[Link to
CIM-0107](http://www.hud.gov/offices/adm/hudclips/lops/CIM-0107LOPS.doc)

[Link to
CIM-0109](http://www.hud.gov/offices/adm/hudclips/lops/CIM-0109LOPS.doc)

Use of Cooperative Unit as Writer\'s Studio

Legal Opinion: GHM-0043

Index: 3.300, 3.110, 3.340

Subject: Use of Cooperative Unit as Writer\'s Studio

July 9, 1992

Ms. Betty John

Shannon & Luchs

3816 International Drive

Silver Spring, MD 20906

Dear Ms. John:

This responds to your letter, dated October 3, 1992,

addressed to Nathalie Augustin of my staff. We apologize for the

delay in our response. In your letter, you described the project

in question as a cooperative insured under Section 213 of the

National Housing Act. You also discussed the difficulty

encountered by many residents of this cooperative project in

their attempts to sell their units. In light of these

difficulties, you stated that it seemed \"unwarranted\" that a

well-qualified purchaser should be denied the opportunity to

purchase a unit in the cooperative project because of the

purchaser\'s proposed use for the unit. In a telephone

conversation with Ms. Augustin, you stated that the purchaser

wanted to use the unit as a writer\'s studio and not as a

dwelling. You enclosed a letter from the purchaser to the

President of the Board of Directors of the cooperative project,

Leslie Hurt, in which the purchaser states that she plans to work

in the unit during the day but will only spend the night from

\"time to time.\" In this letter, the purchaser also mentions that

she has another apartment which is not large enough to house the

materials for her work. Presumably, she uses that apartment as

her dwelling. You also enclosed a letter from Mr. Hurt to the

purchaser in which he denies approval of the purchase citing HUD

instructions as the basis for his denial.

We have reviewed Handbook 4550.1, Basic Cooperative Housing

Handbook, and have confirmed that Mr. Hurt\'s decision to prohibit

the purchaser from purchasing the unit for use as a writer\'s

studio is in fact based upon HUD instructions. Appendix 1-7 of

Handbook 4550.1 sets forth the Model Form of Occupancy Agreement

which, according to paragraph 3-10 of the same handbook, is

required to be signed by all purchasers. Article 5 of the Model

Form is captioned, \"Premises To Be Used For Residential Purposes

Only,\" and states: \"The Member shall occupy the dwelling unit

covered by this agreement as a private dwelling unit for himself

and/or his immediate family and for no other purpose\....\" This

provision is very specific in its prohibition against using units

for purposes other than as dwellings.

By her own admission, the purchaser clearly intends to use

2

the unit as a place to work and not for residential purposes as a

dwelling as she only plans to sleep there from \"time to time\"

and, presumably, most of the time she will sleep in her other

apartment. Therefore, Mr. Hurt was correct in denying the

purchase of a cooperative unit for use as a writer\'s studio.

Although we are sympathetic to your concerns about the

difficulties faced by individuals who wish to sell their

cooperative units, we must, nevertheless, ensure compliance with

administrative instructions.

Sincerely,

Mel Belin

Chief Attorney

Loan Origination and

Eligibility Section