Going Rogue Boards Must Follow Their Own Rules

There’s nothing worse than dealing with someone who has let their power go to their head, and when you’re talking about a co-op or condo board member who starts to act above everyone in the building, huge problems can arise.

Just because someone is on a board does not give them the right to operate under a different set of rules than the rest of the building has to follow. There should be no preferential treatment for parking spots, flouting pet rules, or fast-tracking of their own alteration projects.

A board member has a fiduciary duty to manage the property and financial well-being of the cooperative or condo for the benefit of the shareholders or unit owners.

“Fiduciary duties means they are supposed to put the interests of a shareholder above their personal interests,” says David L. Berkey, a partner at Gallet Dreyer & Berkey, LLP in Manhattan. “What we often do with our boards is to have them sign a code of conduct which repeats the fiduciary duty rules but also advises them that they are supposed to set the standard of behavior in the building.”

A fiduciary relationship exists when one party puts its trust in another party and grants to that second party a degree of influence and power. There is the understanding in a fiduciary relationship that the second party has a high level of accountability, including moral accountability, to the first party, and that the second party—the fiduciary—will put the best interests of the first party above their own.

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4 Comments

  • What happens when there is no quorum at a shareholders meeting and therefore there is no election for new Board members? The same Board has remained in my coop for many, many years without a chance for us to vote them out. Isn't there a law against this?
  • escapefromyonkers on Monday, June 13, 2011 1:04 PM
    something is wrong here, there is this great article about BOD going rogue, yet at the end they state there is not much you can do except waste your money in a legal battle that at the most say dont do that at a cost of $10k per word. renters have a much greater protection from unscrupulous landlord with financial penalties for infractions. to top it off the agreeement was signed with the AG office who will not get involned, 'a better title may be if your board is self ,fealing,non compliant of their fiducary duty , and refuse to perform due diligance , you cannot do anything from the govt on down, might i suggest that the full method for a shar owner to take the boaard or mamaging agent to court , on your own, be a better end to the article. This must be the 3rd or 4th time i have seen this , They can get away with anything unless you do not mind throwing away money, Are there any pro bono, or legal services for elderly or disabled owners. renters have plenty of walk in places to fight back My managing company refuses to provide me with the updated shareholder list., i suspect we are at 50% owner occupied from 80% at conversion 25 years ago. refuse to provide BOD contact info, many do not live in the building.or city. Apartment are occupied not in accordance with par 14 of proprietary list. apartment being treated as unsold shares, but daughter and husband lived in there for 4 years,over 20 years no sublease fees, and owner on BOD, mother in law of pres. self dealing by president . mortgage via conflict of interest.$27k zero drop error on budget,owner of managing company refuse to talk about. IMO it was outsourced, the budget,32,000 for insurance on a 20 year conversion vs$ 3200= your not in the field
  • Dear Escapefromyonkers, I hope soon to escape to, from this cooperative community out here on long island. I am trying my best to support the Bill in the Senate, Cooperative and Condominium Ombudsman Office, introduced by Senator Liz Krueger. If you dont know about it, visit her website and write your Senators. My rogue board has harassed me, caused me financial harm and I have had everything I own, on the outside, broken or robbed. Last night, my dinghy (boat) was robbed. All the boats sit on the rack, none of them gets touched, only mine. This is more like a gang as opposed to a board. There is apparently nothing I can do but file police reports, They dont like me because I hired attorneys as they would not correct major issues that including flooding. They dont like me because I opposed questionable behaviors. Being on a board with these intentions gives members free rein to injure, violate, embezzle, etc. So, if you think your issue is bad, do your homework and please support the Bill.
  • If the State has made laws that the condo should follow about monies and the officers don't follow and there is a vote without the information the state says the homeowners should have, Is the vote valid or null and void?