Penalties for subletting coop apt.

[kenneyk]

What is the name of your state (only U.S. law)? NY

My coop charges 25% of the annual maintenance to rent my apt. for the 1st year. In year 2, the penalty is 50% and in year 3 and thereafter, the fee is 100% of the annual maintenance. I believe these penalties to be rather harsh and not the norm for the market. If you have trouble with the math - here's the reality. My maintenance is $1000 a month or $12,000 a year. By year 3, I am paying $24,000 ($12,000 for the annual maintenance and $12,000 as a penalty).

I would like to know the best way of going about requesting the by-laws to be changed to reflect a more reasonable penalty?

Thanks in advance for any help you can provide.

Regards,

kenneykWhat is the name of your state (only U.S. law)?

[You Are Guilty]

Originally Posted by kenneyk

I would like to know the best way of going about requesting the by-laws to be changed to reflect a more reasonable penalty?

Simple!
Step 1: Get elected to the BoD.
Step 2: Convince a majority of Board members that investment properties in the co-op is a good idea.
Step 3: Amend the by-laws via the procedures spelled out in the proprietary lease/by-laws (might be Board vote only, might need shareholder approval - check the documents).

If I had to guess though, Step 2 is where you'll run into some difficulty. The reason the rental rules typically exist is to discourage investment properties. Why? Two reasons, either of which is sufficient to justify the rule.

First, when a building consists of X% investment properties, it becomes exponentially more difficult to obtain new mortgages. And if mortgages are hard to get, it tends to harm property values.

Second, renters, as a whole, tend to treat the property much worse than shareholders do (for obvious reasons). Which means most people prefer to live with other owners who care about the co-op and not some transient renters who won't be there next year anyway.

In any event, good luck.

[kenneyk]

I appreciate your input and all your suggestions are good ones. I'll start with a letter to the BOD. I didn't mention this in my first email, but I've been on the BOD and we've talked about this issue. One of the major concerns we had for not changing the by-laws was out of fear that previous owners would want $ back. This sort of seems like a lame excuse to me since less than 3% of the apts. are rented out.

Anyway, thanks again. I really appreciate you taking the time to give me some advice!