Web address: http://www.nylj.com VOLUME 227—NO. 1 WEDNESDAY, JANUARY 2, 2002 C OOPERATIVES AND C ONDOMINIUMS BY RICHARD SIEGLER The Roommate Law Revisited S ECTION 235 (f) was added to the Real Property Law by the Omnibus Housing Act of 1983.1 Dubbed the "Roommate Law," it was enacted to accommodate a tenant's need, by lifestyle or necessity, to live with a roommate. The law has been held applicable to a cooperative housing corporation, but not a condominium, and has seemingly stripped some of the powers of a co-op board, most notably, its ability to restrict subletting. This column updates prior articles dealing with the Roommate Law, examines recent developments and explores what a co-op board can do to maintain its control of subletting from further erosion.2 Origin For a landlord, an ideal situation would be to limit the occupancy of an apartment to named tenants and members of the tenant's immediate family. Prior to the passage of the Roommate Law, the Court of Appeals in Hudson View v. Weiss3 enforced a restrictive covenant in the tenant's lease that limited occupancy to the tenant and members of the tenant's immediate family. The 1983 legislation effectively overruled Hudson View, granting a tenant the right to have a co-occupant if he or she chose to. The Legislature determined that the act was "necessary to protect the public health, safety and general welfare" and sought to increase the protection of thousands of households consisting of unrelated inhabitants who live together for reasons of lr g ie S d aichard Siegler is a partner in the New h c R R York City law firm of Stroock & Stroock & Lavan LLP and is an Adjunct Professor at New York Law School where he teaches a course on cooperative housing and condominium law. Brian Rubin, a student at New York Law School, assisted in the preparation of this article. "economy, safety and companionship," who were in jeopardy of losing their homes.4 The Roommate Law provides that a tenant5 may share his or her apartment with at least one additional occupant6 without first gaining the permission of a landlord.7 The additional occupant does not have to be an immediate family member of the named tenant and a landlord is prohibited, "by express lease terms or otherwise," from restricting occupancy to a tenant or tenants and their immediate family.8 Therefore, if one tenant enters into a lease, §235(f)(3) will permit occupancy by the named tenant, his or her immediate family, one additional occupant, and dependent children of the occupant. Section 235 (f)(4), which deals with units having two or more tenants, appears to place some restraint on the number of occupants allowed in an apartment by limiting the total number of persons, tenants or occupants, to the number of persons named in the lease. The wording here is somewhat ambiguous and thus subject to different constructions. An "immediate family member" is not within the definition of either "tenant" or "occupant" and therefore it appears should not be included in the accounting.9 The dependent children of any occupants should also not be included in the count. As a result, it seems that the accounting is made up of only tenants and occupants. Based upon this analysis, if two tenants are on the lease and one moves out, only one occupant and his dependent children can be added without first obtaining the permission of the landlord. If both tenants remain, no additional occupant is permitted.10 Section 235(f)(7) expressly prohibits the waiver of any rights conferred by the provisions of the law. It specifically states that any provision of a lease or rental agreement purporting to waive a tenant's right under this section is void as contrary to public policy.11 While §235(f) has been successful in providing certain occupancy rights to those unrelated persons who reside in the same dwelling, there are a few details that the statute falls to address, which to some extent are still at issue today. For example, while the statute defines "Tenant" and "Occupant," it does not define "Immediate Family." Additionally, although the courts have upheld its applicability in a co-op setting, the statute fails to expressly include co-ops or condominiums. Moreover, assuming the applicability of the statute to co-ops, does the statute render proprietary lease restrictions on subletting meaningless? Section 235(f) also falls short in providing guidance as to what rent a tenant may charge a roommate and whether that rent must be "reasonable." In the past 15 years, several cases dealing with these issues have come before the courts. Applicability to Co-ops While co-ops have traditionally been considered a unique form of housing, significantly differing from rental property, courts have consistently held that the protection provided by §235(f) to tenants applies to co-op tenant-shareholders.12 One of the earliest decisions about the applicability of §235(f) in a co-op setting was Southridge Cooperative Section No. 3 Inc. v. Menendez.13 There, the court stated "it has been NEW YORK LAW JOURNAL abundantly