I Got Rights! Board Operations and the BCL

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.”

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39 Comments

  • Hello there, my Co-op violates almost all the sections of the BCL by holding the board hostage and being in collusion with the sponsor waiving up to 25,000.00 in maintenace fees for him/her. In addition, the sponsor and the board of directors engage in criminal activity against shareholders they don't like. I have many videos of members of the board engaging in such criminal activity you may watch at YouTube.com/NewYorkTi . After watching all these videos can you please tell me what would be my recourse? Thanks
  • How do I find an election inspector for the annual meeting of my coop? Thank you
  • What do you do when a mortgage holder controls the board of directors for 27 years because it has the right to appoint the majority until the mortgage is paid off, but the board appointed by it will never pay the mortgage off?
  • How may proxies can one shareholder hold in a small 10 unit co-op it can be problem when one shareholder has their vote an two or more proxies at one meeting
  • What can you do when you are elected to the Board and they ignore your role as a Secretary? What can you do when there is an annual election and you were not notified who is running until the meeting itself?
  • What do you do if you have a co-op owner who states she represents all owners but really only represents a small mob? Whose intent is to take control of the board and the property herself for personak gain. She persuades owners that she is holy than thou she mis-interprets the facts and mis-leads people to gain favor and whose actions are actually hurting the company and contributing to depreciating values for all share owners?
  • How can a coop board publish new by laws and when you contest this they threaten you with there lawyer? And actually use the lawyer to harass you.
  • WHAT CAN I DO TO STOP SOMEONE WHO WAS A BOARD OF DIRECTOR OF OUR COOP, DEFRAUDED THE COOP, WAS FOUND GUILTY IN A COURT OF LAW, WAS FORBIDDEN TO DO ANY BUSINESS WITH OUR COOP FOR FIVE YEARS 9HE IS A REAL ESTATE AGENT) AND IS RUNNING FOR THE BOARD AGAIN? HE CAN DO THIS BECAUSE THE COOP BOARD BY-LAWS ALLOWS. THIS MAN HAS BEEN ABLE TO INFLUENCE OPERATIONS IN OUR COOP BECAUSE OF HIS RELATIONSHIP TO THE PRESIDENT OF THE COOP. WHAT CAN YOU DO WHEN RESIDENTS ARE AFRAID TO SPEAK UP FOR FEAR OF RETRIBUTIONS? WHEN DOES THE BCL PROTECT US?
  • What can we do if a new bd member decides to add a rule that was not existent in the bylaws or in swimming pool rules for the last 30 yrs and is extremely aggresive if we don't abide by this new rule? Do we have a right to have personal umbrellas on a pool deck to protect from the sun (for health reasons)?
  • Are shareholders privy to capital funds that were spent and on what the Board proposes additional monies to be spent before shareholders are asked to pay more money in either assessments or increased maintenance?
  • How can a co op board Insitute a absentee ballot,send them out to shareholders,use them at the next elections and the shareholders never approved their use?
  • We have a property manager (CAM) that is driving owners/guests away from our On-site Rental Program. She has been caught lieing, backbiting & selfserving. But...we also have Board members (7 member board) 4 of them to be exact, that support her and refuse to let her go. Now a dozen or more homeowners have called a Board meeting to discuss this issue specifically. What are the homeowners rights? I am a Board member that thinks she should go, but hopefully owners standing up can make a difference. I have told those homeowners that should keep it objective in that it should not be about the person, but rather about the position not being done satisfactorily. Can you give me any help on this matter.
  • If I want to buy a co-op do I have a right to see the board's meeting minutes so that I might see if any major repairs have been recently completed on the building or are scheduled to begin.
  • Mark B. Levine, RAM (mblevine@ebmg.com) on Tuesday, March 08, 2011 4:03 PM
    Arianne, Your lawyer should handle the due diligence and they can request to see the Board Minutes to see if there is something that you should be aware of in the way of upcoming maintenance projects, past and current issues, future maintenance increases, etc. The Board will probably only allow the attorney to view these minutes in their office, as most managing agents and Boards do not allow the minutes off the premises.
  • voting confidentiality on Wednesday, May 11, 2011 10:11 PM
    we live in a building where the co-op board reviews the election ballets and shareholders are frightened to vote against them for retaliation. Any suggestions?
