Can Co-op Boards Throw a Curveball at Subletters?

A co-op board changed its rules, requiring all shareholders to carry homeowner’s insurance and all subletters to carry renter’s insurance. After pointing out that the sublease does not include any insurance requirement, and that the subletting shareholder is the landlord, a subletter wants to know: am I required to follow the co-op’s new policy?

The short answer is yes, says the Ask Real Estate column in the New York Times. The sublease may not explicitly require renter’s insurance, but the rental agreement most likely includes a provision requiring the subletter to comply with whatever obligations the shareholder has to the proprietary lease, the co-op bylaws, and the house rules – even if they change after a subletter moves in. 

“It’s not uncommon for a subtenant to find out that the house rules have changed – you can’t have potted plants on the windowsills anymore, or something more substantive,” says Eric Sherman, a partner in the law firm Pryor Cashman. 

Co-op boards often require residents to get homeowner’s insurance to protect the building and minimize any fallout from a mishap. Let’s say you leave the faucet on and the ensuing flood damages the apartment below yours. The downstairs neighbor might sue you for damages. The co-op wants to know you’re covered – and limit the number of claims anyone files under its master policy, which will help avoid future premium increases for the co-op. 

“The co-op wants all parties to have insurance so that it does not have to be drawn into any finger-pointing about the claim,” says Jeff Schneider, president of Gotham Brokerage, which specializes in apartment insurance. 

The good news: renter’s insurance is not expensive. The average cost for a policy in New York is $211 a year, according to ValuePenguin, a personal-finance website. In addition to the liability coverage, the coverage for personal belongings usually includes events that happen away from home.