Cooperative Rules Understanding the Business Corporation Law

Every condo and co-op has its own set of governing documents by which building administrators direct their community's day-to-day business. Bylaws, rules and regulations, and precedent-setting legal cases help keep boards within the letter of the law, and offer a framework within which they can operate consistently from year to year.

Several laws apply to real estate in New York: for example, condos are governed by the New York Condominium Act, and the Real Property Actions and Proceedings Law (RPAPL) deals with landlord-tenant issues between a co-op and its shareholders. Case law interprets these statutes and sets legal precedent for co-op and condo owners; indeed the law governing co-ops in New York is mostly created by judge-made case law.

One statute originally created to regulate businesses, the Business Corporation Law—or BCL, for short—primarily governs how cooperative corporations, including housing co-ops, must be run.

The BCL provides specific rules regulating the corporate governance practices of co-ops, including the manner in which boards and shareholders conduct meetings, amend bylaws, and vote, and the BCL prescribes the rights and responsibilities of boards and shareholders. While it may be asking a lot of volunteers to pore over the entire BCL or know its nuances by heart, it's a good idea for all board members to at least be aware of its existence, and better to have a passing familiarity with its contents.

History and Background

The BCL was implemented over a century ago to regulate governance of corporations in New York, and remained more or less unchanged until it was overhauled in 1998. “The BCL was drafted generally for corporations, [the legislature] didn’t have co-ops in mind, and the courts have applied the BCL to co-ops,” explains Stephen M. Lasser, an attorney shareholder with the Manhattan office of the law firm Stark & Stark.

