A co-op cannot charge a sublet fee solely because a shareholder permits his mother-in-law to occupy an apartment. That was the conclusion of the appellate court in 445/86 Owners Corp. v. Charles Haydon In this case, where the co-op objected to a mother-in-law's occupancy, its proper remedy was to bring an action to end the use because it was impermissible under the lease without the concurrent occupancy of the shareholder.
In an action by a residential co-op against a shareholder to recover sublet fees in the sum of $25,294.71, the motion court, granted summary judgment for the co-op, and the shareholder appealed. The appellate division of the Supreme Court held that: (1) the lease did not permit the tenant's mother-in-law to live in the apartment without the tenant also living there at the same time, and (2) sole, non-permitted occupancy of the apartment by the tenant's mother-in-law did not constitute an illegal sublet.
Insofar as pertinent, paragraph 14 of the proprietary lease provided that the apartment may not be used for any purpose "other than as a private dwelling for the Lessee and Lessee's wife, their children, grandchildren, parents, grandparents, brothers and sisters and domestic employees."
The appellate court said that the motion court correctly construed this provision as permitting occupancy by the listed persons other than the lessee only if the lessee maintains a concurrent occupancy. This meaning was manifested by a grammatical structure that did not differentiate between the lessee's family and domestic employees.
Thus, to hold that paragraph 14 permitted the defendant's mother-in-law to live in the apartment without the defendant also living there at the same time would be to permit the defendant's domestic employee to live in the apartment without defendant also living there at the same time - a patently unintended if not absurd result, in the court's view
The court cited the Roommate Law, Section 235(f) of the Real Property Law, where it has been held that the tenant or the tenant's spouse must be in residence in order for the apartment to be occupied by the tenant's family or an additional occupant. The court found it unnecessary to decide whether paragraph 14 was enforceable to the extent it conditioned a spouse's occupancy on the lessee's concurrent occupancy, and was therefore apparently more restrictive than Real Property Law Section 235-f(3).
The appellate court also found that the motion court had correctly held that, under the broad language of its proprietary lease and bylaws, the co-op was entitled to impose and collect sublet fees without the approval of a majority of its shareholders.
However, the appellate court said that the motion court had erred in concluding that the sole, non-permitted occupancy of the apartment by the defendant's mother-in-law constituted an illegal sublet. While the defendant admitted that the apartment was occupied solely by his mother-in-law, the appeals court held there was no evidence that such occupancy was by virtue of a right that could not be revoked for a fixed period of time.
To the contrary, on the evidence presented, it appeared that the mother-in-law's occupancy was at the defendant's will and that she was therefore his licensee, not tenant. Nor did the proprietary lease or plaintiff's bylaws anywhere define a non-permitted occupancy as a sublet. Accordingly, the court held that the co-op was not entitled to summary judgment on its cause of action for sublet fees, and the lower court's decision was modified accordingly.
Although Real Property Law Section 234 affords the tenant a reciprocal right to attorneys' fees where the lease contains a provision entitling the landlord thereto, to support such an award, the appellate court held that the judgment must be substantially favorable to the tenant. Even if the defendant ultimately prevailed on the issue of whether he must pay sublet fees, any judgment that did not recognize his mother-in-law as sole occupant of the apartment could not be said to be substantially in his favor. Accordingly, the court denied the demand by the tenant for reimbursement of its legal fees.
Comment: It appears that the co-op pursued the wrong remedy. Instead of seeking to collect a sublet fee for the sole occupancy of an apartment by the shareholder's mother-in-law, it should have brought an action to end the unauthorized use of an apartment by a family member where the shareholder of record was absent, a violation of most proprietary leases.