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VOLUME 232—NO. 87 WEDNESDAY, NOVEMBER 3, 2004

COOPERATIVES AND CONDOMINIUMS


BY RICHARD SIEGLER AND EVA TALEL

Co-Op Ownership: Permitted Occupants of an Apartment


members to be: “those members of the

A
n increasingly important
issue pertaining to co-op stockholder’s family who lived with the
ownership is occupancy of stockholder on the date he first took
apartments by non-share- occupancy of his apartment and lived with
holders.1 Boards may seek to restrict occu- the stockholder continuously from that
pancy to meet the compatibility expecta- date.”3 The stepdaughter was not living
tions of a co-op community, while share- with the shareholder when he first took
Richard Siegler Eva Talel
holders often assert their ownership rights occupancy, so she was not a permitted
by permitting extended family, adult chil- occupant under the lease.
bylaws and their much-broader universe of • Concurrent Occupancy Required? If the
dren, significant others or domestic
permitted occupants. court determines that the party at issue is
employees to reside in an apartment.
The issue of who may reside in an apart- within the proprietary lease’s definition of
Who Is a Permitted Occupant? permitted occupants, the second prong of
ment can thus become complex and con-
tentious. Therefore, precise and clear lease A court’s analysis in resolving this issue the court’s analysis is triggered: must the
drafting is critical, so that shareholders are is twofold. First, the court will determine shareholder reside in the apartment con-
not burdened with occupancy restrictions whether an individual is included within currently with that party?
they did not contemplate when entering the proprietary lease’s definition of permit- In 1983, in Rubloff v. 5 East 71st Street,4
into a lease and the door is not left open ted occupant. If the lease definitions are the shareholder’s sister occupied the
for court-imposed interpretations contrary clear, the court will enforce them and the apartment while the shareholder resided
to the expectations or interests of the analysis ends there. If the party in issue is elsewhere with her husband. The propri-
co-op community. not within the lease definition of a permit- etary lease permitted occupancy of the
This column reviews relevant case law ted occupant, the court will likely construe apartment by the lessee and the family of
and suggests language for use in co-op the occupancy as impermissible. the lessee and the shareholder contended
leases that limits occupancy to clearly Ambiguities arise, however, where a that her sister could therefore occupy the
identified categories of persons. This lease sets forth less than a clear definition apartment in her absence. The co-op
column also addresses condominium of what constitutes a permitted occupant. argued that because the shareholder
For instance, a lease may state that and her sister had never occupied the
permitted occupants are, “the shareholder apartment simultaneously as a family unit,
Richard Siegler is a partner in the firm of
Stroock & Stroock & Lavan and is an adjunct and his immediate family.” The court the sister could not occupy it in the share-
professor at New York Law School. Eva Talel must then determine what constitutes holder’s absence. The court — relying on
is also a partner in Stroock & Stroock & Lavan, “immediate family” by looking to the case law holding that where family mem-
specializing in litigation involving co-ops and terms of the lease. bers lived in an apartment together prior
condominiums. Zev J. Holtzman, a stu- In Mitchell Gardens v. Cataldo,2 The to the lessee moving out, the family mem-
dent at New York Law School, assisted in the appellate term ruled that the shareholder’s ber was permitted to continue to occupy
preparation of this article. The Stroock firm is stepdaughter was not within his immediate the apartment — held that because lessee
counsel to the residential management council of family. The court looked to the co-op’s and her sister had never simultaneously
the Real Estate Board of New York. rules, which defined immediate family occupied the apartment, the sister was not
NEW YORK LAW JOURNAL WEDNESDAY, NOVEMBER 3, 2004

