In many ways, a co-op or condo building is a lot like a tiny democratic nation. Like an independent state, a building elects its leaders, and those leaders have certain responsibilities to the people who elected them. Each “citizen” of the building has a vested interest in the continuing prosperity and harmony of their community—and each has a right to know how their elected directors are making decisions and running the building’s business affairs.
In a post-ENRON world, transparency and openness in business administration are more important than ever—and that goes for co-ops and condos as well as multinational corporations.
A Look at the Law
The primary statute covering co-op board operations and shareholder/owner rights in New York City is New York State’s Business Corporation Law, or BCL. Enforced by the New York Attorney General’s office (currently under the leadership of Attorney General Elliot Spitzer), the BCL affects co-ops in two ways. First, it lays out the duties and responsibilities of directors and officers, and second, it outlines shareholders’ rights to information and participation in the governance of their building.
Regardless of whether your building has 14 units or 414, understanding and abiding by the BCL’s standards of disclosure, fairness, and regulation can foster open, productive communication between residents and board members and keep your community on the right side of the law.
Consider the issue of elections, for example. In smaller buildings where there’s little resident turnover, it’s not uncommon for the same few people to run the board for years uncontested. In really big buildings, the board is often largely ignored by the non-serving shareholders. In some buildings, voter turnout is so poor that the board doesn’t even bother to hold yearly elections—if residents don’t seem to care, the board may figure, “If it ain’t broke, don’t fix it.”