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Can Adult Children of Co-Op Shareholders Live in the Unit?

Real Estate Legality, Real Property

When it comes to allowing adult children to live in a co-op without the shareholder, a host of questions come into play, including the co-op’s rules about subletting and the terms of the proprietary lease.

In a prior post about subletting a co-op, we explained that co-op shareholders do not own their unit, and as such are not permitted to sublet unless the co-op board has approved subletting. That approval, which is not guaranteed as the board has the right to deny such requests, may come with numerous limitations including time constraints, fees and surcharges. In some instances, case law provides guidance in that the policies the board does intend to impose on shareholders will have to be clearly stated in the proprietary lease (specifically in relation to surcharges), and be reasonable.

The spouse or immediate family member of a co-op shareholder can typically live in the co-op with the shareholder. Also, the shareholder may be able to transfer their shares to a spouse or immediate family member, to give them the right to live in the co-op. When these scenarios are in dispute, the courts have looked to the proprietary lease, consistently construing its language very literally in that the “Lessee and Lessee’s spouse, their children, stepchildren, grandchildren, parents, stepparents, grandparents, brothers and sisters” can live in the unit, but have excluded  the lessee or shareholder’s relatives on their own. Interpretation of the proprietary lease can depend on the location of the co-op in New York’s boroughs. For instance, in Brooklyn, Queens and Staten Island, courts have construed the word “and” to mean “or,” which then permits children to live in the unit without the shareholder.

The Co-Op Board May Not Approve the Request

Before allowing an adult child to live in the co-op unit, the shareholder must obtain the board’s approval, otherwise a shareholder runs the risk of the board construing the arrangement as a sublet and imposing a sublet surcharge. Co-ops, unlike rentals, have strict regulations and a tedious interview process of their residents. As such, boards are careful as to whom they select as potential shareholders and look for those who will have a long-term interest in the building and will be able to pay bills and maintenance fees. During the vetting process, the board examines the individual’s financial history, business and personal references, and tax returns. The same scrutiny of a young adult, who may have graduated from college, will review financial and tax return history, making them an unlikely candidate.

Can a Child be Added to the Proprietary Lease?

Shareholders can consider adding their children to the proprietary lease, so in the event they need to leave their apartment for an extended period, their children have the right to occupy the unit in their absence. Boards will likely be cautious with this process, to balance protecting the board with accommodating the shareholder.  Young adults tend to have financial debts, such as student loans, so the board will likely assess the family unit’s financial stability as a whole to guarantee the maintenance payment and any other fees. Shareholders should discuss these options with their board and managing agent in order to come to the most suitable resolution for the co-op and the shareholders’ family.

The Condominium and Cooperative lawyers at Guzov LLC are often consulted by co-op Boards and co-op shareholders to address the options and assess possible arrangements.

If you would like to discuss how the addition of a shareholder’s adult children should be evaluated by the building’s board, or how to approach a board with that request, please contact us to schedule a consultation.

This blog was revised on August 28, 2023.

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