shareholders and the corporation.

As a building’s demographic changes – growing grayer, say, or skewing to younger couples with children – boards need to make sure their sublet policy is in line with the current shareholders’ needs. The process for updating the policy will depend on the rules contained in the proprietary lease, say a panel of lawyers convened by Brick Underground.

"Typically a change such as this would entail modifying the bylaws and likely the proprietary lease and, more often than not, would entail a shareholder vote," says attorney Dean Roberts of Norris, McLaughlin & Marcus. "However, some co-operative documents allow the board to make a change such as this in sublet policy."

If there's nothing written in the proprietary lease regarding sublets, the board of directors would technically have the power to establish new policies at its own discretion. But if you'd like to amend your current proprietary lease to loosen the rules for subletting, your board will need to put the issue to a shareholder vote, and will typically need approval of a 75-percent “super-majority.”