A shareholder in a large co-op on the Upper East Side of Manhattan reports that fellow shareholders routinely sublet their apartments on a short-term basis, in violation of co-op rules and state law. Is failure to stop the practice a sign that the co-op board is shirking its fiduciary duty?
Not necessarily, says the Ask Real Estate column in The New York Times. It’s possible the board has sent warning letters and levied fines against the illegal subletters – but those deterrents have failed to work because subletting profits are so high.
“Shareholders sometimes ignore the fines and notices, but it isn’t for lack of effort from boards or management companies,” says Jacob Sirotkin, the vice president of Century Management.
Then again, it’s possible the board is asleep at the wheel when it fails to enforce the law. If so, shareholders can report illegal sublets to 311. Or they could urge the board to tighten the rules, such as requiring shareholders to accompany all overnight visitors when they enter or exit the building. If the building doesn’t already have a sublet policy, the board needs to enact one. Now.
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