One of the principal advantages of a condominium unit (in contrast to a cooperative) is that, generally speaking, the owner of a condominium unit is free to lease it to any particular person and any type of person (individual, firm, or corporation, estate, trust, etc.) without the consent of the Board.

This makes any given unit more valuable, since the hidden economic worth of the unit may instantly be realized by its owner without the possible interference of the Board. A condominium unit participates in the market like a valuable commodity in an efficient and free economy. By contrast, a cooperative apartment may be like a farmer's harvest sitting in a Soviet style warehouse awaiting the approval of faceless bureaucrats while the produce rots.

Some controls exist by condominium Boards to prevent problematic leases of units (such as a lease of a residential unit to an unpopular Middle East politician who might subject the building to terrorist attack). But the control is in the form of a "right of first refusal" by which the Board may block an undesirable lease... but only by putting its money where its mouth is and paying the same price as the proposed (though undesirable) tenant.

Here is how that mechanism operates. John owns a condominium apartment. He is taking a job in California and wishes to lease it to Barbara for $2,000 per month for 2 years (total rent $48,000). John and Barbara enter into a lease agreement (more about that below), subject to the delivery by the Board of a piece of paper entitled "Waiver of Board's Right of First Refusal". The proposed lease is submitted to the Board with a request to issue the Waiver. In a specified time frame, the Board generally has these options:

• issue the Waiver and allow the proposed lease to proceed;
• or exercise its right of first refusal and thereby take on John's lease and pay John $48,000 over 2 years at $2,000 per month.

This is better for John than a cooperative, which could deliberate over the issue for several months, interview Barbara, and then reject the deal!

Some real estate professionals believe that a condominium community is too vulnerable to becoming a transient hotel because of this freedom of contract. These people prefer cooperatives. We prefer the free-market standard, which is self-correcting. (If the building continues to go "downhill" because of too many rentals, by people who are assumed not to care about the building, then the apartments will command less and less rent over time, and the owners will be motivated to sell them to owner-occupants who, by reason of the same assumptions, will care about the building and restore it to its former glory.)

There is a standard lease for the rental of a condominium unit published by a well-known publisher of legal forms (See Form number A 101, last revised in December 1996). You may buy it at a good stationary store. It has a number of provisions typical of a lease (in which the landlord, who is the condo unit owner, has most of the rights, and the tenant has the "right" to pay rent and occupy the unit).

If you would like to see the text here, please let us know.