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 % surcharge on the upkeep charges for flats which might be rented out. That elevated to twenty % 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 proper to impose this further charge? 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 vast latitude to function in the most effective pursuits of the constructing and the shareholders below the enterprise judgment rule. Nonetheless, it’s best to verify your governing paperwork to see what they are saying about subletting.
Even when the board is inside its rights, that doesn’t essentially imply you need to be paying 20 %.
The proprietary lease ought to state whether or not subletting is allowed, and below which circumstances. However the charge 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 proper to impose a upkeep surcharge just like the one you describe.
“The board’s resolution to take action, and to extend or lower the charge, 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,” mentioned Andrew I. Bart, senior counsel with Kagan, Lubic, Lepper, Finkelstein & Gold, LLP.
Charging an additional charge for shareholders who sublet their flats is just not 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, mentioned Steven S. Anderson, a lawyer who works within the condominium and co-op observe at Becker. And there doesn’t seem like grounds so that you can keep away from the surcharge since you had been subletting your unit earlier than it was imposed.
Nonetheless, 20 % does appear a bit excessive, and could possibly be deemed unreasonable in courtroom, Mr. Anderson mentioned. Typical surcharges are round 5 or 10 %. Maybe the board, in understanding how a lot you might be charging your subletter to lease the house, assumes that you may simply pay it. Relying on how a lot lease you’re charging, you would possibly seek the advice of with a lawyer to judge whether or not demanding a decrease charge is price it.
For weekly e-mail updates on residential actual property information, enroll right here.
