Subletting my co-op

You need to talk to them, dear; we're not on the board - yet!

Go to The Real Deal. It should still be up, there was a video on how one of the options for coop boards was to be more flexible regarding sublet terms.

Coops hate to relax net worth/reserve requirements for buyers, and it's the last thing they generally do (many do wind up doing so in a downturn, at varying levels, but right now I think most are still holding firm), but they also hate having fees in arrears and many will become more flexible regarding sublet policies.

Ask for a professional's advice. The school scenario is throwing yet another wrench in the issue. Coops don't want to force people to sell in down markets for no reason, they just want to protect their financial situation/STATUS so depending on the coop you might be OK or someone might suggest that you ask for a two-year sublet provision and then see what happens.

my former coop would not rent under any circumstances -- in fact -- they forced somebody transfered to London to sell at a 50% loss of investment. Some boards just think being inflexible makes sense... Shame.

question: when that person bought their apartment, were they told that subletting was not allowed?

yes, it is in the policy that its a 1 year sublet rule. basically the rules says "1 year allowed if the owner can prove hardship and that it is a verifiably short-term engagement." my argument is that being forced to change careers (or, well, not land a job in the current career and be uemploymed for god knows how long) and pursue further graduate study (ie law school) are enough of an argument for bending the rules. just wondering if these are sufficient in most people's eyes, or whether its a lost cause. i also am wondering whether there is some "reasonability" (is that a word?) form of recourse that one could take in this circumstance, whereby one can argue that it is nuts, given the completely different economic landscape we are in, to force people to be prisoner in their aprtments if life throws a new wrench!!

i mean, can all people in their coops start some sort of revolution?? :-)

I sit on a coop board in a pretty chill midsize building on the UWS. I assure you that as a board member, my primary sense of duty is toward the fiduciary well-being of the building. I would consider forcing a shareholder to sell at a loss and establish a poor comparable sale for the building a breach of that duty. I hear of many boards willing to work with tenants in difficult situations or reevaluate building policies wholesale to adjust to current market realities. Submit a formal, written request to your board for consideration at their next meeting, either directly to the board president or preferably through the managing agent.

I'm on the board in my building (a VERY chill small building in Brooklyn) and I agree with OTNYC. Forcing a sale at a huge discount is ridiculous and I would argue that a renter paying market rate is much better than the big black mark of a lousy comparable sale, from the co-op's perspective. My building allows exceptions to the rules in certain cases.

In the early 90's when I started in this business, it appeared many boards did relax their sub-let policy because there were virtually no sales. We are in the beginning(?) of a cycle of job losses and a weak sales market that will certainly force boards to re-evaluate policy. This won't come over night, but will begin as owners like yourself petition boards.

Your first problem is convincing the board, which may bend in this economy. Your second problem is getting a tenant. Best of luck to you.

thank you all for your comments, they are very very much appreciated and provide some hope :) i actually presented a very succint, brief, formal request via letter to the head of the board, and they replied within a week or 2 stating that although they are sympathetic to my situation, they are obliged to follow the policy of the building. i am a very responsible, motivated, and reasonable person, and simply will not accept this without a fight. my next step would be to take it to the next level, ie speak with my lawyer to see how i can best proceed, and figure out a way to effectively ask the board to reconsider. i may propose to formally speak at the shareholder meeting to propse my request and my personal situation since i am a rather effective communicator. my general view is that coops are great becuase they fostor the community feeling, which i love, as i am respectful of others etc. but cant the boards understand that this "community" fostering can also be acheived by selectively choosing "renters" if the owner must sublet for a fixed amount of time due to temporaary job relocation or decision to attend graduate school out of state? i think there is a confusion between owners and renters who can meet the $$ requirements of the building, and are responsible, trustworthy, etc. am i missing something? cheers, everyone! look forward to your responses.

I understand why co-op buildings choose to limit renters for the very reasons you outline above. However, we are in a difficult time and boards need to be aware of the impact of this on shareholders. I would encourage you to refrain from engaging a lawyer until all other avenues have been exhausted. Approaching the managing agent is usually a good move, as they typically have a deep and rich understanding of the board, building, and what goes on in other buildings. They also tend to have tremendous influence with the board due to their visibility into other buildings' practices. Good luck to you!

10028 -- I think making an appeal at a broad meeting is a reasonable thing to do.

Be aware that a board's attempt to limit renters may not be arbitrary. Currently, for a buyer to get a mortgage in a co-op, both the buyer and the building must be approved. If a building's owner occupancy does not meet the lender's sniff test (which may be 50% or 70%, it varies by bank) then the bank is not going to write a mortgage on that building, even to Warren Buffett.

