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Co-op Boards' Powers Make Illegal Sublets a Very Bad Idea

New York City, New York City

Illegal sublets, co-op boards, shareholders, legal bills, house rules.
Oct. 31, 2022

Q: A subletter's two-year lease in a co-op is about to expire. Co-op board policy forbids a renewal, and the board has rejected a request for a lease extension. The shareholder, who lives overseas, is discussing an under-the-table deal to allow the subletter to remain in the apartment, which is in a doorman building. Is this a good idea?

A: This is not advisable, replies the Ask Real Estate column in The New York Times, particularly for the landlord in this arrangement, who is a shareholder in the co-op. The co-op board has many tools at its disposal to make her life miserable, and it's reasonable to assume the board will know that the subletter hasn’t moved out — this is a doorman building, after all, and doormen typically keep an eye on who comes and goes.

Most co-ops have strict rules about sublets; if this building enforces its rules, it will not make an exception for the landlord. “This is generally not a good idea,” says Nancy Kourland, a lawyer at the Lasser Law Group, adding that the board could issue fines, sue the shareholder, and even force the sale of the apartment.

So what would happen to to the subletter if he stayed in the apartment after the lease expired? The relationship with the landlord would almost surely sour fast, since she would presumably be dealing with this from abroad and would be under enormous pressure to get the subletter out. If the subletter decides to dig in and not move, the shareholder would have to persuade him to go, maybe by paying his moving costs, Kourland says. All the while, the shareholder is racking up fines from the co-op board — and could be on the hook for its legal fees.

Timothy Collins, a partner at the law firm Collins, Dobkin & Miller, sees an alternative outcome, in which the shareholder gets hit with the board's legal fees or even damages, depending on the terms of the agreement signed by the subletter and the shareholder, and the final outcome of the legal skirmish. “The point is, as a general rule, illegal sublets are highly ill-advised all around,” says Collins, who represents tenants.

So before agreeing to an under-the-table extension of a sublease, the subletter and shareholder should ask themselves: Given the power of a co-op board, do we really want to deal with this kind of stress? 

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