Why do so many Co-Ops not allow subletting? Are these policies 100% firm, or is it possible the board might?

Asked by Vanessa, New Rochelle, NY Thu Jan 29, 2009

approve a subletter for the right tenant? Let's say I live in the apartment for a few years and then have to move away for a 1-2 year period, but plan on returning. Do you think if I have been a good owner and have a good relationship with the board that I could get permission to sublet? There have been so many apartments that I'm really interested in purchasing, but I am applying to graduate schools and depending on where I get in, I might have to relocate for a time period. Looking for Co-Ops that allow renting has significantly marginalized my options and I'm feeling frustrated.

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Rey Hollings…, Agent, White Plains, NY
Fri Jan 30, 2009
Some coops allow renting after a certain probationary period, perhaps one or two years. Ask the management office if they have a probationary policy. The main reason why coops restrict renting is to protect the value of their properties. Owners tend to care for their building much better than tenants. As an owner, wouldn't you feel a little better knowing that your neighbors have a stake in keeping your neighborhood beautifully and valuable?

I can provide you with a list of coops that allowing renting if you are interested. Don't be discouraged. Some of these coops have great resale potential for when you graduate. Call me if you want the list.

-Rey Hollingsworth Falu
Licensed Associate Real Estate Broker
Houlihan Lawrence
Web Reference:  http://www.AskRey.net
1 vote
Peter A Harr…, Agent, Bronxville, NY
Thu Jan 29, 2009
Hi Vanessa

I know you have been asking a lot of questions, and they are all good ones!

Coops restrict sublets for two main reasons. The first is philosophical. The premise is the shareholders have made investments in their homes and they want to insure that the building remains stable, with turnover limited to when people sell and move on. With rentals turnover can be much more frequent.

The second reason is practical. The banks (what a surprise!). Fannie Mae underwriting rules generally do not allow more than 10% of the apartments to be sublet, or the banks may refuse to make loans in the property for purchases. That is a real problem if the coop is bumping up against the limit, especially now.

There are many buildings that will allow you to sublet for one year, with the understanding that you will return and reoccupy the apartment, or they will not let you sublet again. So that might be an option for you. In some buildings you can have an immediate relative (brother/sister, parent) rent your apartment, sometimes on an unrestricted basis. Each building has its own rules, and I understand how frustrating it must seem.

You are correct in thinking about the possiblity of a board giving you a break if you have been a good shareholder. But honestly, I would never suggest that you spend your hard earned money on that; who knows what the future will bring.

If you can swing the purchase of a condo, even a small one for now, that might be the answer for you. You can get FHA financing for condos, which require only 3.5% down, and the underwriting is much easier. I can help you figure out if this might be a viable option for you.

Let me know if I can help!

Peter A Harris, ABR
Licensed Associate Real Estate Broker
Houlihan Lawrence

2 votes
Lou Pollak, , Larchmont, NY
Thu Jan 29, 2009
Dear Vanessa, yes this is truly a problem for many buyers. In fact, I just had this same situation with my son but fortunately he found a sponsor's unit and worked out a situation whereas he could put in one of his employees for rent but they had to stay at least a year. Every co-op has their own rules, however, the reason they don't sublet is because the shareholders are protecting their investment. When a building has mostly renters in it, and I recently showed one that allows renting in New Rochelle, the apartments were very run down and not taken care of. Many tenants just don't take care of their units since they don't own them. Another problem generally is that if a building has more than 52% not owner occupied (now that number may have changed I would have to check it out to be 100% accurate), the banks will not give out loans.

If an owner of a unit has a hardship, many times the co-op will allow them to rent for 1-2 years. Again, every building is different. If you could afford to buy a condominiium, and they are generally more expensive, that would solve your problem. They also have some rules and regulations, but allow renting.

I hope this helps and I wish you all the best. Please feel free to contact me if you need more information.

Warmest regards,
Lou Pollak, Associate Broker
Over 23 years experience in the Larchmont, Mamaroneck & New Rochelle areas
Houlihan Lawrence
cell: (914) 943-6677
1 vote
Patricia Mem…, Agent, New Rochelle, NY
Sun Jan 3, 2010
Subletting can reduce values and lead to problems for a Coop....especially if the tenant is problematic but there are coops that allow it after one year or limit it to one year leases. pmemoli@msn.com New Rochelle
0 votes
Marjorie S.…, Agent, Larchmont, NY
Fri Jan 30, 2009
Most coops do not allow renting--they really want the units to be owner occupied. Sometimes with a proven hardship thy will allow a one-time lease, but most coop boards are inflexible on this matter. You are probably best off buying in a building that you know will allow a rental--there is one in Larchmont if that would be helpful.
0 votes
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