  • What to do when the Board mis-interperets... I was on the Board some years ago. We have a parking lot that outsiders were using. i set up a program where stickers were issued to identify Coop members in the parking lot. we chose at the time two stickers per shareholder as that seemed fair. The idea was not to restrict our leaseholders but to identify them. The current Board has taken this to mean there can only be two stickers issued to each leaseholder. In fact- they say I am grandfathered in and newbies only get one. I have a third car and occasionally need to park in our lot. Let it be known, there is always an available spot. They are threatening to tow my car if I do so again. They won't issue me another sticker, they know my car. As a shareholder I own that lot and if there is an available spot I intend on using it if I need to. What should I do?
  • How is it that these co-op board of directors are allow to operate in such length of misconduct. They take money from the building's account and transfer it to their personal accounts, increases of maintenance fee (they claim they have the right to do so) demanding that shareholders give them the keys of their apartments, claims that as board of directors they have the right to search peoples apartments, don't pay the building utility bills, don't pay taxes and then they turn around with claims that the maintenance fee has to be increased because there isn't any money, or the building needs an assessment of some sort and an extra fee has to be paid by the shareholders for a whole year, air conditioner charges all year round, if you question them they react disgruntle, verbally abusive and in some cases perverted against females. The list is long, and shame on these people. Clearly, many of them only purpose, is to find an outlet as a co-op board member to feel that they're finally important and can claim to be VIP's of their community. So many of them don't have any business qualifications nor experience. They made it there because they cheated and don't care about following rules or regulations of any kind. Their only purpose is to get to the money, feel that they're finally grand and step all over shareholders.
  • president of my co op is an absent dose not conduct problems that need to be address. when talk with him response is i'll take care of it. lives in an other state has no clue as what needs to be done to maintain the building. asked for a record of financial report dose not respond. building is old built in 1962 needs to be look after no one to report to. it is a free for all. he said's he calls all when need never received a call from him. i asked him to please send notices in righting not to call have all documented. this guy is a lame duck who is ruining our place because of his incompetence. can you direct me what to do to help me make sure that things will be done accordingly with this co op. state florida city of boca raton ps there are only eight units
  • I live in a coop where the sponser has not sold any apartments since 1993. The President is working with the sponser to turn this building into rentals. The president makes it difficult for shareholders to rent or sell apartments. He repeatly turns down prespective buyyer until the seller is willing to accept his price, the building consists of 170 apartments: the sponser has 69, the presidents family now owns about 12 and looking for more. the President is know to have blocked renting an appartment with no reason given. then rent one of his family's to the same possible tenant. What are are recourses to get stop this problem
  • How can I find out if my co-op filed a charter under the Business Corporation Law. I read the below on the Cooperator. We want to have a board member removed but our by-law states 2/3 of the members would have to vote at a special meeting. I would like to know if the below would pertain to my co-op, for removal of a board member. before 1998, it was necessary to obtain the approval of the holders of at least two-thirds of outstanding shares to make an amendment to a co-op's bylaws. In 1998, the requirement was changed so that now only a bare majority of the votes cast at a shareholders' meeting where a quorum is present is required to amend the bylaws.
  • I find it quite troubling that the existing president and a past president who presided for 19 years have colluded and are consistently creating a hostile environment. I was recently voted to the coop board - I finally gave in to the repeated requests of the now President and a former President to submit my name. They represented to the other board members that I showed interest in the board which is not the case at all. After attending only two meetings, I no longer feel safe in my own apartment because of the negativity and the policies being put forth by this pact of Board Members. On weekend, I engaged in a two phone conversation with a Board Member who was trying to get me to vote on a proposal that I opposed. . .I felt she was using intimidation to get what she and the president wanted. The Board President, in my opinion, circulates abusive emails and hides it behind the cultural fact that he was not born in America and he has a different cultural presentation. I hate to play the race card but I am honestly quite fearful now. I don't feel I have any recourse; it's a small coop, 48 units and I'm not sure if I have legal recourse. I am even contemplating selling my unit - at a loss. The unfairness of this is obvious to me. . .actually I feel emotionally beaten up.