recognized in law that an occupancy agreement or proprietary lease entered into by a stockholder of a cooperative corporation is in fact a lease by a tenant for residential rental premises." The court also focused on similar terminology which appears in §235(b) of the Real Property Law, which establishes an implied warranty of habitability in every written or oral lease entered into by a "landlord or lessor" and a "tenant or lessee." Thus, the same analysis employed by the courts in connection with §235(b) can be used with §235(f), especially since both establish provisions that are mandated by public policy. Consequently, the Southridge court determined that the Legislature intended to make §235(f) fully applicable to co-ops. In Lincoln Guild Housing Corp. v. Stuckelman,14 the court echoed several prior decisions, which determined that §235(f) overrides proprietary leases for cooperative apartments and makes certain lease provisions unenforceable. The court asserted that the relationship between a co-op and proprietary lessee as that of landlord and tenant was well established.15 It explained, "where the Legislature wishes to exclude proprietary leases from coverage by a section of the Real Property Law, it specifically carves out an exception, such as in RPL §226(b)(3)." Therefore, the court held that due to the growing trend to include co-op shareholders under the rubric of the landlord-tenant law, in the absence of a specific exclusion for cooperatives in §235(f), its benefit is extended to co-op shareholders.16 Immediate Family Though it provides explicit definitions of "tenant" and "occupant," §235(f) fails to define the term "immediate family." As a result, questions arise. How broadly should the term "immediate family" be construed? Where should one look for guidance if forced to determine what constitutes an "immediate family" member? When confronted with this issue, courts have uniformly interpreted it to encompass a wide range of family members, including collateral relatives, certain in-laws, and stepchildren.17 The lower courts have read §2104.5(a)(1) of the Rent and Eviction Regulations of the Division of Housing and Community Renewal, which apply in instances where the owner of an apartment seeks to recover possession for his own or his immediate family's use and occu- WEDNESDAY, JANUARY 2, 2002 pancy, to apply in situations where §235(f) is at issue. Section 2104.5(a)(1) defines the term "immediate family" as including only: a husband, wife, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law or daughter-in-law. An identical definition of "immediate family" is also found in §2520.6(n) of the Rent Stabilization Code of the City of New York.18 Subleasing The enactment and subsequent development of the Roommate Law has had a significant effect on co-ops. One of the objectives of co-op housing is to promote occupancy by those who have an ownership stake in the housing community. A typical proprietary lease prohibits the subletting of a premises without the prior consent of the co-op. Moreover, this consent usually can be withheld for any or no reason. In fact, §226(b) of the Real Property Law, which requires a reasonable standard for consenting to assignments or sublets pursuant to a residential rent agreement, specifically exempts proprietary leases from its coverage. Section 226(b)(3) states that: the provisions of this section shall apply to leases entered into or renewed before or after the effective date of this section, however they shall not apply to public housing and other units for which there are constitutional or statutory criteria covering admission thereto nor to a proprietary lease, viz.: a lease to, or held by, a tenant entitled thereto by reason of ownership of stock in a corporate owner of premises which operates the same on a cooperative basis. Section 235(f) contains no such similar exclusion for co-ops. Thus, §235(f) appears to permit a tenant-shareholder to circumvent (on a limited basis) the most restrictive proprietary lease sublet provisions. While the proprietary lease may unequivocally state that the tenantshareholder may not sublet the unit without the consent of the co-op, a shareholder may clearly share the apartment with an "occupant" under §235(f) without first obtaining the board's consent. To this extent, the co-op has been limited in its ability to maintain control over the inhabitants of the housing community. While a shareholder can co-habit with a roommate without the board's consent, it is uncertain whether he may benefit monetarily from the roommate. The issue of whether an occupant may be charged, an if so, how much is not addressed in the statute. It has been addressed in a rental situation.19 However, as of yet, no court has addressed the issue in a co-op setting. Since there is nothing in §235(f) which sets forth what the financial arrangements between the roommate and tenant must be, it is conceivable that a tenant-shareholder may utilize the Roommate Law for financial gain. The power of a tenant-shareholder to