The Limits of Board Powers What You Can – and Can’t – Do

It is not easy being a board member. There are meetings to attend, documents to review, decisions to make, and neighbors to mollify. There are also a number of rules and regulations that must be followed in order to ensure that the individual and collective actions of a board meet all legal and ethical requirements. 

Fortunately, the governing documents that establish co-op and condo communities provide a fairly clear framework describing most of the duties and expectations assigned to board members. “In both co-ops and condos, [those powers are detailed in] the bylaws and the Business Corporation Law (BCL),” says Steve Troup, a partner at law firm Tarter Krinsky & Drogin, which has offices in  New York and New Jersey. “In addition, it’s possible that a condo’s declaration of condominium may prescribe certain actions, but typically the declaration defers to the bylaws.” 

The definitions of board members’ roles tend to be “very general in nature,” says attorney Alessandra Stivelman of Eisinger, Brown, Lewis, Frankel & Chaiet, P.A., based in Hollywood, Florida. “For example, it may say ‘treasurer will handle finances,’ but those powers can be expanded as time goes on. There may also be restrictions in the document, such as the president cannot also be the secretary.”

There are few major differences between the rules and regulations that outline the powers of board members in co-ops and condos. There are “no differences between co-ops and condos, just the differences in each entity’s governing documents,” says Troup. “Even though the BCL does not state that it applies to condos, courts have long ‘borrowed’ from the BCL and applied the principles to condo governance in many areas,” such as the business judgment rule and proxy issues.  

The only area where Stivelman sees a potential difference is in the denial power that board members in co-ops have versus those in condos. Specifically, she is referring to the authority that board members have in turning away potential co-op buyers who may not meet their specific criteria of ownership. “Because of the differences in the ways co-ops and condos are structured, there are different rights of denial,” she says, citing the specific case of a board denying former President Richard Nixon’s attempts to buy into a co-op following his resignation from office in 1974. 


Related Articles

Common Legal Mistakes

...and How Your Board Can Avoid Them

Q&A: Doggy Blues

Q&A: Doggy Blues

Q&A: How Should Boards Operate?

Q&A: How Should Boards Operate?

Q&A: Not the Management We Want

Q&A: Not the Management We Want

The Biggest Legal Mistake Boards Make...

and How to Avoid It!

Co-op Boards Say No to Neumann

Former WeWork CEO Gets Cold Shouldered