  • First of all thanks to the Cooperator for their publication. While running around bureaucratic circles, I've consistently found very helpful articles here! I hope my experiences can help answer some questions posted here. I live in an HDFC which as a recent court clerk informed me are generally corrupt. As I file a request this evening to the Supreme Court requesting a court appointed receiver, I'd like to share that I have observed and reported racial discrimination in approving buyers, repeated account embezzlement, rampant misuse of coop seal, attempts to sell apartments not owned by sellers, attempts to intimidate senior citizens, attempts to harass shareholders including myself, who want to take action, etc. The bottom line is apathy will probably get you harassed and evicted wrongfully. You have to appeal to the right legal body to be heard if your board members are hostile and non cooperative. Be prepared. It is a significant source of annoyance and stress but at the same time something ritually cathartic in practice. First, identify whether the offending party has committed a criminal or civil offense (fraud - criminal, despotic board - civil problem). Start keeping a paper trail and demand that members communicate with you only via email or a letter. This will avoid any provocation for altercations. Be prepared also that your attorney, as in our case, may not support you, may not even be aware of the laws. Remember that the by-laws are subject to a greater authority and everything can be challenged. Even the folks who sympathize and support you may not choose to take action for various reasons - don't have contempt for them. Ultimately, you have to decide whether you will fight to protect your home, because let's face it, NYC is the blood diamonds of real estate and you'll see corruption everywhere. So sell and move... where? Legal recourse is a meticulously bureaucratic and unemotional process. So, find a friend to vent your frustration and begin calmly.
  • I recently asked for the master shareholder's list from my cooperative and was denied. The lawyer of the cooperative site BCL 624 that an affidavit that such inspection is not desired for a purpose which is in the interest of a business or object other than the business of the corporation and that he ha snot within five years sold of offered for sale any list of shareholders of any corporation of any type or klind, whether or not formed under the laws of this state, or aided or abetted any person in procuring any such record of shareholders for any such purpose. I am a shareholder of 12 years dissatisfied with our board. What can I do as I followed your advise and look where it got me?
  • Is it true that the BCL does not allow any vote to require 100% approval before passing? If so, what then is the highest allowed percentage of approval? 99%? 90% or what?
  • East Side Shareholder on Monday, November 19, 2012 10:03 AM
    As i understand under BCL that shareholders can review financial statements, does this also apply to the supportring documents for significant revenue or expense items. For example, if the Coop has pool operations, garage revenue, or a health club, can the details be reviewed, and a discussion occur as to related internal controls?
  • Unosay - I must state that I am not a legal professional but your attorney's response seems absurd - "he has not within five years sold or offered for sale any list of shareholders of any corporation of any type or kind." I don't understand this. Under the BCL he cited you have a right to that list, they need to know the purpose of your inquiry and whether it is related to the interest of the corporation. Look up that law, you'll seethe exact language. (Also, FYI, there are pro bono attorneys in the courts downtown who will help interpret the jargon for you).
  • I believe the current board has not properly designated all the board seats for election. It appears that there should have been 5 but we have been voting for 4. One of the seats was simply set aside for an individual acting as sponsor without the knowledge of the other shareholders. It would also appear that the board knew the designated sponsor signed a waiver relinquishing his right of sponsorship and yet the board did not place the 5th seat up for election. Can the shareholders ask the board members to step aside.
  • My co op board is corrupt and a click of residents that have lived here for many years. It is the same click of board members that have sat on the board for years on end. They are oblivious to BCL and their fidicuary duties and do as they please. Maintaining control by biasness and lack of any laws that oversee them. This is a free ticket to corruption, harassment and other supposedly criminal acts. Laws are in place to protect people from this type of assembly however, who is to enforce these laws when one cannot afford expensive legal fees and even if they could this should not occur and is another way of harassing an owner and causing an owner financial distress. So, to all you commenters; What have you done to support the Co op and Condo Ombudsman law? Have you contacted your Senator and demanded they support this law???? And if you haven't then what is the hold up here, do what you need to do, get pro active towards making changes rather than useless complaining and posts on boards!!!!!
  • Jeanne, One of the most Important steps towards fighting corruption in condos - coops is investigating and acquiring knowledge of your buildings financials, contracts and overall performance. As an owner you have the right to review all this information and pinpoint items that you feel may be irregular. Investigate, ask questions and even participate in a meeting with the Board or perhaps other unit owners. Verify contracts and companies performing work at your property. Verify all information prior to seeking legal advise and or a meeting with an Obudsman. An audit of the condominium documents and financials may be required to conclude the investigation. This is timely and costly. If you truly feel that corruption exists, take the necessary steps without pointing figures. You don't want to open up liabilities and risk a lawsuite for slander. I too dislike and do not tolerate improper behaviors from Boards and managing Agents. Knowledge is Power!
  • Keeping Shareholders in the Dark on Tuesday, October 29, 2013 3:47 PM
    We have a Board with a member who has been on and off for the past 10 years, sometimes as President who has done the bare minimum to keep Shareholder interest and voter turnout low. Despite a background in advertising and marketing, notices for the Annual Shareholders' Meeting and Meet the Candidates go up a day or two in advance. No real effort is made to allow the Shareholders to meet and question potential candidates. Quarterly Shareholder Informational Meetings were done away with after this man and his 3 stooges removed the previous honest Board President ( who has since moved ). The new President seems just as inclined to keep the Sharholders in the dark and not answer any questions. The BOD hides behind Confidentiality Agree-ment so that the Shareholders are not allowed to find out who on the BOD voted for unpopular measures that affect Shareholders adversely. How do Sharholders evaluate the BOD Members if we're not allowed to know how they vote on matters ?
