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Non-Owner Residents Managing Renters, Subtenants, and Short-Term Leasing

Aside from yourself, who exactly may live in your condo or co-op unit? While you as the owner might believe you have the sole authority to make that decision, most (if not all) condominium and co-op properties today have policies spelled out in their governing documents that determine the answer to that question.   

The Nature of Restrictions

Andrew B. Freedland, a shareholder with the Manhattan-based law firm of Anderson Kill, explains that the two types of ownership convey very different status on the nature of the leasing relationship.  “In a co-op, it’s a sublease,” he says, “because you [as a shareholder] are the tenant, and you are issuing a sublease.  The terms by which you are able to sublet are prescribed generally by the proprietary lease and based upon the framework set forth in that lease.  Also, most co-ops have a set of house rules that detail what procedures fit within that framework.”

Freedland goes on to explain the differences in condominium ownership.  “In a condo, it’s a direct lease, because you are the owner of the unit.  In those circumstances, that is governed by the bylaws of the condominium.  In a condominium, when you lease out your apartment, the board doesn’t have the same set of rights as a co-op board does,” to dictate whether you may rent out your unit—within certain limitations.  What the condo board does have is the right of first refusal.  They may refuse the rental – but are then are obligated to rent the unit from you in place of the tenant you selected.”

In effect, in a co-op, the board has the right to approve or reject your sublease.  In a condominium, the board has the right to waive their right of first refusal, thereby approving your tenant or renting it themselves.  “This very rarely happens,” says Freedland.  “I’ve never seen it.” 

Subleasing in co-ops is governed by the proprietary lease, and in condominiums by the association bylaws.  No statutory laws exist to prohibit leasing of a condo.  In New York State, there cannot be an “unreasonable restraint on the alienation of real property.”  That’s why, Freedland explains, the right of first refusal is there.  It’s not interpreted as unreasonable restraint.

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Comments

  • The the wake of COVID, my condo's bylaw seem to be infringing on my rights as an owner. I understad some of the rules but others seem to go to far. I think you need to write an updated article. For example, in the rule and regulations (not the by-laws) the section on use has no language in it as the right of first refusal and reads as follows : OCCUPANCY AND USE OF UNITS Each Unit shall be used in the manner set forth in the Certificate of Occupancy. Residential Units shall be used for residential use only and not more than one family may occupy a Unit at any one time. A Unit owned or leased by an individual, corporation, partnership, fiduciary, or any other entity may only be occupied by occupants designated in writing in advance of occupancy and providing the Unit Owner permits such assurances that the Board may require with respect to such occupancy compliance with the Rules and Regulations, including, without limitation, formal assurances, respectively; or by the Family Members and guests of any of the foregoing (and nothing herein contained shall be deemed to prohibit the exclusive occupancy of any such Unit by such Family Members or guests). Notwithstanding the foregoing, the Condominium Board may, in its sole discretion, permit Persons other than those set forth above to occupy a Unit. In no event, however, shall a portion of a Unit (as opposed to the entire Unit) be sold, conveyed, leased, or subleased. Guests of Units Owners may occupy a Unit concurrently with the Unit Owner or the Family Member residing in the Unit. Any guests to occupy a Unit may only do so after approval by the Board of Managers and providing such guest(s) vacate the Unit within thirty (30) days after individual occupancy. No Unit Owner may permit a guest to occupy a Unit more than thirty (30) days in any twelve (12) month period without the Board of Managers’ consent. Any vendor, employee or other entity or person to be given access to a Unit in the absence of a Unit Owner (including but not limited to cleaning services, delivery services, home health aides, contractors, nannies) must be registered with the Condominium and provide such information as the Condominium shall request. Short-term rentals and transient occupancy, such as through services like AirBnB, are not guests and are not permitted by law or pursuant to these Bylaws. No consideration may be paid or received in connection with guest occupancies, and in the event any such consideration is paid or received, such occupancy shall be deemed to be a lease of a Unit in violation of the Bylaws pertaining to the leasing of a Unit. In the event the Board of Managers, in its sole discretion, determines that a guest is not in compliance with the Condominium’s Bylaws or Rules and Regulations, and such noncompliance continues after notice is provided to the Unit Owner, such Guest may be denied further access to the Building, fines may be imposed and other action may be taken as permitted by law, in equity and/or pursuant to the Bylaws.