Condos are a popular investment among buyers in part because, unlike co-ops, condo owners enjoy a relatively unrestricted right to rent out the apartment should the need or desire strike.
But sometimes, this seemingly advantageous freedom turns out to be a painful Achilles heel.
No authority, and little accountability
Unlike co-ops, condos lack the authority to reject undesirable renters who, even at first blush, would appear likely to cause problems in the building.
Instead, a condominium board’s only initial protection is a right of first refusal--meaning that if the board doesn't want a particular unit to be rented, it must rent the unit on behalf of the condominium association on the same terms and conditions offered to the unwanted tenant.
Compounding matters is the fact that although renters must live by the same rules and regulations as the condominium’s units owners, condominium boards face a slew of challenges when seeking the removal of a renter who causes a nuisance (such as odors or noise) or engages in illegal activity.
This is because there is no direct legal relationship between the condominium association and the tenant. Rather, the relationship is between the association and the unit owner, who is likely realizing a profit from the rental, or at minimum, offsetting the carrying charges for the apartment and who may be loathe to put their income stream at risk, or see it dry up.
All a condominium board can really do is ask the renter to stop, and ask the condo owner to either control or evict the renter.
Unfortunately, such requests are often not successful, as the tenant is simply a bad actor and, as noted above, the condo owner is not likely to be highly motivated to take any steps that would result in their loss of rental income.
Next stop: Court
If the unit owner can’t control and refuses to evict a problem renter, the next step for a condo board is to bring an action against both the unit owner and the renter, seeking a court order forcing the owner to evict the tenant and/or enjoining the renter from engaging in the problematic behavior.
Our firm recently handled a case on behalf of a Manhattan condominium board where the tenant of an otherwise lawfully rented condo unit was engaging in prostitution.
Although the case settled in relatively short order due to the undisputable evidence we obtained as a result of multiple police sting operations, we stood a very good chance of successfully stopping the unlawful conduct via an injunction and obtaining a court order compelling the unit owner to begin eviction proceedings against his tenant.
Not all cases are this easy, however, particularly where the alleged objectionable conduct might be considered more subjective in nature; i.e., noise and smells, abusive conduct toward the building staff, etc.
In these types of cases, the best solution from a practical perspective might be to simply continue documenting the objectionable behavior and, to the greatest extent possible, persuade the unit owner that he or she would be much better off not renewing the lease and finding another tenant instead.
A way out?
In theory, condominiums can try to narrow the ability to rent out apartments by amending the governing documents to restrict the duration of rentals and/or impose conditions such as the payment of a rental fee to the association.
Such an amendment would be difficult to pass--requiring, at minimum, the approval of a supermajority of unit owners who may not be thrilled to sacrifice the obvious benefits of having the freedom to rent one’s unit with virtually no limitations.
Bottom line: It’s hard for condominiums to have their cake and eat it too. Greater flexibility to rent brings the possibility of greater rental-related problems, for which a proactive and consistent legal response is the best approach.
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