  • Confused and Stressed on Thursday, December 04, 2014 7:39 AM
    Hello. On a chance meeting (not an interview, just a "bumped into" kind of thing) the VP on the board told us in person that we were approved, welcomed us, he gave us a few tips about the building, shook our hands and said we think you're great, welcome to our building. That was one person, although there were 4 other non-board members present and heard this. We haven't received anything official, no phone call, no letter, no clue when/if we can move in THEN they elected a new board. Do we have any leg to stand on here????
  • RE: Onboard Management Thanks for your response. There is a problem with that, the board, the same people never changes, a few newcomers that change frequently. They will not allow anyone, if you ask questions, you get harassed, things happen, I have been a victim. Do you like to find flat tires, car vandalized, you property vandalized, the list is endless. People will go through great lengths to protect their activities, this is a serious situation. One cannot be sued for slander if they are not making a direct statement about a person. This is why the co op condo ombudsman is long overdue. Managing agents are handling financials and such and are hired by boards, therefore they serve there best interest. Where there is no oversight, there is corruption. We don't have an ombudsman in New York, we need one to weed out criminals sitting on boards and abusing their power. It should be up again this January 2015, lets see, I suspect they change one word and it gets kicked back for another six months and so and so on. Thanks again for the advice.
  • During my 2012/2013 board tenure, the management company presented their preliminary budget, which displayed a single line salary of $72,000.00, for the site manager's assistant, and was then co-mingled with the year's budget. Since the person denied the said salary. As a shareholder and board member am I within my right to request a complete structured salary breakdown for the whole listed employees for our co-op, their year end W-2 would be the perfect solution to tie in with the total reported salary expenditure. Thank you being paud that muchbudget with the whole co-op's staff office was member
  • Our senior board member (28 yrs on board) is running for reelection while trying to sell his apartment at the same time. He claims to have a long-term interest in building yet is ready to abandon shareholders and building the moment he finds a buyer. I find this outrageous.
  • At our last AGM the Shareholders elected 4 and Sponsor the usual 3. Aterwards the specific officers treasurer,VP secretary and VP were selected then the President was considered with discussion of the availability timewise of a person . Immediately the sponsors rep while he was not on the ballot said would take the post and was voted on by Treasurer whom he had voted to the president's post,this now treasurer had been voted to pres.for nine years to the chagrin of most shareholders leaving out one of the Shareholders elected without a post within the board. While he was not even on the ballot. In 2013 he was asked to give someone a chance and he just smiled and did as had the right to do so put this abusive person on as Pres. This year he took the job himself. Incidentally at the outset of that meeting the second of the sponsor's appointed stated that two of the elected by the shareholders were not fit to be on the board and also that we did not need a lawyer!! !n 2008 She had insisted that our newly hired Lawyer only communicate with her alone. He objected to this and departed. We have not had a lawyer since. As President he is supposed to respond to the needs of all residents but has neglected to respond to some with great problems i.e. consistent mold problems for almost 3Years with constant requests to do so . A lawyer does not get responses and litigation has to be avoided. Incidentally the now past president who really wanted the treasury job with the sponsor as President gives very little room for opinions of the other members, to do an effective job for the corporation, with abusive name calling and filthy language, it cannot be possible that the manager and both sponsors never objected, Incidentally, the apt. above this woman is a rental of the sponsors, she has objected to them on some pretext and the sponsor has moved some to another of his apts, this has happened to SIX individual residents in in six years. What I really want to know is: If the original sponsor gave up control of board in late eighties and sold his share to the current sponsor ten years later now gives the new sponsor to the same right? I am an Ex board member.
  • unprecedented territory on Monday, November 02, 2015 8:23 PM
    okay, here's one for the records - what can the shareholders in our 700+unit NYC co-op building do as recourse for our Board that is costing and depleting our reserves to the tune of HUNDREDS of THOUSANDS of dollars because - are you ready for this??? ...because: THEY ARE SUING EACH OTHER. Yes, you read that correctly - our Board of Directors are suing each other, (the managing agent may have possibly contributed to the animosity amongst them), and the shareholders have been stuck year after year paying for the outrageous legal fees, (the Board members/managing agents chose to use lawyers outside of the lawyers covered by the bldg's insurance provider). Seriously, we need help - what can be done? What are the shareholders rights? Can a shareholder class-action lawsuit be brought up against them to stop this nonsense and reimburse our reserves?
