Many cooperatives and condominiums contain renters who live in investor- or sponsor-owned apartments. And although those tenants live in the same building as the resident-owners, they might as well, in some cases, live in a different world. If you're renting in a co-op or condo building, here's what you should know.
When the conversion boom took place in the 1980s, the vast majority of buildings that converted to cooperative status did so under what is "a non-eviction plan." This only requires that 15 percent of the tenants purchase their units in order for a building to convert to co-op. Those who don't buy can stay in their homes and still take advantage of applicable rent control or rent stabilization laws. The building owner sponsoring the conversions either retains the shares representing rental apartments or sells them to outside investors. These holders of unsold shares become the renters' landlords.
Although often lumped together, rent-controlled apartments (a diminishing number of pre-1969 units) and rent-stabilized ones (post-1969) have slightly different sets of rights. In either case, as far as a co-op or a condo is concerned, an outside party — the original sponsor or an investor who bought the unit — is the landlord of those apartments. He or she collects the rent is responsible for dealing with renters' issues concerning the interior of the apartment.
"The rent-regulated tenants are governed by the terms of their leases," explains attorney Arthur I. Weinstein, a founder and the vice president of the Council of New York Cooperatives & Condominiums. "It's very difficult for co-ops and condos to impose different conditions on them, however reasonable they may seem." If the original lease allows the tenant to have a dog, then the tenant can have a dog — even if co-op or condo house rules prohibit it.
"Rent-controlled and rent-stabilized tenants are not subject to the rules that everybody else lives by," says attorney James Samson, a partner at Samson Fink & Dubow. "There is no obligation for them to observe the house rules. Their rules, rights, and obligations are spelled out in rent stabilization codes and the rent regulation guidelines. A co-op board neither has the power nor the right to change those rules." Samson adds that renters usually have rights that were grandfathered in at the time of the conversion.
An Exception: Noise
Noise complaints are another issue, however, addressed not under the house rules but under city regulations and ordinances that govern quality-of-life issues.
"Noise is covered under basic contract law and real estate law," observes Weinstein, "so, if the rent-controlled tenant were creating a nuisance in the building, the co-op could probably force a shareholder [including the sponsor] to enforce a general rule of law prohibiting nuisance. If it's actionable under landlord-tenant law, the co-op could force the owner of the apartment to take action."
Similarly, Samson adds, "if the house rules are parallel with the city's regulations, you're fine. If the city law says you can't do work in a residential apartment after five o'clock in the evening, and your rules say five o'clock, then you're okay. If the board rule says four o'clock, however, you can't restrict the renters to that time. You can't take away the rights the tenants had."
But dealing with such complaints requires spending money on a lawyer. "Ultimately, you have to go to court," Weinstein says. "The only way to ever seek enforcement of anything is through the court system." It's questionable whether a court would actually support fines or eviction unless the breach of the lease were substantial or part of a persistent pattern. In any event, says Weinstein, an eviction "would have to be brought by the owner of the apartment, so enforcement by the co-op is a very problematic thing."
What About Repairs?
In rental buildings, the landlord is responsible for repair work inside apartments — repairing leaky faucets and malfunctioning refrigerators and the like — and also for repainting the apartment every few years. In a co-op or condo, those tasks are the responsibility of the unit-owner.
However, Weinstein notes, "In many buildings, the rental tenants try to get the building superintendent to do appliance repairs. That's not the obligation of the building staff. And that's an area of tremendous concern, especially if the managing agent is providing management services for the owners of those apartments on an across-the-board basis." Co-ops and condos have no obligation "to provide landlord-type services," he says. "They have to apply minimum required statutory services, like heat and hot water. Anything else is extra."
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?