permitted to occupy the apartment absent apartment alone because “grandchildren” [lessee] also living in there at the same
the lessee. The principle of concurrent are a category of permitted occupants. In time would be to permit [lessee’s] domestic
occupancy was thus established. interpreting the word “and,” the court employee to live in the apartment without
rejected the lessee’s argument that the [lessee] also living there at the same
lease clause identifying permitted occu- time — a patently unintended if not
When Does ‘And’ Mean ‘Or’?
pants “must be read in the disjunctive absurd result.”15
In January 1994, a Queens County Civil as if in the place … of ‘and,’ a comma or
Court in Barbizon Owners Corp. v. the conjunction ‘or’ separated the words Roommate Law Exception
Chudick,5 addressed a different version of Lessee and Lessee’s spouse, etc., rendering
Despite some confusion, courts are like-
this issue. In Barbizon, the apartment was each person separate and independent of
ly to construe the word “and” to require
occupied by the lessee’s brother; the lessee the other.”10 Instead, the court relied on
concurrent occupancy by the lessee.16
was present from time to time, but did the “generally accepted meaning” of the
Nevertheless, there may be exceptions. For
not occupy the apartment as his primary word “and,” as defined in Webster’s New
example, occupants who are not among
residence. The lease prohibited the apart- International Dictionary: “Expressing the
those permitted under the lease may be
ment from being “occupied or used for any general relation of connection or addition,
protected by §235-f of the Real Property
purpose other than as a private dwelling …combination, …simultaneity … thus
Law,17 dubbed the “Roommate Law,”
for the lessee and the lessee’s spouse, their along or together with; added to or linked
which deals with unlawful restrictions on
children, grandchildren, grandparents, to; as well as, at the same time ….”11
occupancy. The applicability of the
brothers and sisters and domestic employ- Hence, the grandson was not permitted to
Roommate Law has been upheld in the co-
ees ….”6 Although lessee’s brother was occupy the apartment absent the lessee.
op setting and provides that a tenant may
clearly within the category of persons In 1995, in Wiesz v. 233 East 69th
share the apartment with at least one addi-
permitted to occupy the apartment, the Owners Corp.,12 the New York County
tional occupant without first gaining the
co-op contended that contemporaneous Supreme Court interpreted a lease clause
landlord’s permission.18 Section 235(f)(7)
occupancy by the lessee was required. The virtually identical to that in Barbizon and
prohibits waiver of the rights conferred by
co-op’s position was based solely on Thwaites and held that the word “and”
the law and provides that any lease that
grammar: “[T]he clause … says, ‘The does require concurrent occupancy by the
attempts to waive such right is void as
Lessee and …’ not, ‘The Lessee or …’ … shareholder. The shareholder contended
contrary to public policy.19 Because of this
imply[ing] that the lessee must reside in that her lease permitted her apartment to
nonwaiver provision, the Roommate Law
the apartment together with the permitted be occupied by her children’s caregiver
overrides the restrictions set forth in a
occupants.”7 The court rejected the co-op’s without the shareholder’s co-occupancy.
proprietary lease and allows one additional
argument, holding: “In terms of grammar, The court discussed the opposing holdings
occupant — the roommate. Section 235-
‘and’ is merely a coordinating conjunction in Barbizon and Thwaites and concurred
f(3) however, states that such protection is
(as is the word ‘or’),”8 which did not clear- with the Thwaites holding: “[A] reasonable
available only where the tenant or the ten-
ly signify a requirement that a lessee must and fair construction of the words ‘lessee
ant’s spouse occupies the apartment as a
occupy the apartment contemporaneously and’ requires [that] the lessee must reside
primary residence.20 Therefore, the
with a permitted occupant. Absent a clear in the apartment.”13 Thus, the Weisz ruling
statutorily required concurrent occupancy
restriction, none would be implied by the clarified some of the ambiguity apparent in
of the roommate and the lessee puts some
court and the lessee’s brother was therefore the previous line of cases.
limits on this expanded occupancy.
permitted to stay in the apartment. Further reinforcing the holdings in
A few months later, in Thwaites House Thwaites and Wiesz, in 2002, the
Proposed Use Clause
Owners Corp. v. Vega,9 a Bronx County Appellate Division, First Department,
Civil Court ruled that the word “and” does ruled in 445/86 Owners Corp. v. Haydon14 A clearly drafted occupancy provision
require contemporaneous occupancy by that virtually identical language in a lease in the proprietary lease gives a measure
the lessee. There, the co-op claimed that provision must be interpreted to require of certainty to shareholders and boards
the lessee violated her lease by allowing the lessee’s concurrent occupancy. The and reduces the need for judicial interpre-
her grandson to occupy the apartment court held that the mother-in-law of the tation. The following is an example of
while she resided in Puerto Rico. The lease lessee was not permitted to reside in the such a provision:
provision was virtually identical to that in apartment absent the lessee: “to hold that The Lessee shall not, without the
Barbizon and the lessee claimed that the paragraph 14 permits [lessee’s] mother- written consent of the Lessor on such
grandson was permitted to reside in the in-law to live in the apartment without conditions as Lessor may prescribe,
NEW YORK LAW JOURNAL WEDNESDAY, NOVEMBER 3, 2004

