In recent news, a co-op board filed a lawsuit to terminate a tenant's proprietary lease due to illegal subletting. The co-op building's property manager caught some suspicious looking visitors coming and going from the accused resident’s apartment. He notified the board immediately, and with some digging, they found the tenant was subletting the space on Airbnb. Eventually, due to the resident’s unwavering denial, the co-op board had to subpoena Airbnb’s records for indisputable proof. To this day the case is still ongoing in court. Here are three steps you can take to prevent a similar scenario from happening in your building.
If resident’s renting out their apartment, on major concern is that there needs to be policies in place that make Airbnb-ing more difficult. Some examples are:
- A rule prohibiting guests from staying in an apartment without the tenant-shareholder.
- Prohibiting doormen from holding keys for guests.
- Prohibiting the doormen from allowing guests in who haven’t been approved.
- A rule prohibiting guests from entering who aren’t accompanied by the apartment owner.
- Creating a system where guests have to register with the building before entering.
These rules if enacted make it harder for residents to have a constant flow of strange guests entering and leaving the building.
If a unit owner has found a way around the rules and is using the apartment as a short-term rental, the first step is to send a letter to the resident demanding they stop. This letter does not have to be a formal warning and can come from the board or your property manager. Although a lawyer is not necessary at this point, but a lawyer could also send the warning letter.
If the resident ignores the first warning and persists, the next step is to check your by-laws. These will hold all the provisions against short-term rentals and rules informing you how to notarize the resident that they are in violation. You should have a formal warning written up and signed by the co-op board president. A formal notification such as this will put your board in proper legal standing, if legal action becomes necessary.
It is important to note that in co-ops the board is also required to notify the tenant-shareholder’s lender. This may seem like an annoying extra hoop to have to jump through, but it actually could work in your favor. The lender may also start urging the tenant to stop subletting the apartment, giving the tenant extra pressure to cease their activities.
For condos the by-laws may give the board the right to fine a resident for violating the rules of the building. This could prove to be a helpful step in preventing legal action.
Taking Legal Action
After you send a formal warning the owner or shareholder has 30 days to end their illegal activities. If they continue to rent out the apartment, your next step is to check the by-laws or proprietary lease for your building's policies on recovering legal fees from a resident.
A co-op has the option to start the process of a “Pullman Case” to evict the shareholder on “objectionable conduct.” A condo has to go straight to the New York Supreme Court to request an action for declaratory judgment against the accused resident. This option is also available to co-ops, but unlike condos, they also have the choice of housing court.
In court you'll need to state that by violating the rules, the owner is challenging the authority of the co-op board to enforce rules. Next, ask the court to declare that the board has the right to enforce the rule and permanently prohibit the owner or shareholder from violating the rules in the future. As long as you come prepared with evidence you should win the case.
All in all legal action should be your last resort, as it can potentially cost tens of thousands of dollars, not to mention the stress and hassle of the process. The benefit of going to court is that if the resident fails to comply they can be held in contempt of court. Again, this should be a last resort. Hopefully, if you’re dealing with a resident who is renting out their apartment on Airbnb, or any other source, they will cease their disruptive activity after receiving their first warning.
If you serve on a co-op board or condo board and need professional property management services, contact All Area Realty Services and find out why our over 30 years experience and loyal clients makes us experts.
All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.