While essential to the successful operation of all cooperatives or condominiums, the contents of governing documents are often only glossed over by otherwise well-intentioned boards members and managing agents leading to potential pitfalls. As a result, co-op and condo attorneys often suggest that boards at least revisit—and in some cases memorize—the various components of this all-important and varied document.
Co-op vs. Condo
The first step is differentiating between cooperatives and condominiums, explains Steven Troup, a partner with the Manhattan-based law firm Tarter Krinsky & Drogin LLP. With cooperatives, the bylaws govern how the cooperative corporation conducts business such as voting on directors, voting on officers and meeting conduct. “The proprietary lease governs the landlord-tenant relationship between the co-op corporation and its shareholder-residents, transfers, subletting, respective responsibilities for maintenance and repairs to individual apartments as well as common areas,” says Troup. “The certificate typically does not contradict either document, but it needs to be reviewed to ascertain that if there are any contradictions, the certificate of incorporation trumps.”
When it comes to condominiums, the bylaws set forth the rules of the road on all issues. “Contrary to a co-op, there is no landlord-tenant relationship between the condo’s board of managers and unit owners,” says Troup. “The declaration is the instrument filed with the county clerk by the sponsor and sets forth the precise property comprising the common elements and units.”
While the governing documents are different, there exist overlaps or provisions common to each, explains Thomas D. Kearns, a partner with the New York law firm of Olshan Frome & Wolosky LLP, “bylaws include notice provisions for meetings, the officers to be appointed, the number of seats on the board of directors for co-ops or board of managers for condos,” he says.
Common Questions Answered
While some board members are conversant in legal terms and definitions thanks to years of experience, or because of their own professions, others—especially new board members—are often playing catch up ball making the first weeks and months on their board an educational experience. For example, a common question is: What’s a proprietary lease, and why is it called that? With a secondary question: Why don’t co-op owners get a deed like condo or single-family homeowners do?