Court decision bans B&B's in co-op units.

Co-op managers and attorneys hailed an Appellate Division ruling declaring that Bed and Breakfast facilities don't belong in co-ops. The unanimous three-judge decision came after a lower court upheld an Upper East Side tenant's right to operate the business.

The owner of the two-bedroom unit at the Diplomat on East 73rd Street had used the apartment as a Bed & Breakfast since 1987. B&B's provide city visitors a cheap alternative to pricey hotels while furnishing share-holders with extra income.

The business was starting to take hold in co-ops all over the city to the chagrin of the boards and shareholders who complained about the streams of unknown visitors and security risks. This decision should give boards the teeth to enforce the ban.

Irwin Gumley, president of Gumley-Haft, Inc., which manages Manhattan buildings, said that while he has not seen this in any of the buildings his company manages, it was a good decision. Living in a co-op is not a business venture, he explained.

"You're living in cooperation with other people and additional transient traffic doesn't help," he said. "It presents additional security risks."

Marc J. Luxemburg, president of Council of New York Cooperatives and a partner in Snow, Becker Krauss, P.C. said the case was a good one from the cooperative point of view.

The ability to regulate occupancy of the apartments is an important tool to help boards control what goes on in the building, he said, and the Appellate Division pointed to the "use" clause, which says the tenant is restricted to residential uses and use by the tenant's immediate family. Luxemburg had written an amicus brief on behalf of the CNYC.

That clause was the basis for holding that you can't have a commercial guest in the apartment," Luxemburg said. "It's a sign to me that the court singled out that clause and is comforting because it will help the boards in their ability to manage what goes on in the building."

Although the tenant has said he intends to appeal, Luxemburg did not think he had any chance of obtaining permission from the court to do so, particularly because of the unanimous decision based on the clause.

Luxemburg said it is a common problem for someone to show up at a co-op with luggage. "This ruling will give more strength to the control of the building to say who are you and what are you doing here?"

Alvin I. Apfelberg, a Manhattan coop attorney said, "I am glad that the Appellate Division put a stop to some of the abusive practices of tenants and shareholders using their apartments as way stations. I think its a wonderful ruling."

In this fashion, he said, the buildings can control who their neighbors are and the units are not turned into profit centers.