sublease without obtaining the consent of the co-op, although seemingly protected to an extent by §235(f), is not absolute. Courts have customarily found that a shareholder must use the unit as his or her primary residence for the occupancy of a roommate to be valid.20 This principle was enunciated in W. P. Owners Corp. v. Caramihi,21 where the co-op sought to terminate the tenancy of proprietary lessees on the grounds that they sublet their apartment without permission. The shareholders, who allowed their niece to move into the apartment because they were moving into a house, argued that the niece was a roommate under §235(f) and thus free to occupy the apartment alone. The court found that, while the niece qualified as an occupant under the Roommate Law, the shareholder's maintenance of the premises as his or her primary residence was a prerequisite when seeking to have another person occupy the apartment. Thus, it is clear that the roommate's right to possession is dependent on the continued occupancy by the tenant-shareholder.22 Similarly, in Mill Rock Owners Corp. v. McEvoy, the court found that §235(f) is not applicable if the tenant-shareholder does not primarily reside in the subject premises.23 Only occasionally were both shareholder and occupant occupying the unit simultaneously, and each had alternate residences when they were not occupying the subject premises. The court noted that, under §235(f)(3), occupancy of the tenant's immediate family and one additional person is protected only where the tenant or the tenant's spouse occupies the premises as his or her primary residence; thus, under the circumstances, the shareholder and occupant "may not claim roommate protection under NEW YORK LAW JOURNAL RPL § 235(f)."24 The above cases demonstrate that courts have unmistakably spoken to the issue, and as such, the co-op shareholder must concurrently reside in the unit with an occupant or family member to enjoy the benefit of the Roommate Law. Thus, co-op boards can rest a bit easier, knowing that their tenants may not unconditionally sublease their unit, without remaining in residence. Section 235(f) is not an offensive mechanism for landlords.25 The First Department of the Appellate Division has held that a landlord may not terminate a tenancy solely because the tenant has violated the Roommate Law.26 However, the court recently ruled that an owner may evict a tenant based on a violation of a lease clause that incorporates the limitations set forth in the Roommate Law.27 This ruling has the potential to provide assistance to co-op boards as they try to maintain a certain level of control over the residents of its co-op building. Applicability to Condos Although it has been made clear that §235(f) applies to co-ops, a separate question is whether the statute is applicable in a condominium setting. It was thought that, since there is no landlord-tenant relationship in the condominium form of ownership, §235(f) should not apply. Presently, it appears that New York courts will treat co-ops and condominiums differently for purposes of determining the applicability of the Roommate Law. In 1993, a court held that the Roommate Law was inapplicable to condominium units.28 The action stemmed from a dispute concerning a parking space in a condominium complex. The plaintiff owned a condominium in the complex and co-habitated with a gentleman with no ownership stake in the unit. In June 1989, the condominium association installed a remote control gate to its garage. Plaintiff had a parking space in the garage that was used primarily by his co-habitant. Thus, the plaintiff applied for a remote control permitting him to access the garage. The application was denied on the ground that the vehicle which occupied the space was registered in New Jersey to the co-habitant, who had no ownership interest in the condominium. Plaintiff then sued the condominium association, alleging, among other things, that §235(f) was applicable, and WEDNESDAY, JANUARY 2, 2002 under the statute the association could not deny his co-habitant a remote control and access to the parking space.29 The court found that the Roommate Law should not apply to this matter. It determined that §235(f) "plainly states that it is effective only between landlords and tenants in a rental-type situation, and makes it clear that the plaintiff "voluntarily entered into an agreement to purchase a condominium unit and voluntarily agreed to adhere to the by-laws of the condominium and thus agreed to the restrictions contained therein."30 It remains to be seen whether another court will disagree with this analysis. Conclusion It is clear that a co-op shareholder will be afforded the protection of § 235(f), thus allowing certain flexibility (despite the terms of the proprietary lease) in determining who may share the premises without having to obtain the permission of the co-op. It is probable that courts will not find the Roommate Law applicable in a condominium setting. To some extent, many of the Roommate Law's lingering issues have