occupy or use the Apartment or permit bylaw provisions provide far less control occupancy, see Richard Siegler and Eva Talel, “Non-
Residential Occupancy,” NYLJ, Sept. 3, 2003, p. 3,
the same or any part thereof to be over who lives in the unit, they reflect col. 1.
occupied or used for any purpose other the goals of the condominium form of 2. 175 Misc2d 493 (App. Term 2nd Dept. 1997).
3. Id. 175 Misc2d at 494. The court rejected as
than as a private dwelling for the ownership, where unit owners, as com- improper the civil court’s use of the definition of “fam-
Lessee and Lessee’s spouse or Spousal pared with owners of co-op apartments, ily member” that appears in the Rent Stabilization
Code §2520.6 (N.Y. Comp. Codes R. & Regs. title 9,
equivalent (as defined herein) and, have far less financial, legal and social §2520.6 (2000)) to determine the meaning of those
simultaneously with the actual interdependence with one another. words when used in the proprietary lease.
4. Index No. 6489/83, (Sup.Ct. N.Y. County) (Nov.
occupancy of the Lessee, the Lessee’s 14, 1983).
spouse or the Lessee’s Spousal Conclusion 5. 159 Misc2d 1023, (Civ. Ct., Queens County
1994).
Equivalent, their children, grandchil- 6. Id. 159 Misc2d at 1024.
A clear proprietary lease or condomini-
dren, parents, grandparents, brothers 7. Id. 159 Misc2d at 1025.
um bylaw provision is the most effective 8. Id.
and sisters and domestic employees, 9. NYLJ June 29, 1994, p. 30, col.2 (Civ.Ct., Bronx
way for a co-op or condominium to set County).
and in no even[t] shall more than one
forth restrictions on who may occupy 10. Id.
married couple occupy the apartment 11. Id.
an apartment as well as whether such 12. NYLJ April 19, 1995, p. 25, Col. 2 (Sup. Ct.,
without the written consent of the
occupancy must be concurrent with that of N.Y. County 1995).
Lessor. For the purpose of this Lease, 13. Id.
the lessee or unit owner. Furthermore, 14. 300 AD2d 87 (1st Dept. 2002).
the term “Spousal Equivalent” shall
clear language puts purchasers on notice of 15. Id. 300 AD2d at 88. The court also reversed the
mean any person residing with the Individual Assignment System (IAS) court’s holding
restrictions regarding their use of an apart- that the nonpermitted occupancy constituted an ille-
Lessee as a primary or principal gal sublet, characterizing the mother-in-law’s status as
ment or unit. The language should clearly
residence, who can prove emotional that of a licensee, which status did not entitle the co-
state who may reside in the apartment, op to recover a sublet fee.
and financial commitment and In 2004, a New York City Civil Court, distinguish-
with whom and at what point in time.
interdependence between such person ing Haydon, held that a co-op waived and could not
If the lease or bylaws are unclear, summarily revoke the occupancy of an apartment by
and the Lessee. the shareholder’s son without her being present,
boards should consider the need to seek
notwithstanding the identical proprietary lease provi-
shareholder or unit-owner approval sion as that construed in Haydon and a no-waiver
Condominiums clause in the proprietary lease. The court found that
of a clarifying amendment. Clarity will
the co-op’s former managing agent had apparent
Condominium associations have bylaw prevent ambiguity in interpreting the authority and did grant permission for the sharehold-
provisions that identify permitted occu- rights of occupancy and will best protect er’s son to occupy the apartment alone and the board
accepted rent for 11 years knowing of the noncoter-
