Working together is something we all must do in one or many ways pretty much every day. But it’s a rule of thumb that’s easy to forget, given the varying pressures of a 21st century economy and the needs of businesses to profit, and of residents to have reasonably peaceful lives in their multi-family dwellings.
So when a building converts from being a rental property to a co-op or condo, and the former owner of the building retains financial interest in the property, objectives and attitudes can collide. As long as any unsold shares are owned by the former owner or so-called sponsor (he, she or it, in the case of a corporate developer), the sponsor has a place on the board. That means that said sponsor has an allotted number of votes to cast in board decisions that affect the building at large.
Most of the time sponsor/board/manager relations are smooth and trouble-free. But sometimes, a sponsor can become a problem for both management and the board, because the interests of the two parties seem to collide, or the sponsor takes an adversarial stance for one or another reason.
As with many things in life, education can provide a better footing for navigating such complex relations. Understanding the role of the sponsor, how the sponsor interacts and works with the board and management of a building, and how that relationship changes as the sponsor’s unsold shares are sold off, can give any resident a calmer temperament and sound arguments when issues with a sponsor arise.
In most cases, sponsors stay involved with a building because they must. They need to see their investment through to fruition, or in some cases, it may be more profitable for the sponsor to rent the units, rather than selling them all off as fast as possible.