Board Transparency Lifting the Veil of Silence

One of the biggest political buzzwords of the past 10 years or so is “transparency.” Observers demand transparency in meetings of elected bodies in local and state governments, transparency in the proceedings of public agencies, and at times in the doings of private organizations, such as civic groups and churches. The feeling is that if an organization serves the needs of the public in general or a specific group, the public is entitled to a certain level of disclosure about the organization's inner workings and decision-making processes.

Inevitably, many people would like to apply the same concept to meetings of co-ops, condos or HOAs. In these cases, the property being managed represents the biggest single investment of the residents who call it home. A lack of open communication can result in these residents’ distrust of the board—but if too much information is divulged, it could violate the privacy of individual residents, or jeopardize important financial negotiations or legal proceedings.

The Legal Angle

In New York state co-ops, the availability of co-op records is governed by the Business Corporation Law (BCL). According to attorney Eric Goidel, a senior partner of the law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C. In Manhattan,  “In cooperatives, the Business Corporation Law requires that shareholders have access to the minutes of annual meetings of shareholders, shareholder lists for the ability to communicate with fellow shareholders, and access to the books of account of the corporation. Accordingly, an annual financial statement must be furnished to shareholders.”

In condominiums, says Attorney Adam Leitman Bailey, of Manhattan-based law firm Adam Leitman Bailey P.C., “Because most condominiums exist as unincorporated associations not subject to the Business Corporation Law, any rights of owners as to the inspection of books and records arise out of the building’s corporate documents, the common law, and Real Property Law [commonly known as the Condominium Act] Section 339-w, which states that the manager or the board of managers, as the case may be shall keep detailed, accurate records, in chronological order, of the receipts and expenditures arising from the operation of the property. Such records and reports shall be available for examination by the unit owners at convenient hours on weekdays.”

Attorney Timothy Byon, an associate at the law firm of Romer Debbas, LLP in Manhattan elaborates on these requirements. Under Section 624 of the BCL, he points out, “A co-op board must keep correct and complete books and records of account,” must record “minutes of the proceedings of its shareholders, board and executive committee, if any,” and maintain “a record containing the names and addresses of all shareholders, the number and class of shares held by each, and the dates when they respectively became the owners of record thereof.” Shareholders, their agents or attorneys, have the rights, as per the BCL, to examine in person shareholder minutes and the record of shareholders, Byon says. 

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