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Habitat Magazine Business of Management 2021

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The Roommate Law

Boards devote a lot of time to documenting and passing rules about subletting in co-ops. They have to, simply because banks have rules about owner occupancy and sublets. If you have too many sublets, the co-op can’t obtain financing. The issue of roommates complicates things, however, and many boards struggle over it. Regina Warren, board director at a Manhattan cooperative, is going through this now.

“We have a shareholder in our co-op who moved out,” Warren says, “and the shareholder now has a subtenant living in his unit. The subtenant went through all the proper co-op application channels and signed an appropriate subtenant lease. Now the subtenant wants to bring in a non-related roommate. Can the board require this new person to apply just like the original subtenant?”

 

 

Habitat publisher Carol J. Ott discussed Regina Warren’s question with two attorneys: Bruce Cholst, a partner at Rosen Livingston & Cholst, and David Byrne, a partner at Herrick Feinstein.

This transcript has been adapted from a “Legal Talk” podcast. It has been edited for clarity.

 

 

Carol Ott: What exactly is the Roommate Law?

Bruce Cholst: Basically, the Roommate Law is a statute. Under certain circumstances, it permits a residential tenant to bring in persons, other than those listed on the lease, to live in the tenant’s apartment without the landlord’s prior review or consent. It strikes at the very heart of cooperative living, though, which is to be in an environment where your neighbors are vetted. It allows a lot of unauthorized residents in the building.

David Byrne: My sense is that in this particular instance, the Roommate Law is not going to prohibit the board from engaging in its normal application and approval process. As I understand it, the Roommate Law is really protective of the tenant-shareholder while he or she resides in the apartment. So, once that situation no longer exists, then I think that the Roommate Law won’t provide a shield for the subtenant.

Bruce Cholst: It’s important to note that for the Roommate Law to apply as a shield, the tenant of record must be the primary resident. And in terms of this case, I think an argument can be made that it would not apply to roommates of an approved subtenant.

David Byrne: In some respects, it certainly undercuts the concept of cooperative living and the control aspect that is the focus of a lot of boards. However, it allows the shares to become a little more valuable because they become more condominium-like. The owner has more flexibility in taking in someone without going through an approval process.

Bruce Cholst: I wonder if people who are opting to live in a co-op rather than a condo would consider that a benefit? The stated purpose of the Roommate Law, when it was enacted about 30 years ago, was to help tenants meet their rental costs. And it certainly does help people who might have lost their jobs in this economy. It helps them stay afloat by letting them bring in a boarder, so, to that extent, it does help stabilize co-op associations.

Carol Ott: Can the board require notification when a roommate moves in?

Bruce Cholst: One thing the statute requires is that the tenant who’s bringing in the roommate must notify the landlord, if the landlord requests it, about who the roommate is. And I think, at the very least, boards should know who is residing in their building. At a minimum, they should ask for the name and the address of the roommate. In my opinion, the roommate occupancy is not subject to board approval.

Carol Ott: Can the board ask to vet the roommate before he or she moves in?

Bruce Cholst: I don’t believe they have that power. They can certainly do it if the proposed subtenant, out of a desire to get the lease, voluntarily approves and submits the roommate to review of the board. But I don’t think they have the power to compel it. And legally, I think, they would be required to evaluate the subtenancy on its own merits.

Carol Ott: One of the major tasks of a board is to approve who buys apartments and who can live in them. The Roommate Law seems to really undercut that responsibility.

Bruce Cholst: You’re absolutely right.

David Byrne: Regina’s board approved the subtenant. They already have a policy that allows non-shareholders to live there. In some respect, they lose the moral authority to decide whether someone other than a shareholder can live in their building by this fact.

Bruce Cholst: I think it does do an end run around the board’s approval. I think it’s not really so much about moral authority, but about how it restricts the cooperative concept of screening prospective occupants. It absolutely does strike at the very heart of that concept.

Carol Ott: Sounds like Regina Warren’s building is stopped in its tracks. They can’t require that the roommate apply to live in the building, despite the fact that the subtenant had to.

Bruce Cholst: Under the Roommate Law, I don’t believe they can.

Daid Byrne: I don’t think so, either. But they certainly would have a right to know who the roommate is, for safety and security purposes.

Bruce Cholst: The way the statute reads, the initial obligation to notify the landlord – which in this case is the board – is on the roommate, or the tenant who brings in the roommate. Notification must be done within 30 days. If it isn’t, then the landlord has a right to ask, and this response must be within 30 days. A roommate is not a sublet situation; it is separate and distinct. Boards should be very careful before jumping to conclusions that an unauthorized occupancy is an illegal sublet. They don’t want to start an illegal sublet proceeding and then learn that this is a valid roommate in accordance with the Roommate Law. The board should do their investigation up front before pulling the trigger.

 

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