Ms. Demeanor's Vertical Etiquette

Dear Ms. Demeanor: My co-op board says I am on the hook for a full sublet fee even if I sell. How is that fair?

By Dianne Ackerman | January 3, 2020 - 1:00PM 

While it may be financially painful to pay a full sublet fee on a one-year lease if you're selling midway through the year, keeping a tenant will help you offset your maintenance payments.

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Question:

I own a co-op for many years. I have been subletting it for the past five years and now I am ready to sell. My problem is that the market is slow and it is taking longer than I anticipated to find a buyer. My tenant is willing to stay until I sell but the board will not pro-rate the sublet fee that our building charges. Should I let the tenant leave at the end of the lease, or pay the hefty fee and forfeit if I sell soon after? Signed, Perplexed Owner

Answer:

Dear Perplexed,

I understand your concern but life never quite works out in perfect time frames. If you let your tenant go at the end of the lease you may be liable for many months of maintenance. If you are lucky enough to sell right after the lease has ended you will be ahead of the game. But, you do not know what will happen. Even if you do find a buyer, it can take a while to close the deal.

I would be inclined to allow the tenant to stay until you sell. This will still give her plenty of time to find a new place and you will not be paying maintenance on an empty apartment. Of course, you can easily do the math and see which option makes the most financial sense.

Some buildings charge a sublet fee based on the number of shares you own. Others might charge one month’s maintenance. I certainly understand that the board will not allow you to pro-rate the fee, which I assume is for a one-year lease. It would be an accounting fiasco and set a precedent that would be unwieldy at best. I know it’s financially painful, but the rules are the rules. Just chalk it up to another owner’s expense like the flip tax and broker fee. You already must know that nothing in this city is cheap or easy.

Ms. Demeanor


Dianne Ackerman is the new voice of reason behind Ms. Demeanor. She has lived in her Upper East Side co-op for the past 20 years and is the vice president of her co-op board. She is filled with opinions that she gladly shares with all who ask—and some who do not. Have something that needs sorting out? Drop her an email.

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Planning to sublet? Think twice about buying a co-op

Most CO-OPS have very strict policies about subletting, which does not make them an ideal investment opportunity and can present a serious challenge if your job suddenly relocates to London, for instance.  The rules vary, but owners are usually allowed to sublet their apartment for no longer than 1 to 2 years in any 5-7 year period. The board also gets to approve your tenant and charge you a fee for subletting.

CONDO sublet policies are far more liberal.  While there may be rules against short-term sublets (say, less than 6 months), there is usually no outside limit nor do boards have the right to turn down a tenant unless they exercise that right of first refusal and lease your apartment themselves. This makes condos ideal if you are looking to buy strictly for investment purposes and rent out your apartment year round. But just like a co-op, the application fees, move-in fees, processing fees, etc., can range from a few hundred to a couple of thousand dollars extra that you or your potential tenant will have to pay. And, if you do make a home in your condo, you will be living in a building with a more transient population than a co-op. 

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