  • Our property management company refuses to acknowledge that having gasoline exhaust fumes pouring into all of the lower floors in our co-op building in Briarwood NY, from leaf blowers and landscaping equipment. In addition, due to this severe habitability killer and unbearable nuisance, we are all suffering! I have quite a number of people on-board in this co-op to do a petition for a cease and desist using this equipment. Would that help in a law case to get it to stop? Would video and audio, combined with a petition of many people living in our building who are dying from being poisoned by gasoline exhaust fumes. One of the partners promised a lawyer acquaintance of ours that this would come to an end! But in the end, the partner laughed in my face on the phone and said "only communicate in writing". In addition, the property lawyer claims "they are not aware of any harm being done", even after they were told that it is so!!!!! What should I do? Should I move forward with the petition in the building? We also have a second building connected to this one with the same problem. What lawyer would take this?
  • I see a lot of comments and questions. I'm curious to know if anyone gets any answers. Co-ops are equivalent to leasing a car. One pays for it as long as one has it,,, never owns it. While the laws stated that sponsors needed to relinquish control after 5 years of conversion, Co-ops have found a way around it. Thru the creation of new companies,,,, usually LLCs to whom they transfer sponsorship which comes in handy whenever there are unsold shares. I read someone complaining about commingling of funds, paying for mortgage loans indefinitely. If your building is an old building and had strong equity prior to the market crash of 2008-2009, buildings may have taken a huge loan which they are swiftly being passed on to shareholders. Every single shareholder needs to take the responsibility to check who owns the individual promissory note of his/her mortgage loan. Shareholders need to also ask their board to show all shareholders who owns the note for the mortgage in the building. It is the note holders who retains the power at time of sale. The financial institution who is receiving payment is not always the one holding the note and many people don't know this. It doesn't have to be a financial institution, it can be any investor, even the sponsor under a different LLC who holds the note. If anyone puts 1 and 1 together, will realize that many Co-ops sitting on old buildings, such mortgages have been long paid off, thus, should have strong equity;however, someone other than shareholders is benefiting from that equity. Personally, I'm not against anyone making money,,, but giving a title to residents in the name of shareholders and withholding important information from them to benefit a sponsor/investor is disgusting. Someone said that a sponsor member appointed himself as a board member without going thru the proper channels, i.e. election,,, my question is where was the Managing Agent and the so called co-op attorney to prevent this from happening. If a Co-op has a board and advisors such as managing agent and legal counsel,,, why on earth then are there sooo many complaints on Co-op activities. The reason is simple,,, those advisors obviously sleep together,,, and they always wake up happy as they make the board and shareholders believe that they have the best intention for the betterment of the building (!) preposterous,,, Sponsors and managing agents have also found their way to grab board members as well, to play the dirty game of hiding things from everyone,,, sometimes they give them a good honorary title, and sometimes may be some other forms of compensation as long as they keep their, mouth, ear and eyes shut. I would suggest all shareholders and good boards write to the Attorney General's office as well as government officials and city representatives to strongly request a change to Co-op laws. Managing agents and Co-ops should be regulated. They should have a government representative, auditing their books thoroughly and periodically,, Although a little bit of progress is being made on trying to obtain disclosure of LLCs,,, it is not enough,,,, there should be NO LLC without proper ownership disclosure, allowed to be part of any Co-Op. Board members should sit at every closing or any financial affair. That is were money mostly evaporates on the pockets of the internal and external aliens. No financial affair should be delegated entirely to managing agents,,remember managing agents and sponsors are always having affairs,,, wild ones too. A good Co-op representative suggested boards should get bank statements together with copies of executed checks. I will extend that recommendation to include the billing statement,,,, they could be paying the organization you know but not necessarily for what you think it is. Boards who are adamant to accept committees should raise big red flags. Running a Co-op board is not easy and one should question why don't they want more hands,,,?
  • Greetings to ALL: Query: If a sponsor has already sold more than 99.5 of his shares and the co-op is 32 years old can he write in a letter for a share holders meeting that he is entitled to a seat on the Board? Our by-laws state once the Co-op has been over 5 years (1987) and or has sold 50% of shares he is no longer entitled to what he states is a non-elected set on the board. Just wanted to confirm my thoughts are correct. This has been an on-going situation. We only get to vote in four board members not five like we should be doing. Thank you for your guidance/expertise and enjoy your Thanksgiving holidays!