So it will help before you make your case to know what your building's owner-occupancy stats are. It's possible that the board does not want to push you into selling, but that their alternative -- allowing you to rent for several years -- could in conjunction with the credit crunch and the decisions of other owners put them in a position where NO ONE is able to sell unless they can find a cash buyer.

ali r.
{downtown broker}

^^"board" not "broad"

ali

yes -- it is in the proprietary leases

Also, first first coop allowed 2 years of renting -- where they received $25/mo. rent of the rent. You can use it (call it 5% of the monthly rent) as a FEE to the coop to incentivize revenue for the whole building...

i think you're on the right track but... (sorry) gotta make the $$$ a little more real.

either way, this is going to be a continuing and growing issue i suspect.

my coop increases maintenance feels by 25%! which is fine. so yes, the building would get extra $$ from this engagement. the buildings main argument is "why break something that is not broken" and "we like the all owner thing" and "its simply in the house rules." i'm definitely going to push this, and only involve my lawyer to the extent that he will help me draft a document to request re-consideration, and help me prepare my case in general. my plan at the moment is to get accepted to law school first, so that i can provide them with hard "evidence" to more concretely support my case. maybe also do some cash flow analysis for them - ie. tell them how much extra they will profit from this, and what steps i would take to ensure that my renter will be adequate for the building. my feel is that if i make them know i am serious about this (and not just using it as an option because i am lazy, or just somehow want to profit), that they might take my request more seriously, and allow me to sublet during my education. i will definitely lose my job some point int h near future (firm downsizing), and so at the moment saying "i might lose it" is not as firm as saying "i have lost it, and will not find something anytime soon."

You seem quite determined to get your way. You could surely go to law school while living in your NYC co-op apartment.

this is true. this will for one depend on whether i get into a nyc school, and will depend on cash flow coming in the door. sans the cash flow, i will need to live with parents in manhattan.

would urge caution about involving lawyer. very unlikely that you have any real legal angle here so you are only escalating for no upside. no one likes to hear from a lawyer -- does not help your sympathy approach.

They know or should know what they will benefit monetarily from your subletting. They might find your presentation patronizing or juvenile.

Simply saying that "my job is very shaky. I'm going to law school so I can have a career," might play better.

I tend to over think things also and go an extra step or seven when a simple explanation works better. That said I would go all out to find a board passable renter who doesn't mind going through the equivalent of buying a coop simply to rent. That will be the difficult part in a renter's market

I don't want to sound insulting when I say this, it truly is not my intent, but it seems like you're approaching this the way you might with mommy & daddy; I'll plead & pout & try again & eventually I always get what I want. It may not work in this case. I truly wish you the best but the board may not approve what you want to do.

no offense taken - no i definitely don't want to involve a lawyer! i would just ask him to help me draft an argument. thats a fair point - through this whole thing i dont want to sound juvenile... it was just a thoguht out loud (to show that i was mroe seriously trying to convince them). i think my best appraoch is to simply draft a bit of a longer letter than my previous one which explains my situation in more detail. in general i am just surprised that they cant make exceptions, given this market and given people's circumstances. its only because i feel like i can 100% reasonably justify my argument that i feel like i can change their mind.

List your co-op at a 90% discount to market value and hold an open house nightly--see how the board likes that (joking)

using a lawyer does not convince another party that you are "serious." there is an implied threat of considering actual legal action. this tends to inflame a situation and as i said earlier is quite ill advised when you don't have a legal leg to stand on.

i would urge you to take the face to face approach -- writing a longer letter is not going to get you anywhere. much more difficult for people to say no to your face.

you also need to start thinking about this whole matter from the other side--boards are under pressure to maintain status quo---once they make exceptions, they can run into trouble.

your best bet is to give them the words to explain to others why they made an exception for you and why your situation is different. (of course, the problem is that on the face of it your situation isn't different.)

Why would anyone want to buy into a coop (a NY city phenomena) when one can buy a condo with so much more freedom? I would hate people telling me what to do with my place that I payed for.

BWC

yeah exactly. i really dont want to cause a raucous (spelling?). and i do know that my situation is really no different than anyone else's situation (i mean, everyones situation is enough of a reason to fight to the board to approve). i think the following will give me the best chance i can get: 1. i need to go to 3-yr law school because of lack of job opporunitiy in my field for the foreseeable future; ie i NEED to reinvent myself. 2. i will lose my job and have 0 chance of finding an immediate similar opportunity that will pay as much., and as an addendum, i may ask that the board reconsider relaxing their rules because they are not realistic (eek, dont know how this would fly).

well you are buying shares of a corporation, its different than a condo, and some people like that "feel" better than condos because condos feel more like a hotel than a home. its more a community sense, i guess.