The housing market in New York City is forever evolving. The traditional rental market is tight and many New Yorkers are now renting a coop or condo from a single unit owner as an alternative. When this happens, difficulties can arise because these property owners are not professional landlords and, to be honest, don’t always know what they’re getting themselves into! They often rely on brokers, property managers, friends, lawyers, their cousin Vinny, whoever, for guidance on how to be a landlord. This isn’t always the best tactic. Likewise, tenants don’t always know what they’re getting themselves into either.
If serious issues arise, you might need to hire a lawyer. Hopefully it won’t get that bad. I’ve listed some pointers that, if followed, should help you avoid that.
If you’re a landlord of a coop
- Know the rules of your particular coop. Confirm that your coop allows you to sublet at all.
- Even if your building doesn’t have a doorman, don’t assume what goes on in your apartment goes unnoticed and that you can sublet with impunity. If the board discovers you are subletting without approval, there are likely to be major repercussions.
- Check to see if there are any coop subletting fees. Sometimes these are based on a dollar amount per share per month. Depending on the building, the fees can be hundreds of dollars.
- Check to see if there are any time limitations for subletting. Sometimes you must use the unit as your primary residence for two to three years before subletting. Some coops limit the how long you can sublet -e.g. two years and then you must resume occupancy.
- Be aware of the financial requirements – almost all coops will require board approval.
- Provide a proper sublease for your subtenant. Don’t download something off the internet. Not all leases are the same. If you’re using the wrong form, it will be a huge hassle to sort the mess out.
- And lastly, do not let the tenant take occupancy before he or she has been approved by the board!
If you’re a tenant in a coop
- Know the coop rules.
- No excuses, no exceptions, do not, do not, move in without approval from the board.
- As a subtentant of the coop, do not pay rent or your broker commission until you are approved by the board. If you are required to pay such funds to the broker, make sure they are held in escrow and that they’re returnable if you’re not approved by the board.
If you’re a landlord in a condo
- Follow all applicable rules for coop owners – in general, rules in condos tend to be more liberal than in coops.
- As the property owner, you must prepare the condo lease. This is a tricky form and the correct New York City condo lease form is required.
- Be aware of these two clauses in a standard condo form lease:
1. There is a 30-day cancellation period if the owner wants to sell.
2. If the condo increases common charges, the condo owner can increase his subtenant’s rent.
- Obtain a “waiver of right of first refusal.” This confirms that the board will waive its right to lease the unit from the unit owner and allows the owner to lease the property of his own accord.
If you’re a tenant in a condo
- Read the lease before signing it – as always.
- If you’re hesitant about the lease, hire a lawyer to review it.
- Know and follow the rules of the condo.