been answered, with few uncertainties remaining. It seems that the courts have determined that the definition of an "immediate family" member can be found in §2104.5(a)(1) of the Rent and Eviction Regulations, as well as in §2520.6(n) of the Rent Stabilization Code. Through the provisos of §235(f), a tenant-shareholder may circumvent the consent process for subletting provided in most proprietary leases, so long as the shareholder maintains the unit as his or her primary residence. Additionally, it is apparent that §235(f) is a shield for tenants and not a sword to be used by landlords. A remaining uncertainty is whether and to what extent a co-op shareholder may reap an economic benefit from a roommate. •••••••••••••• ••••••••••••••••• (1) L. 1983 Ch 403 at 1. (2) See Siegler, "Legal Trends in Condos and Co-ops," New York Law Journal, Nov. 16, 1983 at 23, col. 6; Siegler, "Development of the 'Roommate Law,'" NYLJ, July 5 1989, at 3, col. 1; Siegler. "Update: Apartment Transfers, Subleases, Roommates," NYLJ, March 4, 1992 at 3, col. 1. (3) 59 NY2d 733, 463 NYS2d 428 (1983). (4) L. 1983 Ch 403 at 1. (5) N.Y. Real Prop. Law §235(f)(1)(a) defines "Tenant" as a person occupying or entitled to occupy a residential rental premises who is either a party to the lease or rental agreement for such premises who is either a party to the lease or rental agreement for such premises or is a statutory tenant pursuant to the emergency housing rent control law or the city rent and rehabilitation law or article sevenc of the multiple dwelling law. (6) N.Y. Real Prop. Law §235(f)(1)(b) defines "Occupant" as a person other than a tenant or a member of a tenant's immediate family, occupying a premises with the consent of the tenant or tenant. (7) N.Y. Real Prop. Law §235(f)(3) and (f)(4) (McKinney 2001). (8) N.Y. Real Prop. Law §235(f)(2). (9) N.Y. Real Prop. Law §235(f)(1) (McKinney 2001). (10) See 425 Realty Co. v. Herrera, 146 Misc2d 790; 559 NYS2d 442 (App. T. 1st Dept. 1990). (11) N.Y. Real Prop. Law §235(f)(7) (McKinney 2001). (12) Sherwood Village Cooperative A Inc. v. Slovik, 134 Misc2d 922, 513 NYS2d 577 (Civ. Ct. Queens Co. 1986); Hilltop Village Cooperative No. 4 Inc. v. Greenberg, NYLJ, Oct. 27, 1988, at 26 col. 4; Lincoln Guild Housing Corp. v. Stuckelman, NYLJ, April 9, 1992, at 24 col.4; Mill Rock Owners Corp. v. McEvoy, NYLJ April 14, 1993, at 21 col. (13) 141 Misc2d 823, 535 NYS2d 299 (Civ Ct. Queens Co. 1988). (14) Lincoln Guild Housing Corp. v. Stuckelman, NYLJ, April 9, 1992, at 24 col.4. See also Siegler, "Development of the 'Roommate Law," NYLJ, July 5 1989, at 3 col. 1; Hauptman v. 222 E. 80th Street, 100 Misc2d 153, 418 NYS2d 728 (Civ.Ct. N.Y. County 1979) (noting that there is no intention by the Legislature to exempt co-operatives from the ambit of the warranty); Suarez v. Rivercross Tenant's Corp., 107 Misc2d 135, 438 NYS2d 168 (1st Dept. 1981) (stating that a "proprietary lessee is entitled to the statutory protection as well as the non-investing, ordinary tenant"); McMunn v. Stepping Stone Management Corp., 131 Misc2d 340, 500 NYS2d 219 (Civ. Ct. N.Y. County 1986) (declaring "there is no doubt that the warranty applies in co-operative apartments"). (15) Lincoln Guild Housing Corp. v. Stuckelman, NYLJ, April 9, 1992, at 24 col.4. (16) Id. (17) See Mitchell Gardens No. 1 Cooperative Corp. v. Cataldo, 169 Misc2d 983, 647 NYS2d 389 (Civ.Ct. Queens County 1996); 38 Astoria Associates v. Chavez, 126 Misc2d 811, 484 NYS2d 267 (Civ.Ct. Queens County 1985). (18) N.Y. Unconsol. Laws § 2520.6(n) (McKinney 2001). See also Ziegleman and Langfan v. Delgado, NYLJ, Jan. 15, 1986 at 11, col.3, aff'd NYLJ, Nov. 20, 1986, at 11 col.3 (App. T. 1st Dept.); Ali Baba Hotel Corp. v. Seye, 162 Misc2d 1006, 619 NYS2d 243 (Civ.Ct. N.Y. County 1994). (19) See Ram 1 LLC v. Mazzola, NYLJ, June 8, 2001 at 17, col. 1. In Ram 1, the court, citing the newly amended Rent Stabilization Code §2525.7, prohibited a tenant from charging a roommate more than the roommate's "proportionate share" of the legal rent. (20) See W. P. Owners Corp. v. Caramihi, NYLJ, April 15, 1993, at 21, col. 2; See also N.Y. Real Property Law § 235(f)(3) and (4). (21) Id. (22) Id. (23) NYLJ, April 14, 1993, at 25, col.5. (24) Id. (25) See Schneller v. Moed, 128 Misc2d 885; 491 NYS2d 574 (Civ. Ct. N.Y. County 1985). (26) See Capital Holding Co. v. Stavrolakes, 684 NYS2d 477 (N.Y. Ct. App. 1998), aff'g, 242 AD2d 240, 662 NYS2d 14 (App. Div. 1st Dept. 1997)(concluding that § 235(f) sets forth minimum requirements for the benefit of the tenant, and not a statutory limitation on the number of permitted occupants; adding that subdivision nine of the statute, which lists the remedies available for violations of the section, gives no affirmative right of action to landlords). (27) See Roxborough Apartments Corp. v. Becker, 187 Misc2d 604, 723 NYS2d 817 (App. T. 1st Dept. 2000). (28) Smith v. Board of Managers, Leland Gardens Condominium, NYLJ, Nov. 16, 1993 at 25, col. 1. (29) Id. (30) Id. 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