Q&A: Board Problems

Q. I  have recently been elected to the board of directors at my co-op in Suffolk County. I rocked the boat when I was elected. The current board is not interested in doing necessary things, but rather stall projects and try to distract the shareholders from the current issues.

 Some shareholders had assigned parking spots in the luxury co-op section. They have just voted to remove the assigned parking. Although I find it wasn’t in the offering plan, they have been there for over eight years. Aren’t they then considered grandfathered in?

Also, I have many shareholders asking questions regarding the monthly meetings, and if can they have a copy of the minutes. The board refuses to release any minutes to the shareholders. Can they get away with that? They also told me that they do not record who voted for what in the minutes. I don’t think they can get away with that either. 

                                               –Feeling Stifled

A. “The writer raises a number of questions regarding the governance of his cooperative corporation,” says attorney Jeffrey Reich of the New York City firm of Schwartz Sladkus Reich Greenberg Atlas LLP. 

 “We would need to review the terms of the offering plan, proprietary lease, and any other documentation according to which the parking spaces were allocated and used by the shareholders in order to determine whether the board was within its rights in removing the ‘assigned parking.’ Use of the spaces for eight years may lead to certain claims as to a shareholder’s right to the continued use of a space, but we would need to review the aforementioned documentation in order to determine how strong such a claim would be. Many cooperative proprietary leases and parking agreements provide apartment corporations with termination rights and include ‘no waiver’ provisions, which could enable the apartment corporation to defeat a claim based on so-called ‘grandfathered’ status.

 “Shareholders’ rights to inspect the books and records of a cooperative corporation stem from both statutory provisions and the common (court-made) law. Section 624 of the New York State Business Corporation Law provides a shareholder with the right to review certain corporate documents, including shareholder rolls, minutes of the shareholder meetings, and the corporation’s financial statements. Shareholder common law rights allow shareholders to review a broader range of corporate documents. Recent court decisions have found in favor or individuals who have sought to review board meeting minutes. Thus, while the writer’s board may not be doing anything wrong per se by withholding the board meeting minutes, a shareholder could potentially gain access to the board minutes by seeking court intervention. We recommend that our board clients prepare their minutes in such a manner as would allow them to be shared with current and potential shareholders.

 “Finally, there is nothing wrong with a board’s decision to record the tally of board votes in meeting minutes as opposed to providing specific information as to how each board member may have voted. Board meeting minutes are meant to record the actions taken by the board. Given the personal nature of the matters that may come before cooperative and condominium boards, and the fact that board members and shareholders usually live in close proximity, boards often elect not to record how each individual board member has voted.”              

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Comments

  • I own a condo in upstate NY. Recently there was a problem with a leak somewhere in the heating system (our bldg. gets the heat via a furnace in another bldg., and both bldgs. were found to have leaks). This necessitated a plumber going through each unit in both bldgs. to locate the leak(s). One was in our bldg. but not our unit, the other was in the other bldg. Up to the point where they identified a water leak, we had NO problems with our heating and had not had any in the 30 years we have lived here. Once the testing was done, and repairs done in the units with the leaks, our heat was turned back on, and low and behold, we now had no heat at all. After much ado, they finally managed to restore heat to us and the other 8 units in our bldg. Now, we had heat even when we turned the thermostat off. The bottom line was the zone valve was stuck open (no doubt caused by the work done, as we have never had a problem before and know of several other owners in these 2 bldgs. who were told they needed to buy and replace their zone valves). In light of the water leaks, the many zone valve break downs, and the location of the zone valve which is inside of the baseboard unit, it is my contention that this is part of the common heating unit and should be paid for by common fees. However, our board has decided that it is up to the owner to replace these valves. Is there any basis for charging owners for repairs to heating systems which affect all of the other unit owners by running non stop even when off?