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and may also include an interview.
This screening may help to protect
the co-op and the other shareholders
from having to make up the shortfalls
caused by arrears. On the other
hand, it may make it more difficult
and time consuming for the selling
owner to find a buyer.
Additionally, the governing docu-
ments of most condominiums impose
little to no significant restrictions on the
right of unit owners to rent apartments
(i.e. a typical provision may grant the
unit owner the right to rent his apart-
ment so long as the lease is for at least
6 months). Many co-op governing
documents, however, require that the
board consent to any rental (called a
“sublet” in co-op parlance). The right
of co-op boards to establish reason-
able rental restrictions and terms and
conditions is also set forth statutorily in
N.J.S.A. 46:8D-13.1 (often referred
to as the “Cardinale Rule” named
after the legislator who introduced the
bill), which, among other things, spe-
cifically authorizes co-ops to limit the
number of rentals “based on lending
policies of financial institutions per-
taining to owner-occupancy ratios,”
and permits boards to set minimum
lease terms. Furthermore, the statute
authorizes a complete prohibition on
subleases provided that, among other
things, such a policy was clearly set
forth in the offering plan and has been
strictly and consistently enforced. The
statute prohibits “unreasonable” rental
restrictions.
Many co-ops that permit rentals
have adopted sublet policies that,
among other things, often include
provisions establishing: limits on the
percentage of units that can be sublet
at any particular period of time; a
sublet waiting list; limits on the num-
ber of sublet terms in order to avoid
a monopolization of available slots
by certain shareholders; and, mini-
mum lease terms. While co-op sublet
policies may tend to screen potential
subtenants and preserve the owner-oc-
CONT I NU E S ON PAGE 50
"While many of the governance
issues involving co-ops and
condominiums are identical...
significant differences arise as
same relate to sales, rentals,
and collection of debts"
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