Ask an Expert: What can I do about the tyrants on my co-op board?
I was recently elected to my co-op's board of directors. Some incumbents were not re-elected, much to the chagrin of the previous board.
The re-elected board members are now withholding information and making financial decisions without my involvement. The president does not allow a board vote and even when we agree on an action at a board meeting, she may unilaterally reverse it later.
Some of the re-elected board members cut me off at meetings, yell and try to intimidate me, likely hoping I will become so frustrated that I will resign. Others on the board are too afraid to speak up about this behavior or try to force a vote.
I want to represent the shareholders who have had decisions forced on them in the past that were not in their best interests, but what can I do when board members refuse to cooperate or follow the rules?
First of all, you are justified in your alarm about your board's behavior, say our experts.
"Part of a board member’s fiduciary duty is the duty to inquire and educate him or herself about the issue being decided," says real estate attorney Steven Wagner of Porzio, Bromberg & Newman. "The board member is entitled to rely on experts such as a managing agent, an accountant, an architect or engineer or an attorney in the process of investigation and educating him or herself. The board member is also entitled with very few exceptions to examine and review all of the books and records of the cooperative. Withholding information that is the cooperative’s is not permitted."
Review your co-op's bylaws and board procedures "to see which requirements can be used to compel the board to provide information to board members," says co-op and condo attorney Dean Roberts of Norris McLaughlin & Marcus. "There are also requirements of the Business Corporation Law that the board members be provided information especially relating to financial information."
Typically, proper notice of meetings must be given to board members, says Wagner, and "decisions and resolutions of the board must be adopted by a majority -- or in some cases, supermajority – vote of the board members in attendance at a meeting where a quorum is present."
It may be that a sternly worded written reminder of the board's legal obligations will be enough to curb this misbehavior that boards.
You might also remind them that boards "function best and the buildings run best when board members work to come to a consensus, as diverse points of view will usually also be reflected among other owners," says Roberta Axelrod, a real estate broker and asset manager with Time Equities who sits on many boards as a sponsor's representative.
While finding solutions that address all concerns can be initially more time consuming, "it produces better results," says Axelrod.
If your fellow board members continue to flout the rules for calling meetings as required or make decisions outside of what is permitted in the by-laws, breaching their fiduciary obligations, you can issue a legal challenge.
"Typically these digressions are dealt with in a type of action called an action for declaratory judgment and injunction, where the court declares the rights of the parties and can mandate certain rules such as the by-laws be followed," says Wagner.
That said, staging an election-year coup is likely a less expensive, faster and more effective route.
Inform your neighbors about your board's improper behavior, including the withholding of information, and "build a consensus so that at the next election or new members can be elected who support the existing director," says Roberts.
Teri Karush Rogers is the founder and editor of BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.