Rights of Inheritance Co-op Boards Change With the Times

Rights of Inheritance

Several months ago, I wrote an article for this column detailing the circumstances under which a cooperative

board could legally discriminate against those wishing permission to either occupy or purchase the stock and lease of a cooperative apartment (Boards Beware: Steer Clear of Discrimination, September 1994). That article explained that so long as a board did not engage in prohibited discrimination, its acts would be protected under the Court of Appeals' ruling in Matter of Levandusky v. One Fifth Avenue Apartment Corp., a case which insulated board members from liability for the consequences of good faith decisions made in the context of carrying out their elected responsibilities.

In recent years, however, there have been significant developments in one area of discrimination which has become increasingly troublesome for boards, namely, discrimination based upon real or perceived sexual orientation and/or marital status. In this rapidly evolving area of the law, co-ops frequently struggle with how to decide the occupancy or inheritance rights of individuals, often characterized as live-in lovers, who want to be treated as the equivalent of married spouses or blood-related family members.

In 1989 the Court of Appeals, in what has come to be known as the Braschi case, awarded rent controlled succession rights to a gay roommate who claimed and demonstrated domestic partner status. Later, amendments to the Rent Stabilization Law and Code echoed this change. Typical proprietary leases and House Rules, however, have been woefully inadequate to deal with these issues and often have not kept pace with the flurry of court and legislative activity in this area.

Traditionally, most co-op proprietary leases written prior to the court decisions and legislative and administrative changes mentioned above, restricted occupancy of a co-op unit to the shareholder and his or her immediate family members, usually including a spouse, children and other blood relatives. A typical use provision in such a proprietary lease would have read:

The Lessee shall not, without the written consent of the Lessor on such conditions as Lessor may prescribe, occupy or use the apartment or permit the same or any part thereof to be occupied or used for any purpose other than as a private dwelling for the Lessee and Lessee's spouse, their children, grandchildren, parents, grandM-parents. brothers and sisters...

Such lease provisions considered individuals who didn't qualify as family members to be guests who, under the same types of use clauses, could not occupy the apartment at all unless the shareholder lived there with them and, even then, for a period of no more than 30 days, without the occupancy being deemed an illegal subletting of the apartment.

When a shareholder wished to co-occupy his or her apartment with an unmarried lover on a long-term basis, the traditional restrictions imposed in proprietary leases, mostly placed years ago, were no match for the situation. This same dichotomy between blood or formal spousal relationships on the one hand, and long-term but informal relationships on the other, permeated the inheritance provisions of proprietary leases as well.

Thus, typical assignment provisions of older proprietary leases required board approval, which could be withheld in the board's unilateral discretion except that:

...i ffb f the Lessee shall die, consent shall not be unreasonably withheld to an assignment of the lease and shares to a financially responsible member of the Lessee's family other than the Lessee's spouse as to whom no consent is required.

Recent Settlement Gives Rights to Live-In Partner

As a result of these problems, a number of cases have been brought both in court and before relevant administrative agencies, in which unmarried couples, often gays or lesbians, denied the right to co-occupy or inherit an apartment on the same terms as married couples, demanded to be treated as a spouse or as the domestic partner of the shareholder for purposes of co-op proprietary leases, rules and regulations. Recently, a settlement of such a complaint, brought before the City's Human Rights Commission, was made which has important implications for what willor will notbe considered acceptable co-op treatment of this issue.

In that complaint, a Sutton Place co-op agreed to convey an apartment to the surviving companion of an individual who died of AIDS while suing to force the co-op to allow him to inherit the apartment he shared with the unit's original owner, who had died previously. Under the terms of the settlement, the co-op agreed to allow the surviving companion of the complaining party, himself the surviving companion of the apartment's owner, to inherit the apartment on the same terms as if he were the apartment owner's spouse. The co-op further agreed to see to it that its proprietary lease provision governing inheritance of apartment shares and leases be modified to explicitly treat domestic partners as spouses.

Although this was a settlement, and not a binding case precedent, how should boards act if the situation presents itself to them? First and foremost, it is apparent that, with changing times and mores, the language of traditional proprietary lease clauses restricting occupancy rights to shareholders and their immediate family offers little more than an incomplete solution and must be modified to the degree that they are no longer in conformity with existing law. This, of course, must be accomplished by following the co-op's procedures for modification of the proprietary lease agreement.

Updating Lease Wording

Review of new proprietary leases written in the last few years, following the publication of the rulings mentioned above, shows that many co-ops have begun to incorporate a more progressive approach to this issue. Some recent use clauses modify the definition of spouse as follows:

...The term M-spouse' as used herein shall also include a member of the same or opposite sex with whom the Lessee actually resides.

While this addition appears in several recent proprietary leases, some boards have chosen to be more precise in the wording they use, since they must be careful to avoid conferring spouse status on an individual who may only be in a short-term, casual romance with a shareholder who happens to die during the relationship.

The Braschi case, and other legal changes designed to protect unmarried or same sex life-partners of a tenant or shareholder, were not meant to protect casual relationships but, rather, long-term relationships characterized by emotional interdependence and financial commitment. Accordingly, some co-ops have considered qualifying the definition of spouse to include:

...a member of the same or opposite sex with whom the Lessee actually resides in a relationship which, in the reasonable opinion of the Board, is shown to demonstrate emotional interdependence and financial commitment.

