Getting elected to the board of one's co-op or condo building is usually a very positive thing: it gives a person the chance to play a part in the preservation of their community, and also gives them the opportunity to leave it in better shape than when they started. But great power comes with great responsibility that must be utilized properly. Board members can suddenly find themselves in tough spots when figuring out how to balance their status and fiduciary duty with relationships that may predate their position of authority.
How should one tackle their authoritative roles with existing friends and neighbors? Whether it’s something as simple as repainting a kitchen to something as serious as falling behind on your fees, there’s a tactful way to approach all these situations so as to maintain stature, maintain friends, and not get in trouble along the way.
Know – and Make Known – Your Role
Board members, although somewhat of an authority figure in their buildings, need to find a healthy balance between being an administrator and being a friendly neighbor.
“The best advice I can give to an existing or new board member is to treat their position on the board as a separate job with fiduciary responsibilities,” says Alex Kalajian of Solstice Residential Group, LLC in Manhattan.
When among residents, Kalajian says board members should live and act as a fellow resident reflective of living in a communal environment. When in the boardroom, they should act as an executive whose responsibility is the enforcement of rules and fiscal policies. “One has to know their place and position and from time to time has to be reminded of which hat they are wearing,” he says.
Kalajian cites one instance where in one of his buildings the resident manager was also the live-in-super, a shareholder of several apartments and a board member.
“[It was] very tricky, but when there is a mutual level of respect and understanding from the beginning, it is a very manageable situation. To this day, we remain close friends.”
It’s when board members step outside of their bounds and make decisions they aren’t authorized to make that problems start to arise, says John Lipuma of JAL Diversified Management Corp. in Brooklyn. That includes getting involved in residential disputes or providing services they aren’t meant to provide.
“It’s very hard for board members to get involved,” Lipuma says. “They don’t have the power many of them think they do.”
Say, for example, that the boiler goes out in the middle of the night and a board member takes it upon themselves to reset it to keep everyone in the building warm. If a fire starts, it’s on the board member as they aren’t licensed to carry out such duties.
“Board members often don’t understand the nuances of the real estate business,” Lipuma says. “They get caught up in what’s right or wrong, but it doesn’t always work that way.”
The most effective way for board members to continue to be neighborly is to refer all issues to the managing agent of the property, suggests Lipuma. “It’s not a good idea to make snap decisions. I advise my clients and board members to come to us.”
Don’t Take Sides
When it comes to getting mixed up in community disputes, the best thing to do is to just be fair.
“There is a judiciary obligation that [board members] owe,” says Robert Braverman, a managing partner with the law firm of Braverman & Associates in Manhattan. “They are legally obligated to treat all shareholders fairly.” If exceptions are made for one person, then everybody starts to feel entitled.
Eric M. Goidel, a senior partner with Borah Goldstein Altschuler Nahins & Goidel, P.C., a Manhattan law firm, agrees. Most often, he says he comes across situations where a board member turned a blind eye or allowed for illegal subletting, pets and alterations. “Board members have to be cautioned not to do that because you can’t be favoring or unfavoring one shareholder over the other,” he says. “You should not act like congressmen.”
Kalajian says he strongly encourages boards to review their house rules and to customize them on an as needed basis to keep up with the general quality of life issues such as noise complaints or hallway clutter, for example. This update should include a written outline detailing what steps are to be taken in the event an infraction of the house rules.
“A board member who is being antagonistic or overly favorable to one board member or owner as opposed to another will be harder pressed to do so if the focus of the dispute remains on policy, facts and documents,” he says. “The best weapon a board can have against getting embroiled in disputes involving sensitive or questionable decisions is to refer to the association’s governing documents and to have a full and comprehensive set of written policies in place.”
These will inevitably come in to play when tougher decisions, such as collecting debts or the need for a foreclosure has to be made.
“As fiduciaries, having such policies in place, takes the emotion out of an otherwise very hard and uncomfortable decision for boards to make. Of course, before any legal action is taken, communicating and working with the owner to resolve the issue amicably is preferable,” Kalajian continues.
Quality of life issues, such as noise complaints, odors, and hallway clutter are to be expected when living in a vertical city, and therefore are sometimes easily looked past. Rules for pets, or removing carpets, are really only enforced when someone complains, says Lipuma.
For example, he says that high rises have a common problem of unequal heat distribution and some units are colder than others. A board member could put a heater in one of the colder units, which may be against fire code rules, but makes up for the problem and provides warmth to an uncomfortable neighbor. It's not okay, but things like this happen all the time all over the city.
Even more serious issues, such as a resident being plagued with an illness or losing their job due to the circumstances of today’s economic market should be treated on a case-by-case basis by the board to insure that more stress doesn’t ensue, Kalajian says.
“Boards are not inclined to make decisions readily or easily and are certainly not inclined to add to the stress and financial difficulties which their neighbor may be going through,” he affirms. Special exceptions can be made as long as they are done in “good faith and in the interests of the association as a whole.” But they should only be made after the board examines the decision very carefully and has their own attorney assess it.
Lipuma says there was a woman in one of his buildings who paid her fees consistently on the first or second day of the month. When she lost her job, she approached a neighbor on the board to pay only half her fees monthly until she got back on her feet. The board approved the request and she eventually caught up.
“If you get too dogmatic, it’s not generally healthy for the co-op,” he says.
Board members who do favor specific residents and make decisions without approval from the board can face big legal problems down the road. Fines can be issued that can affect the whole building, says David L. Berkey, a partner with the Manhattan-based law firm of Gallet Dreyer & Berkey, LLP.
Worst case scenario? A lawsuit on your hands.
“A board member has no duties unless the board authorizes it. Board members need to realize they have legal bounds,” Lipuma says.
Say for example that a resident asks for an alteration such as a paint job and a board member hires a contractor without consent from the board to speed the process along. If that contractor was injured while on the job, the board member could be held liable.
In addition, Goidel warns that rogue board members making decisions of their own may affect how much insurance coverage they get and what kind of legal assistance can be provided.
Braverman also suggests that while disparate treatment is unlawful, proving it isn’t easy and quickly becomes expensive.“The only way to establish proof is to look at prior conduct of the board member,” he says, using emails, and testimonies. If proof is found, or if a board member messes up while acting outside of their jurisdiction, they can be sued for hundreds of thousands of dollars.
In the end, even though board members retain specific relationships with some of their neighbors after getting elected, they must be wary of their obligations to the community as a whole. And while some lines of protocol can be somewhat of a nuisance, it’s better to just play it safe and abide by them rather than finding shortcuts for the sake of friendship.
If an alteration request is made, such as painting the basement, email everyone on the board and let them know about it. If a dispute unravels, engage an outside third party.
When issues do arise, keep an open line of communication between residents and the board. Refer to documentation for guidance and board peers for solutions. That way everybody gets equal treatment and lengthy legal disputes can be avoided.
Bernadette Marciniak is a freelance writer and a frequent contributor to The Cooperator.