To Let, Or Not to Let The Impact of Subleasing on Co-op Buildings

Even though subletting is often frowned upon by boards and sometimes forbidden outright, that doesn't stop shareholders all over the city from renting out their co-ops. Shareholders may sublet as a means of making money on an apartment that's not their primary residence, or as a way to avoid paying maintenance on an apartment they won't be occupying for an extended period, perhaps because of work or travel. Sometimes even a building's sponsor will rent out unsold units as a way of generating extra income.

But with these renters come a whole slew of related issues. Are people who sublet in a co-op bound by the same rules and regulations as the shareholders of a building? What about subletters grandfathered in as rent-controlled tenants when the building converted to a co-op? Are they equally responsible for contributing to the building's upkeep? Do they represent a liability for shareholders trying to negotiate favorable loan terms from a lender, since too many sublets in a building may be viewed negatively by lending institutions?

How Common Is It?

For most co-op buildings, the idea of subletting individual shareholder's apartments just doesn't sit well. Certainly many restrictions are placed on those people who do sublet, and sometimes the practice is restricted altogether. Restrictions vary, depending on where the building is located, who lives there and even on what the market is doing.

"During the last bad real estate market, many shareholders could not sell their apartments without suffering a loss in equity," says Robert Harwood, chief operating officer of Century Management. "And many boards realized that they had to accommodate their constituents by letting them sublet."

These days, however, the market is healthier in the city, so boards tend to make it difficult by setting restrictions on sublet situations. Such restrictions include prohibiting people from subletting more than a certain length of time and charging them substantial sublet fees, according to Harwood.


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  • Can co op refuse me, (a shoareholder) taking a home equity loan against my own space? I have no mortgage and worth 2 million and need a half million. what reason?