How do you get rid of unwanted occupants in a co-op? Habitat poses the question to Marc Luxemburg, partner at Gallet Dreyer & Berkey.
Some co-op boards find themselves in an awkward situation with an unwanted occupant in an apartment. How do you get rid of such occupants?
We had a shareholder who moved out and subsequently died, and the apartment was vacant. The family moved an in-law into the apartment who was in her 90’s, and the board suddenly found itself with somebody living in the apartment who wasn't a shareholder, wasn't even a family member of a shareholder. And the board said this person has to move out.
Don’t co-op boards have tools for uprooting unwanted occupants?
Yes, there's a hardball way to go at it and maybe a softer way. This board was originally of a mind to start serving legal notices and, if the occupant didn't move out, to go into litigation. But there were a number of factors that had to be considered. First was the fact that the person in the apartment was in her 90’s, and to try to evict somebody who’s that old is, you know, not good public relations.
You wind up on Page Six of The New York Post!
Right. You certainly could, and the building didn't need that kind of a black eye. There were other considerations. The family had lived in the building for a long time, they had friends in the building, and the board had to consider how this situation would affect other people who might want to have guests living in their apartments. They did not want to set a bad precedent. On the other hand, they did not want to get involved in litigation and bad publicity.
What did you advise them to do?
My suggestion was that to offer the family a softer way out. And so, along with sending them a strong letter saying the occupant has to leave, we gave them several options. They could have another family member buy the apartment and then have the elderly occupant live with that family member, who would then be a shareholder. That would be one option. Even though they didn't quite fit the sublet rules, we said the board would consider giving them a one-year sublet to allow the situation to be resolved. The family kind of waffled for a while, and then they decided they would try to have the apartment bought by one of the other family members. Unfortunately, that family member had a bad history in the building.
So there was some bad blood between this person and the shareholders?
Actually it was with employees and with shareholders. And so after a lot of back and forth, the board finally decided to reject the purchase application for these subjective reasons, which is always difficult. And I said, “You know, we need to soften this because if you reject a family member who has lived in the building before, the courts will have a lot of sympathy for that person. So you don’t want to put the family in a situation where they might want to sue to get the apartment and overturn the board's decision.” My view was: don’t put them in a corner, offer them a way out. So we said, “Sorry, your purchase application is rejected, but the occupant can continue to sublet for another year.” The family contemplated that for a while, even hired a lawyer, but ultimately decided not to fight. I don't know what went on in their minds, but I think certainly one of the considerations was that they really couldn't complain that the offer had been arbitrary or unreasonable. I understand the apartment is now on the market.
So that's a win for the board?
It seems to me that by taking the softer approach and not trying to hammer these people on the head with legal notices and threats of litigation, we were able to resolve the matter in a satisfactory way, within a reasonable time period, and with minimal legal expenses. So, yes, it seems to me that was a win for the board.