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31 Comments

  • The BCL is indeed very explicit as to the nature of notice for shareholder meetings, cf. Article 6, Section 605 of the BCL at the link provided in the article under “Laws of New York.” then select BSC, then Article 6 for Secton 605. Not sure how the two lawers contributing to that article could have missed it: Not fewer than 10 days nor more than 60 days via electronic or first class mail; not fewer than 24 days nor more than 60 days when mailing via third class mail.
  • Question. I am a co-op owner. Renovation Plan was approved by the Building Board & City. Con-Edison added a new power line to the building at no cost because the building was at its capacity for the existing electrical load. It cost the building $150,000 to meter the new power line and also some other renovation in the building to facilitate the installation. The Building Board decided that the cost should be borne by the first ones who need to add the extra power. This decision was made after my renovation plan was accepted by the Building Board and, for that reason, is retroactive to me. The addition is to the common area and for that reason the cost is the cost of the cooperative building. What law can I cite to state that I am not liable for the $15,000 charged to may Co-Op unit in that building ($150,000 divided by 10)?
  • Iam the POA for my aunt, who has alzheimers, and no longer lives in her coop in Yonkers. For four years I have been trying to sell this unit for under $100K. I have had five buyers over this time. Each time a "contract" is presentedfor me to sign the process starts. After many months of "vetting" the applicants, most were paying cash, one already had a loan commitment and one never got to finalization. However, each applicant was systematically "turned down" by the board. No reasons, no explanations, no notice. I have learned that only 1 unit has sold in this entire building in over 5 years!!! The board has turned down every buyer by every seller. Same thing-no reasons. Many have been minority buyers, others retired teachers, police and other walks of life. The board has held EVERY seller hostage-with no repurcussions. How can this be?? Are there no governing bodies? Does Fair Housing come into play? Can they and the management company be held liable? I am at my wits end here with these people and they believe they are above laws and reproach. I am unfamiliar with coop laws & regs. Can you advise?
  • The BCL is very informative, however it does not address the issue of who can be on the board of a cooperative. I live in a building where there are renters, subletors, and shareholders. The Offering Plan is dated from 1986 and allows anyone including non-residents to be board members should they receive the number of votes from the shareholders necessary to qualify. Is there any legislation which speaks directly to matters of a board can only consist of people who are shareholders? Thank you
  • i have a co-op in white plains can the board put in for a loan for 500.000.00 without a shareholders vote
  • What can be done if the President of the Co-op board refuses to show members the ballets of tenant shareholders who are aware that the votes were tampered with and a new president was elected and the board stayed the same?
  • I owe maintenance in a Westchester coop and I will be moving to a senior citizens apartment building in january 2013. The aparment is going to the coop association and the first payoff will be my lender due to a reverse mortgage i received a few years ago. There is no other debt on my apartment. My question is my star abatement that is distributed to all shareholders on a 12 month basis.Am I entitled to my proportionate share of my star abatement or does the board have the right to retain these funds and apply it to my arrears. This money is rightfully mine I think. Please help
  • I lost my apartment last winter when my elderly landlady hurt herself and her daughter sold the 2-family house. I've been staying with my mother in her coop in Queens since. I'm disabled with a chronic neuro. condition, and can't find an apartment in NY, esp. since Sandy, so I am trying to search out of state, but it's difficult. My mother and I have always had a difficult relationship, and living together for 10 months in a 1-bedroom apt. has made it unbearable. She now threatens me with eviction by the police whenever she gets angry. If she goes through with that, can they throw me out?
  • I am living with my aunt in a two bed room coop, originally its just the two of us. eventually i got married so my husband moved in with me, and a cousin from foreign country moved in with us since she has no one to live with ans shes on a student visa which she can not afford to pay her own rent. I got my son last june from my country hes 9y/o. it makes us 5 in a two bed room unit. the board now says that there is a maximum of 4 occupants in a 2 bedroom unit and gave us a decision that one should leave. since my aunt does not earn enough to pay for all the expenses me and my husband needs to share. but we can not let go of my cousin who needs help for accommodation more than anything else. Is there such a thing as maximum occupancy?
  • I bought an apartment for my aging father in my building. He has since passed away and I've been renting out the apartment, with board approval. I am one of 3 or 4 people in the building who keep an extra apartment. I am retired and depend on the income of that apartment. Our rule has been that as long as you reside in the building, you can continue to rent out an additional apartment that you own. However you can only rent out your own apartment for 18 mos, and then you must return or sell. I am on the board, but voting on this issue was dominated by board members who don't like this rule. Am I grandfathered in or do I have any senior status exemtion?
  • ive been approved byBoard and now have a renter of four years. I had to move out to care for parents. the current Board wants someone else to rent and to get rid of my tenant
  • I'm a shareholder in Co-op. At last night' shareholders annual meeting ,A QUORUM AGAIN was NOT reached & NO ELECTIONS for the BOD took place.(the last election was in 2009).The BCL allows only a 13 month extention(sect. 602) NUMEROUS times in past 3 yrs.I've informed the BOD,MANAGEMENT & CO-OP's LAWYER via mail BUT the BY-LAWS & BCL is ignored. Other shareholders want to become members of the BOD, but are not able to be voted-in BECAUSE there hasn't been an election OR ANY ATTEMPT to "adjourn meeting to a future date when a quorum is present"..WHAT ACTION DOES ARTICLE 6 recommend (Siegler staiting "bring lawsuits under Article 6:" Section under Board Meetings & Voting Requirements: ?).CAN I OBTAIN this info.if I go to the Law Library & look up answer in the BCL?..Can a few of us Shareholders prceed with a lawsuit against the present BOD ?..or IS IT NECESSARY TO HIRE A LAWYER?..ANY INFO YOU CAN PROVIDE WOULD BE EXTREMELY HELPFUL THANK YOU IN ADVANCE FOR YOUR RESPONSE !!....
  • shareholder concern on Tuesday, July 30, 2013 2:11 PM
    Is it legal for a NYC residential co-op building's management company to demand a deposit for work (not requiring an Alteration agreement), when there is no such l building rule?
  • The supt and porter are union in my building...can we go. With out union. ???? Make building. Non union. Too expensive. Union. Co op building