In order to apply this more stringent definition, however, these boards became aware that they opened themselves to difficulties in resolving these issues, including the thorny questions of what type ofand how muchproof is sufficient to establish the stated criteria.

In the case of a traditionally recognized formal marriage, of course, there is a marriage certificate that conclusively establishes a spousal relationship. Yet, under circumstances such as those involving a ffb recently deceased shareholder, many boards do not wish to coldly examine the title to bank accounts of their shareholders to see if they were held jointly with their unmarried co-occupant, or to otherwise conduct detailed inquiries into the extent to which the two individuals held themselves out to the world as lifepartners. This, in large part, is why many proprietary leases written in recent years have opted for the more simplified definition, merely requiring co-occupancy. Either way, however, the board is acting within its rights and the path that any individual co-op chooses largely reflects the degree to which it considers it appropriate to examine the underlying details of claims to surviving live-in lover or family member status.

Make Inquiries Early & Annually

Considering the propensity for litigation and/or administrative complaint to agencies such as the Human Rights Commission that have been occasioned by inquiries like this, boards would be better advised to make appropriate inquiries when an individual moves in with a shareholder, and to monitor the situation thereafter, rather than wait for the unfortunate circumstance of a death before beginning to investigate the legitimacy of the claimed family member or non-traditional spouse relationship.

For example, the threshold question of co-occupancy has been resolved by changes to the Real Property Law, specifically allowing an individual tenant to have an unrelated roommate, notwithstanding restrictions to the contrary which may be contained in their lease agreement. Court decisions have interpreted the so-called roommate law as being applicable to co-ops. Nevertheless, that same law requires that tenants/shareholders advise their landlord of the existence of the roommate within 30 days of the roommate's having moved in.

Moreover, landlords, including co-ops, are entitled to demand that their tenants indicate, on a designated form, who the occupants of their apartment are, and what relationship, if any, they have to the shareholder or tenant of record. This early warning system remains the cheapest and best way of anticipating the issue and establishing the shareholder's position with respect to the relationship, if any, which he or she may have with their co-occupant. Demand forms such as this may be sent once a year and should be sent so long as the board is in doubt as to the nature of the relationship.

In addition to changes in the use clause of the proprietary lease, these changes in the law suggest the need for boards to re-examine their sublet policies so that individuals co-occupying apartments incidental to such relationships are no longer considered illegal subtenants to the extent they co-occupy in excess of the 30 day limit found in many proprietary leases.

This change can be accomplished through board resolution amending its sublet policies to exempt live-in lovers and other roommates from the purview of the sublet rules. Amendment of the lease to exclude such relationships from the definition of guest would also be appropriate.

In the end, the modern trend to recognize the legitimacy of non-formalized family-type relationships appears here to stay, albeit with certain limitations. To the extent these relationships are real, and not contrived for the purpose of improperly securing rights to an apartment, boards should not have too much of a problem with them. The task for vigilant boards is to distinguish between the two situations. Luckily, despite all the recent changes, these methods are still available and, when employed early, work best.

Mr. Zinns is a partner with the law firm of Jacobs Zinns & Braff.

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  • If a shareholder's husband of 25 years is not listed by name on the coop shareholder certificate, does the board have the right to refuse answering and dealing with the husband's complaints about unsafe conditions, etc. because the board says he is not a shareholder?
  • @unkown: As a managing agent, I don't talk to subtenants (they have to talk to me through their landlord, the Shareholder.) While practically speaking this is the case, I would never turn down information that is an unsafe condition. In fact, the Manager/Board may be opening the building up to liability should this unnoticed and unmonitored unsafe condition turn to damage, injury or death. I would certainly step to the side of the normal rule in this case.
  • My brother grew up in the co-op he now lives in. The shares were willed to him by my father. He never moved out. The new board of approximately three years sent him a letter from the co-op attorney telling him that since his name is not on the stock certificate, he either has to pay the flip tax or sell to a third party. My lawyer has sent their lawyer all of the the sufficient documentation and it's now a waiting game. Can the board do this to my brother?
  • I am in a similar situation to the person whose Brother grew up in the Co-Op. My Mother and I purchased a Co- Op about 15 years ago. She passed away two years ago. my name was never put on the Stock. We thought it had been done. Anyway , it is obvious I can pay the Maintenance since I do so. Do I have the right to stay or can the board make me pay the flip Tax and or Move?
  • I am a shareholder in a Florida Cooperative; it is a mobile home park & I own my unit. The share is in my name only. I want to make my sister 2nd occupant (I am a widow). My coop insists that her name go on the share as joint shareholder. I do not want to do this. Any thoughts?
  • I am in a mobile home park where we own 1 58th. share of the corp. Ownership requirements state that owners must be over 55 yrs. old, a married man and woman. I would like to sell my unit to a gay couple that meets all the requirements except "man and woman". Is it legal for the board to deny their purchase.
  • @Barbara: Use a sublease and make your sister your undertenant and attach it to your proprietary lease. This way you won't have to put her name on the certificate thus keeping the occupancy separate provided you stay and reside in your unit. Also, I've never heard of joint shareholder. However I'm familiar with joint tenancy which means all parties jointly own the property. Hope this helps.