The terraces were crumbling and the board engaged an engineer to make a recommendation. When the engineer reported that the terraces needed several hundred thousand dollars worth of repairs, the board went through a bidding process with the help of their managing agent, and hired a contractor. Scaffolding went up, work commenced, and before long every shareholder was billed a special assessment to pay for the work.
The board thought they'd done everything right, until the irate letters, midnight phone calls and verbal assaults from angry shareholders began. What's going on? they demanded. Why do I have to pay a special assessment when my apartment doesn't even have a terrace? Who decided on the contractor? Will my terrace be ready by summertime? And the most revealing question of all, Why weren't we informed?
Why, indeed? Most problems boards have with the resident body are caused by bad news that comes as a surprise, says Howard Schechter, partner in the Manhattan law firm of Schechter & Brucker, PC, which counts about 85 co-ops and condos as clients. Most shareholders and unit owners are able to understand if costs go up sharply or major work is required to keep the building in good shape. But they never understand when a board tells them after the fact that these problems have occurred, or only reveals major capital plans when announcing the assessment or monthly increase required to pay for them.
How can the board avoid such lapses in communication? One very effectective tool is the in-house newsletter. Newsletters are critical, says Vincent Castellano, host of the weekly radio show Real Estate Nightmares (From 7 to 8 pm every Wednesday on 1050 AM, WEVD) and shareholder in a self-managed co-op in Rockaway. Part of the problem is that people forget what they've invested in. A newsletter is one way of reminding them. These people live together. They don't have to like each other, but they do have a common interest. It's also a way to decrease suspicion between shareholders and the board because they have some understanding of what's going on. I can't imagine living in a co-op without a newsletter.
A newsletter provides an ongoing link between the work done by the board to promote the interests of the building, and the shareholders or unit owners who are called upon to pay for them, says Schechter.