Once upon a time, you usually greeted your neighbor in the hallway of your building as you were coming or going. But you haven’t seen or heard a peep from her in almost two months. You wonder if she is okay.
So you ask the super one morning in the lobby about your neighbor’s whereabouts. He responds that she’s perfectly fine – she just went to a writers’ retreat in Portland for a year. The reason why the neighbor didn’t sublet her place, the super explains, is because she has a valuable collection of pre-Columbian art and was afraid of possible theft or damage.
And just like that, you have a ghost owner for a neighbor.
The Fundamentals of Vacancy
Co-ops and condo units are potentially income-producing assets. While ostensibly intended as principal residences for their owners, both can generally be leased out. In a co-op where a resident of the unit is a shareholder in the corporation that owns the property, the act of leasing out the unit is referred to as a sublet. In a condominium where a unit is owned directly, the leasing out of the unit is referred to simply as a lease. In both cases – particularly in a co-op – the board will have some level of control over the leasing of the unit. Given that co-op and condo units carry monthly costs such as common area charges, maintenance and probably mortgage payments, owners who plan long absences for work or travel often place a rent-paying tenant in their unit during that time to cover those costs. But some owners, like the aforementioned art-collecting neighbor, can afford or prefer not to have anyone at their place while on vacation. Those type of residents become so-called ‘ghost’ owners.
The Practical Effects of ‘Ghost’ Ownership
Perhaps the most obvious possible consequence of unoccupied units is problems with accessing those units when necessary. Unlike a private home, an apartment unit surrounded on all sides and up and down by other units may be involved in any number of situations that require building staff or outside contractors to access it.