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Understanding the legal issues of co-living: 3 ways to protect yourself

Co-living eliminates a lot of the typical NYC rental hassles but it's important to know your rights and liability issues when it comes to the lease.

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In NYC there are strict rules about renting out single rooms—it’s illegal unless the building fits specific requirements. Co-living companies that offer private rooms and shared common spaces in NYC apartments are an increasingly popular trend—but they still need to follow the rules.

If you’re curious about co-living, it’ll be important to stay on the right side of the law or you could find yourself being unexpectedly thrown out of your apartment by city inspectors. You also risk being on the hook for the rent for the entire apartment so taking a look at—and fully understanding—your lease should be your top priority.

Make sure you are signing a lease for an apartment, not just a room

It is illegal to rent out individual rooms in NYC unless the building has a certificate of occupancy allowing single room occupancy or SRO. Co-living does not fall into the SRO category. The rules for SROs require a building to have lots of additional safety measures in place like sprinklers, and fire doors—the types of safety measures you see in place in hotels.

So be aware that putting locks on bedroom doors is “completely illegal,” says Sam Himmelstein, a tenant and landlord lawyer with Himmelstein, McConnell, Gribben, Donoghue and Joseph, and a Brick Underground sponsor. Himmelstein says exterior bedroom locks are considered a major fire hazard and the NYC Department of Buildings will issue a vacate order if they get wind of it. Everyone will have to move out and the landlord can face tens of thousands of dollars in fines. That’s what happened in Himmelstein's recent case involving a townhouse in Harlem.

Make sure you sign a lease for an apartment, not a crowded or cramped room where you feel you don’t have a way out in a fire. Even better, make sure there is a “fire safety plan in your lease,” says attorney Michelle Itkowitz, founder of the Itkowitz law firm, who represents both co-living companies and tenants.

Signing a lease for an apartment means you could be liable for the entire rent

When all the tenants are on the lease, each tenant has the right to occupy the entire apartment. What you should know is that in signing that lease and sharing it with roommates, you can be “individually liable for the entire amount on the lease if someone defaults,” says Himmelstein. That means, if someone stops paying, you could be on the hook for the full rent. In co-living situations, you want to see that the landlord is prepared to take on some of that risk, with a clause saying the co-living company is responsible or will actively participate in a new roommate search if, or when, someone leaves.

When co-living is done legally, “the landlord absorbs that risk,” says Itkowitz. It may mean that every time you get a new roommate, you get a revised lease.

“Read the lease,” says Himmelstein. “It’s going to say in black and white that each person is potentially responsible for the full amount” of the rent.

Make sure you are not in a rent-stabilized apartment

A building with more than six apartments that was built before 1974 could be subject to NYC’s rent stabilization rules. A rent-stabilized apartment is one that should be priced affordably and that won’t be the case if it is being rented as a co-living space. This type of housing is important in maintaining NYC’s affordability. Itkowitz believes there are at least 250,000 illegally deregulated apartments and the inventory is being “beaten back little by little,” she says.

Itkowitz has this advice: “Go to the Department of Housing and Community Renewal [Editor's Note: DHCR has multiple offices in the city]. If you bring your lease they’ll give you a copy of the rent history of your building and from there you can get an idea [if your apartment should be rent stabilized] and if you qualify, take it to The Legal Aid Society.