Co-Op Sublease Agreements

By Christopher Raines
Make your subtenants aware of house rules against grilling on balconies.

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Apartment cooperative boards generally disfavor subleases by unit owners. Many boards include bans on the practice within their proprietary, or master, leases. Concerns over obtaining loans and controlling subtenants drive the dim view toward subletting. You might be able to sublet if you have to leave temporarily because of a temporary job assignment, such as a military deployment or serving as a visiting professor for a semester. Your sublease agreement recognizes that the co-op is ultimately the master of the sublease arrangement.

Asking for Board Permission

You must get the board’s permission to sublease your unit if the proprietary lease requires it. Some co-ops, such as University Towers Owners Corporation, have limited the number of units that may be sublet at any one time to 20 percent. The Woodlands at Islip prevents subletting beyond 12 percent of the units. You may need to explain why you’re subletting. Your proposed subtenant will have to apply for approval, and, as part of the process, submit to a credit check and an interview. If your proprietary lease with the co-op so provides, the board can deny the sublease request for no reason or for any reason that does not violate fair housing or civil rights laws. The co-op may charge application fees if the proprietary lease says so.

The Ceiling on Sublets

You must live in the apartment for a minimum period before you can sublease; the specifics vary by co-op. Board rules cap the amount of time you can sublease over a period of years. The maximum at NaBors Apartments is two years during a six-year period. Review your co-op rules for limits on the duration of your sublease agreement. You likely will need board approval to extend a sublease. The board may consider allowing a longer sublease term or waiving time caps if you or the subtenant has an emergency or other hardship.

Subtenants Must Follow Rules

Your subleases should incorporate or be consistent with the proprietary lease, bylaws and house rules. Shareholders and subtenants are routinely prohibited from nonresidential uses, so do not allow your subtenant to operate an office or studio in the unit. The co-op’s house rules and leases cover topics such as cleanliness, noise reduction and overnight guests. The subtenant may be required to get permission from you or the co-op to erect signs, repaint walls, hang decorations, replace floors, or otherwise alter the unit.

You Get the Money

You collect rent from the subtenants. Obtain from the subtenant a security deposit that can be applied to back rent or damages you suffer because of the subtenant’s behavior. You hold the deposit in trust, not as prepaid rent. If you're going to be a long distance away, consider asking the subtenant to pay the co-op directly up to the amount of your rent payment and have the excess, if any, sent to you.

The Creature Comforts

The co-op may choose to take responsibility for the subtenant’s water, heat and air condition, or may saddle you with the task. Normally, the subtenant must look to the corporation rather than to you for repairs to common areas. Payment of electricity, gas, cable, internet and telephone bills falls upon the subtenant. Your subtenant must arrange for these services directly from the utility providers, unless the corporation is charged for the services and includes them in rent.

About the Author

Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August 1996, Raines has handled cases involving business, consumer and other areas of the law.

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