Board Resource Guide: Etiquette for Board Members Conflicts & Confidentiality

Serving on the board of directors for your building brings on a range of emotions: pride that you were selected to represent the best interests of your fellow shareholders; unease at the thought of the additional time commitment of meetings; and, perhaps most importantly, nervousness that you will do or say something that will ultimately be problematic for your board or for you personally.

This article will discuss some of the more common legal and ethical pitfalls that board members might face and give advice on how to recognize and avoid falling into those traps.

Training of New Board Members

Experienced board members should help newer members learn the ropes, not only to protect the new guy, but also to protect the whole board collectively from errors that could cost them a court battle.

"It is important for veteran board members, the building attorney and the managing agent to remind both new and incumbent board members that every member has a fiduciary responsibility to act in the best interest of the cooperative or condominium," advises Rosemary Paparo, director of management at Buchbinder & Warren, a Manhattan-based property management firm. "Perhaps that should be the first order of business whenever a new member joins the board."

Some board members may indeed not care about adhering to rules and ethics, while others simply may not realize what the rules are. Frequent reminders of how to act from those in the know—board attorneys, managing agents and veteran board members—is essential to having an ethical board.

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24 Comments

  • Thanks for this article! After being on the board for just a few months, I've been brought close to tears twice already. It's not easy, and as mentioned, it's thankless, but it's a good thng to be able to understand how a building is run. One thing is also key: communicating with shareholders, to try to avoid misunderstandings.
  • key: communicating with shareholders, must be a rule for board to follow or a code to refer too.
  • What about a Board member who sends e-mail attacks to shareholders that include mocking? Dose this put the Board at some sort of legal jeopardy?
  • ManhattanCoopPresident on Tuesday, September 02, 2008 10:32 AM
    Can shareholders, who have their apartments up for sale (and do not reside in the building) become board members that wish to be apointed to the admission committee solely? Isn't that a conflict of interest?
  • Shareholder, former board member on Tuesday, November 18, 2008 5:31 AM
    The current board has been in office for 2 years and no further elections have been held. They have ignored the requests from three of us, to see the financials. They have assessed the shareholders for taxes for over a year and have not paid any taxes at all. Every single one of the current board members are non residents. Two have not been residents for more than 10 years. Of those 2 one has beeb subletting their unit and the other put his mother in a nursing home and has left that unit empty for a year now. The two others just moved out of the building this year and sublet their units. The building has 14 units of which there are only four shareholders living here. The previous board of which I was a member evicted 3 non payers over the last 10 years and the rest of the shareholders I do not know the status of their units since the current board has rented out the non resident shareholders to rental tenants. I can not get any information about the whearabouts of the other shareholders. What can I do about this situation?
  • Thank yo for all the splendid information yu sare with us. I learn from every issue. Would y ou please give me a protocol for handling proxy votes at meetings.
  • Everyday Entrepreneurship on Friday, February 13, 2009 1:23 PM
    Great blog. I interviewed several entrepreneurs and investors about their opinions on Board meeting etiquette. It's fairly consistent with your article. I especially appreciate your work on keeping company information to yourself. Too often Board members take personal liberty in what they discuss outside the Board room, especially those in small business that are not in the public eye. Thanks again, Everyday Entrepreneurship
  • my husband resigned from a board that did nothing but bash sharholders. clearly a click of long time members. now we are the target of bashing and defaming. what can we do? besides sell
  • 70% if the owners of a 48 own your own apartments have requested the current board members to resign and re elect new board members but as an owner we where told by current board that they are not giving up and will remain as board member. Do owners have any right on saying who we want on the board? Please advise us.
  • the president of our coop board, a resident for many years, is currently working for the management company. is this legal? ethical?
  • ANGEL, 70% WANT A CHANGE. That should be more than enough votes.If they refuse to leave after the vote is won,I would get the AG or DA OFFICE involved because they have no rights as the majority has spoken.
  • I have enjoyed reading the comments, but where are the responses. I would like to hear the response to "Shareholder, former board member" comments.
  • Is it ethical for Board members or immediate family members to choose to do a job that would normally be something the community would get together to do for free (ex. spreading out mulch in the park pressure washing the gazebo or painting it.) or hire outside help for these kind of services. I am concerned because one board member is using her family and herself to get paid for these services. The work is fine, but is this ethical when you are on the board and then request after the work is done to request a certain pay for it?
  • Board Membership and Presidency, should have term limits. Invariably, long terms tend to corrupt members. My old building, the Board President, an attorney, got free work done in his apt. from contractors, who were hired to fix certain common areas, when a neighboring apt. became available, he made sure the board would not approve some of the people, as he was really interested and did not want to bid until, the owners were desparate. When a shareholder passed away, he forced the mid-night employee to give him access to the apt., and when the employee stated that, "He was not comfortable", he got the "Do you know, who I am?" act. He and the President of the Management company, were as thick as thieves. I could write a whole novel on the shady dealings of the Board President and his Partner in crime, the President of the Mangement company!
  • Is it true that the board can deny a refinancing application and not give a reason? Do a reason must be provided upon request?
  • We have a board that acts in secrecy, passing agendas based on their own interests not necessarily those of the co-op. Unfortunately, they have the votes. At the last annual meeting, they voted that the old board should be the new board and won! Other than the votes, they have the funds, so fighting them legally is not possible and you have to have the stomach for a prolonged fight. It's criminal.
  • What were your resposes to the qustions posed by Mary Anne and Angel?
  • I am running to become a board member. The anunal meeting was canceled and a new date has not been announced. The cancelation of the meeting was not communicated to all, meaning some people recieved notices while other were left in the dark. Now I am aware that by law a Annual meeting should be held every 12 months. I feel that the current boards members are turning to figure a loop to stay on as member without having any elections. What can be done about this?
  • Theres a website called UHAB you can get alot of your questions answered the key to alot of these question is you must have the majority of shareholders who agree with you in order for things to take place , Until they put a program in place that would allow someone to follow up on accusations the only suggestion again is UHAB. Im living proof I had the same issues with President and board members n no elections, no books , conflict of interest with family members, I had no board only a President she took complete control until Ifinally got the majority of shareholders on my side which was only 2 shareholders that I needed we had a total of 5 in 10 unit bldg, I told everyone to cease all payments of rents until we had UHAB rep come in and have an Election and now we have a Board but guess who's President Me LOL!
  • A club member came into a Board Meeting in session and was asked to leave while we were discussing disciplinary actions against another club member. He refused and said it was his right to stay as long as he did not speak . Is this true?
  • Confidentiality and transparency...Anybody uses an INTERNET FORUM in his building? It a wonderful tool to communicate between shareholders and to control the activity of the board. I would like to hear about real experience.
  • I am a disillusioned board member and fear the current president is taking the co-op into bankruptcy. Can I sell my apartment while being a director, or do I resign first and then sell?
  • Is there a conflict of interest or is it unethical if the Board president's wife(a realtor) is selling apartments in the building ?
  • How is keeping everything a secret in the "best interests of shareholders"? Isn't that the problem with most boards, keeping too many secrets between themselves? This article is bull--it protests the wrong redirecting the crooks to seek legal advise to cover more wrong. Let say 1 of 9 board members is the only honest one; he sees a lot that shouldn't be happening; he gets no help from the board of course nor management who are often the enablers and dependent on board support for their livelihood, what should he do--say nothing, keep silent and suffer within himself? YOU HAVE TO SPEAK UP and usually getting shareholders on your side is the only way. Document and collect your proof then exposed them. This article's advice is a stupid as the idiots that most often are NOT qualified to serve on most boards!!!