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Q. Our co-op has a new house rule barring shareholders who have home-based businesses from having clients or customers come to their apartments. This is in direct conflict with the lease, which states that we may have any home occupation permissible under local zoning laws. How can we persuade the co-op board to rescind this rule? And if we can’t, what can the board do if we violate it?
A. If a new rule materially alters a shareholder’s rights and obligations, it may not be enforceable, because, it can be argued, it is an impermissible change to the terms of the contract between the co-op and the resident, according to Matthew J. Zangwill, a Manhattan real estate lawyer.
A co-op’s proprietary lease is the principal document that sets forth the dos and don’ts of daily living in a co-op, and the house rules are usually part of the proprietary lease. The lease, which is a contract between the co-op and the tenant/shareholder, usually gives the board of directors the power to adopt new house rules without the consent of the shareholders, Mr. Zangwill said. But a new rule would not be enforceable if it changed the terms of the contract.
"...Notwithstanding the foregoing, (a) the Lessee may use the Apartment for any home occupation permitted under applicable zoning law, building code or other rules and regulations of governmental authorities having jurisdiction..."
Nope, that clause isn't in our lease or the early 1980s-template used by many co-ops. If it's in your lease, however, then it sounds like you're covered and the board could not overturn it without a supermajority vote by shareholders.
You should ask a lawyer to confirm the zoning laws in your case. For example, the NYC Zoning Resolution states that a home occupation "occupies not more than 25 percent of the total floor area of such dwelling unit or rooming unit and in no event more than 500 square feet of floor area." Furthermore, you're only allowed one employee who doesn't live in the apartment. If you meet those criteria and the related ones specified in the zoning laws, and your lease contains the clause you quoted, then you should be okay, regardless of any house rule to the contrary. (I'm not a lawyer and you should definitely consult one if you plan to ignore a house rule because you believe it is unenforceable.)
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All the NYTimes Q&A is saying is that the board cannot pass and enforce a new house rule if it conflicts with the lease. That's been a settled point for ages and is not news. Changes to the lease require approval by a super-majority of shareholders.
The interesting part is the question-asker's claim that their lease explicitly allows home occupations. That would be quite an unusual provision, if actually present. Our own lease is based on the same template as many co-op conversions from the early 1980s. There is no mention of home occupations or zoning, and the language in Paragraph 14 ("Use of Premises") explicitly rules out any use except as a private dwelling: "The Lessee shall not, without the prior written consent of the Lessor on such conditions as Lessor may prescribe, occupy or use the apartment or permit the same or any part thereof to be occupied or used for any purpose other than as a private dwelling ..."
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