pants and reflect a concern for congenial the security, values and quality of life mimus occupancy. 201 East 37 Owners Corp. v. Cass,
occupancy of the property and protection associated with the co-op or condominium 3 Misc3d 1102(A), 2004 WL 1094804 (N.Y. City Civ.
Ct. April 23, 2004).
of values.21 However, their scope is in sharp community. 16. Indeed, the pendulum may have swung too far.
In a recent decision, a court interpreted the words in
contrast to typical proprietary lease use
a lease clause — “lessee or lessee’s spouse, their chil-
provisions. In the proprietary lease, •••••••••••••• ••••••••••••••••• dren …” — as requiring concurrent occupancy by the
1. Another category of residential occupancy issues lessee when lessee’s adult child occupied the apart-
as illustrated above, the categories of
pertains to the death of a shareholder. The executor or ment. Bikoff v. 198 East Tenants Co., Index No.
occupants are fairly narrowly defined and administrator can use the decedent’s apartment for a 101483/04 (Sup. Ct. N.Y. County) (March 8, 2004).
period of time in order to wind-up the affairs of the 17. N.Y. Real Prop. Law §235-f (McKinney 1989).
basically limited to the family of share- 18. See Richard Siegler, “The Roommate Law
estate. See Richard Siegler and Eva Talel, “Death of a
holders. In contrast, modern condomini- Shareholder,” The New York Law Journal, Jan. 7, Revisited,” N.Y.L.J., Jan. 2, 2002 at p. 3, col. 1. The
2004 p. 3, col. 1. See also, Joint Queensview Housing Roommate Law does not apply to condominiums. See
um bylaws typically reflect a broad range of Smith v. Board of Managers of Leland Gardens
Enterprise, Inc. v. Balogh, 174 AD2d 605 (2nd Dept.
permitted owners and occupants, includ- 1991) and Joint Properties Owners, Inc. v. Deri, 113 Condominium, NYLJ, Nov. 16, 1993, p. 28, col. 6
AD2d 691 (1st Dept. 1986). Yet another category of (Sup. Ct. Bronx County).
ing corporations, partnerships, limited 19. N.Y. Real Prop. Law §235-f(7) (McKinney
residential occupancy issues relates to the rights of a
liability companies and foreign govern- judgment creditor or purchaser of the judgment 1989).
20. N.Y. Real Prop. Law §235-f(3) (McKinney
ments. Occupancy is typically permitted debtor’s co-op apartment at a sheriff’s sale. The pur-
1989).
chaser at auction may not occupy the apartment with-
for officers, directors, shareholders or 21. See, e.g., Board of Managers of Village House (a
out board approval, although “transfer” of the shares
Condominium) v. Frazier, 81 AD2d 760 (1st Dept.
employees of the corporation owning the and lease may occur by operation of law. See House v.
1981), aff’d, 55 NY2d 991 (1982).
Lalor, 119 Misc2d 193 (Sup. Ct. N.Y. County 1983);
unit, partners or employees of a partner- Trepel v. Diop, 2003 WL 22283816 (SDNY Oct. 2,
ship owning the unit, and the like. 2003). Yet another category of residential occupancy
issues relates to occupancy of a co-op apartment by a This article is reprinted with permission from the November 3,
Further, such bylaws generally allow sublessee of the shareholder, a nonshareholder. This 2004 edition of the NEW YORK LAW JOURNAL. © 2004
issue, which is the subject of a separate body of case ALM Properties, Inc. All rights reserved. Further duplication
permitted occupants to live in the unit
law, is not addressed in this article. without permission is prohibited. For information, contact
alone, without requiring contemporaneous For a discussion of nonresidential occupancy and American Lawyer Media, Reprint Department at 800-888-
occupancy by the unit owner. While such steps that boards and managers can take to halt such 8300 x611. #070-11-04-0003