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- Timeline for Closing on New York City Real Estate - April 10, 2018
- The Mortgage Recording Tax in NYC - April 3, 2018
- Questions to Ask a Real Estate Attorney in NYC Before Hiring - April 2, 2018
Co-op boards have rules you need to follow, including those that guide everyday living. A co-op board is interested in protecting its investment, and it is natural to have policies that involve subletting your unit. These are useful to know, even if you do not plan on renting out your apartment since this can affect your resale value. Potential buyers look at the percentage of owner-occupied units in comparison to rentals as a factor in their decision.
REBNY Co-op Apartment Sublease
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You need to check the subletting rules since these run the gamut. It ranges from forbidding all rentals to allowing them with no restrictions, allowing you to sublet freely if a very liberal board.
In between, co-op boards allow subletting but apply certain conditions. This is not unusual, but it means you need to pay close attention to the details.
Common Co-op subletting restrictions
Co-op boards can apply a residency time required prior to permitting subletting. They do this to ensure the building does not get overrun with investors since renters generally do not have the same pride of ownership. Under this subletting rule, you have to live in your unit for a certain period of time. For example, once you buy the co-op, you have to occupy the apartment for a 1 – 2 year(s) period, at a minimum. You may also have to get board approval prior to subletting.
Minimum and maximum subletting terms are also common rules the board imposes. Under these conditions, the board states a minimum lease term in order to minimize rental turnover and discourage short-term renters. The Board could also impose a maximum rental term, after which the owner has to request a renewal. Subletting rules could also limit the number of consecutive periods you can sublet. For instance, after the third consecutive year subletting, you must either move back or sell the unit. The board could also limit the number of subletting periods within a defined set of time.
The co-op board could ban subletting altogether, but allow it in a certain instance. In these unusual circumstances, you would likely have to present your case to the board.
There is a price
Co-op boards generally do not like subletting. In order to discourage its use and raise revenue, there are typically fees attached to the lessor. This may be imposed as an upfront fee or paid out over time.
Under a co-op’s subletting rules, they may institute additional fees, such as an increasing percentage based on the number of years you sublet and annual renewal charges.
Remember to account for these fees when setting your monthly rental charge.
Investors are likely to find a condo board imposes fewer restrictions. If you are seeking a full-time rental, this is no doubt the easier route, although condo properties are costlier.
A co-op could work for those that are seeking occasional rentals, however. For instance, subletting your co-op unit might fit in the rules for those taking a temporary overseas work assignment or have a summer home.
We have given you typical subletting rules, but we implore you that investigating the subletting rules prior to purchasing the unit will save you a lot of headaches.