  • I have lived in the coop one bedroom unit I bought nine years ago. When I purchased the unit the rules were that you could sublease your unit after you have lived there for 3 years. I need a larger place to live and the co-op is telling me the rules have been changed by the board and you can no longer sublet your apartment unless you list it with a realtor first for sale. I would sell the unit but with the drop in housing prices the unit is now worth less then what I owe I'm the mortgage and I would loose a significant amount of money if I sell in today's market. If the unit does not sell after a year you must get your name on a waiting list as they only allow a certain number of the units to be sublet. I feel trapped and have no way out. Should the rules under which I purchased the unit stand. Is there any way out?
  • I live in a residence which is a coop. I would like to know : 1. Do the by laws of our complex over ride those of the BCL. 2. Can a person of 82yrs. of age who has lived in her home for 30 years have her lease retracted if the board of Directors decide to conduct a vote and the majority of members vote in favor of doing so. I await your reply.
  • My mother is a shareholder without a title and has requested maintance repairs on her apt. Such as walls falling down in her bedroom under her window for over two years. She had to call the city housing inspector to come into the matter. While inspecting the apt. she saw the sink in the kitchen was about to fall from the countertop and wrote that up also. The maintance manger and others came into my mothers apt and told her that she is responsible for the repairs financially. My mother has section 8 housing voucher which she could lose because of the validations, but the worst part of it all is my mother lives on a fixed income. She just can not afford the repairs.what can she do about this matter,please help my mother she is almost 80 years old now and has worked all her life but still is poor . Thank you kindly just having this outlet for her to be heard.
  • what is property manager responsibilties when squatter move in a coop do any one know
  • My coop is forcing us to sell our apartment in 12 and if we do not have a contract of sale we will lose money of a settlement agreement. Their reason is that they do not want us in their coop because we are interracial. My question is , can a corporation force you to sell your shares and in this case to loose your home, just because they do not like you? I understand put the property for sale, but having a contract of sale in 12 months is something we c?annot control? Thanks.
  • My husband has a share with Co-Op in the Bronx. He has been living here for 10 yrs. My daughter and I have been here for 5 yrs. Since my husband and I have been living here, our place HAS NEVER BEEN TRULY PAINTED. I heard that there is a law in NYC stating that your apartment should be painted AT LEAST ONCE EVERY 3 YRS no matter if you still live there. I called Co-Op about having my apartment painted. They told me that we have to do it our self. What I don't understand, is if we do paint it ourselves and it doesn't meet their standard paint, we get penalized if the apartment is not the way it was first bought if we decide to move out. No test is ran on my apartment's paint. How do I know if we not breathing something in that could cause us damage. Please Help. Are they suppose to paint apartment at least once every 3 years.....
  • I have a question about a coop in Brooklyn Heights. Can you give me some advice? I don't see anwers on this blog, only questions. Please let me know, I have an important question
  • I reside and own a Co-op apt. in Spring Valley, NY. I am disabled(2008) with Multiple Sclerosis. Want to move due to my disable fixed income and various Maintenance increases. I also owe Mortgage of 107,000,therefore I am paying $1400 monthly on a $1700 income. Was advised to stop payments on Mortgage and do Short Sale. Continue to pay Maintance until I get a new apartment. Will the Bank stop me from getting a new apt? Can I apply for section 8 so that I could stay here?
  • A new mgmt company recently took over mgmt of our bldg early 1st quarter this tr. do they hv the right to add fees (proceeding fees) & implement them just because they are now the new managing company?
  • Concerned Shareholder on Monday, September 01, 2014 9:56 PM
    I live in a garden co-op for more than 35 years. Is it legal for the BOD to enter an apartment and make an inspection? I remember 25 years ago it was deemed illegal. Did anythig change?
  • Cooperative is out of control with shareholders buying larger apartments and renting out their other apartments with board approval. Board members are doing the same after getting on the board. We are mostly a rental cooperative with at least 60% not owner occupied. What can we do to turn this around. No quorum for elections for four terms. Lawyer does nothing to stop the madness in this 480 unit cooperative. Help!!!!
  • Are there rules that govern the election of co-op boards? Our method had always been to allocate votes according to shares, but to allow each shareholder to vote for each candidate only once. Last year, an innovation was introduced by which owners could give all their votes to a single candidate(i.e. 7 votes for Candidate A, none for any of the other candidates). Is this innovation legal?
  • My super insists that I pay for painting to repair water damage from a roof leak. Yet my purchase agreement states that I am not liable for damage if "the cause thereof originated outside the apartment and did not result from the acts of purchaser or other occupants of the apartment." Who is right?
  • can a co op board set a bottom price on my apartment that they will accept and do they have to buy it if cant sell it
  • Co-op Board members wish to vote on the internet for President instead of at a Board meeting.. Is this legal?
  • i have one question ,,, i own 2 co op in westchester in same building and there are some issues that i want to make clear if someone can help me is it against the law not to provide financial statment for 5 years , last statment i got in 2010 ? is it possible to hire indipendent company to check all the paperwork , cause there is a big posibbilty that all statements are ttmeperd with because its impossible that 5 years in a row there is no money and co op is in constant minus,,,,, banks wont approve mortages unless person pays cash for it? Before i continue just to explain that this is 200 familly building with 60% shareholders and 40% is managing company . 2010 co op was in -300k ,,, ok after they switched to gas instead of oil ( its cheaper ) and no one saw actuall contract (do they have to provide one to all owners ) they did pointing and no one provided owners with contract they painted hallways (in fact i know that painters that did this are property manager friend ) and again no one knows how much was spent for it that finnancial statement from 2010 shows 1,1 mill colected in that year 26 k from laundy 90 k from parking and still 300 k in minus ?????? since 2013 nothing i repeat nothing major was done in the buldings ,,,, basement of buildings , floors , walls look like shit ,,no one painted them for 5 years ,, landscaping and snow removal lol 60 k a year and it looks like jungle .... etc there is a lot more to write i think i need extra 10 pages
  • My daughter has coop ownership in an apartment which she inherited from her mother who passed. She's been behind in her maintainance fees and faces evicition. Management won't accept a payment plan and wants the whole amount at once. They told her they can also take over the apartment without her getting any money for it. Can they do this? Thank You.