RENTERS' RIGHTS, P.2

 

If the co-op or condo reduces services, a renter could be entitled to a rent reduction from the unit-owner. The unit-owner, however, still must pay the same maintenance/common charges to the co-op or condo — which can cause bad feelings between the owner and the board, and also lead to the courtroom.

"Boards sit in a room saying, 'I don't see why we can't convert the elevator to a self-operating elevator,'" says Samson. "Well, you can but there will be consequences. If you renovate the elevator, the owner then files for an MCI [major capital improvement] rent increase with the city. The tenant then opposes it by saying, 'That's not a capital improvement, that's a reduction of services.' The owner argues, 'We've got a whole new modern electrical system,' and the tenant argues, 'Yeah, but I've got reduced security in the building now.' The owner does not get an MCI rent increase, but the tenant gets a rent reduction — so instead of paying $400 rent, the renter pays $350. But maintenance is still $1,000 a month, so the owner of the renter's unit pays more…. So he may turn around and sue" the co-op or condo.

You're in it together

Or take this scenario, suggested by Robert Tierman, a partner in the law firm of Litwin & Tierman: "You've got a free-market tenant who is renting a year at a time and he's creating a nuisance so the co-op wants him out. The investor may say, 'Let him be. He's only got six months left on his lease and then I won't renew. I'm not going to waste my time suing someone who's only got six months left on the lease.' But the co-op gets tough and serves a notice to cure both on the investor-owner and the subtenant. The landlord will then sue his tenant in landlord-tenant court. If he doesn't do so, the co-op can default the two of them, which takes time and money, and the chance of getting legal fees back is not that great."

A better approach for a board would be to talk with the nonresident-owner and work something out. "There is no advantage for the investor to have a disruptive tenant," Tierman says. "The investor will probably want to have a good relationship with the co-op, too."

Boards that have followed this approach have found success. In Greg Carlson's 450-unit co-op in Forest Hills, the sponsor owns 20 percent of the units, but Carlson reports clear sailing. "He lets the co-op do what it wants; all he asks is to be informed when there is a big expenditure." The board not only informs him, its members ask advice, which he freely gives. "If we're going down the wrong road, he'll let us know. He looks at the co-op as a whole and says what's good for the co-op is good for him."

Boards should realize that it is better to get along with its renters and nonresident shareholders than to be confrontational. "Even if there was a troublesome conversion, there's no reason not to create a better relationship," says Sherry Frankel, president of Caran Properties. "It's very foolish not to. After all, you're in it together."

 

 

Adapted from Habitat July / August 2004. For the complete article and more, join our Archive >>