New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide

HABITAT

Subscribe for Daily Updates!
No fee for sublets and fees for others in a coop - fair?Feb 26, 2018

My coop charges 15% of maitenance for any portion of the first year in which an apartment is sublet.

However, for shareholders who are renovating they have allowed sublets (of vacant shareholder apts) where this fee does not have to be paid. This seems unfair and inconsistent.
Is this allowable/ equitable/legal?

Join the Conversation Comments (1)
Sublet Fees - Steven424 Feb 27, 2018

My Co-op charges a monthly fee for sublets. It is on a per-share basis, but since maintenance is based on the number of shares, it is roughly equivalent.

There are a number of reasons why co-ops charge a sublet fee. Probably the most significant is to discourage sublets. A sublet puts extra work on the board and managing agent to make sure that the strangers being granted access to the building do not present a security and safety risk, and will fit in well with the rest of the shareholder community.

Too many sublets make it difficult for shareholders to sell or refinance their apartments because banks use the number of concurrent sublets as one of the factors in deciding to approve or reject a mortgage.

Sublets cost money in terms of extra paperwork and bookkeeping for the MA, credit and background checks, interviews, etc. The fee helps to recoup some of these expenses.

These are the reasons why most co-op charge a sublet fee, impose a time limit (usually 2 years) on the length of a sublet, and have a limit on the number of concurrent sublets.

If the board allows an existing shareholder to use a vacant apartment during a renovation, almost all of the reasons for discouraging a sublet vanish. The shareholder's character is already known to the board, the duration of the sublet is usually very short, and almost no additional expenses are incurred by the co-op or MA.

Is is allowable/equitable/legal? In my opinion, absolutely. First, in my opinion it is both allowable and legal. Subletting to an existing shareholder without a fee does not create a new class of co-op shares, which is prohibited under co-op regulations. I'm assuming that either the co-op owns the shares of the vacant apartments or that the shareholder-owners have given permission. I don't believe a board can force the owner of a vacant apartment to sublet to another shareholder or anyone else.

Is it equitable? I believe the Business Judgement Rule gives a co-op board the power to waive fees like the sublet fee if they feel it is appropriate to do so. It might be a different story if the board waived the sublet fee for some sublets to external tenants and imposed the fees on other sublets to external tenants. That would be a question for an attorney, or maybe someone else on here knows the answer. There may be finer points to the definition of a "sublet" I'm not aware of.

I hope this helps.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation

Introduce yourself to other members of Board Talk! Log in below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Introduce yourself to other members of Board Talk! Login below or register here.
Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Ask the Experts

learn more

Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

Source Guide

see the guide

Looking for a vendor?