Q: I purchased a co-op house in Queens about 35 years in the past and I’ve been renting it out. About 15 years in the past, the co-op imposed a ten p.c surcharge on the upkeep charges for residences which might be rented out. That elevated to twenty p.c about 5 years in the past. Ought to my house have been grandfathered in, exempting it from the surcharge? Does a co-op even have the precise to impose this further payment? The board claims that the co-op does have the authority, however isn’t it discriminatory to use the upkeep surcharge solely to nonresident house owners?
A: A co-op board has extensive latitude to function in one of the best pursuits of the constructing and the shareholders below the enterprise judgment rule. Nevertheless, you need to examine your governing paperwork to see what they are saying about subletting.
Even when the board is inside its rights, that doesn’t essentially imply try to be paying 20 p.c.
The proprietary lease ought to state whether or not subletting is allowed, and below which circumstances. However the payment won’t be listed. In some circumstances, leases give boards broad authority to set circumstances for the approval of a sublet, which can embrace the precise to impose a upkeep surcharge just like the one you describe.
“The board’s resolution to take action, and to extend or lower the payment, is ruled by the enterprise judgment rule, which allows it to make choices in good religion on behalf of the shareholders and inside its authority below the co-op’s governing paperwork,” stated Andrew I. Bart, senior counsel with Kagan, Lubic, Lepper, Finkelstein & Gold, LLP.
Charging an additional payment for shareholders who sublet their residences isn’t unusual. The board should deal with shareholders equally, however imposing this surcharge, and infrequently altering its circumstances, wouldn’t be discriminatory or unlawful if licensed by the proprietary lease, stated Steven S. Anderson, a lawyer who works within the condominium and co-op apply at Becker. And there doesn’t look like grounds so that you can keep away from the surcharge since you had been subletting your unit earlier than it was imposed.
Nevertheless, 20 p.c does appear a bit excessive, and may very well be deemed unreasonable in court docket, Mr. Anderson stated. Typical surcharges are round 5 or 10 p.c. Maybe the board, in understanding how a lot you might be charging your subletter to hire the house, assumes which you can simply pay it. Relying on how a lot hire you’re charging, you may seek the advice of with a lawyer to guage whether or not demanding a decrease payment is value it.
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