There are a number of things that make shareholders unhappy in a co-op or condo, but chief among the complaints is when the board just doesn’t seem to hear their concerns or doesn’t do its duty to keep shareholders informed of board meetings, important decisions or anything else that might affect shareholders’ investment and day-to-day life in the building.
Georgia Lombardo-Barton, president of Manhattan-based Barton Management LLC believes that many shareholders may not realize the amount of time board members dedicate to co-op/condo matters.
“If there are issues that shareholders feel are not being addressed, they should contact the managing agent in addition to contacting the board members,” she says. “We recommend shareholders first present their questions to the managing agent in a respective, professional tone.”
When a board is unavailable and/or unresponsive to a shareholder’s questions and concerns, problems can arise.
Patricia Kantor, a partner with the law firm of Edwards Wildman, who has represented NYC co-op and condominium boards for more than 20 years, says she advises the boards she works with to take owners’ questions or grievances very seriously.
“It is never okay to ignore or not respond to them, even if the board is dealing with a serial complainer,” Kantor says. “However, I also advise individual board members to be careful about how and when the response is communicated and to avoid personally responding to questions or grievances, if possible (at times this can be awkward, since neighbors often confront a board members with concerns when they chance to see them in and around the building).”
With shareholders, sometimes seemingly straightforward inquiries are not as innocent or inconsequential as they appear. There may be a history or precedent that needs to be considered and so the issue is best discussed by the board as a whole, which can provide context and background information critical to the response. If and when appropriate, the inquiries and resolution can be included in the minutes or at least kept track of for future reference.
“While this may cause a delay in getting back to an owner, it is a delay that, absent an emergency, should be tolerated,” Kantor says. “The key is to let the owner know the status of his or her concern. If the next board meeting is not imminent, the managing agent should send a note to the owner assuring him or her that it will be on the agenda at the next scheduled meeting. It is really a matter of courtesy.”
Watch Your Words Carefully
Greg Cohen, CEO at Impact Real Estate Management with offices in Manhattan, Queens, Long Island and Westchester, advises that a board leave all communication to the managing agent.
“The shareholders should use the property manager as a liaison but they don’t. Usually, problems arise because of a lack of communication,” he says. “The emails or letters should be addressed to the board but sent to the manager, who will relate the information to the board.”
Doing it this way will keep one board member from offering his or her opinion in a response to a shareholder or unit holder that might not be the opinion of the entire board. The managing agent will make sure no misunderstandings happen.
Therefore, it is usually best to allow the managing agent, at the direction of the board, to respond to all complaints and questions. First, it de-personalizes the process. Second, the managing agent is generally more knowledgeable than board members about issues involving building operations and personnel.
“Having the managing agent interact with owners in the first instance can also take the burden off individual board members, who often find dealing with their neighbors’ personal concerns about the building difficult to field,” Kantor says. “By referring/deferring to the managing agent, board members should be perceived as responsive without actually getting substantively involved in issues about which they may not have full knowledge or authority to answer.”
For example, a shareholder in one of Kantor’s buildings was trying to sell her apartment and ran into a board member on the elevator and sought to confirm that the board would not have a problem approving a potential purchaser who had a pet dog.
“Rather than advise her to contact the managing agent for the building’s pet policy, the board member assured the shareholder that it was a pet friendly building and thought that was the end of it,” she says. “What the board member failed to mention (and in fact didn’t know) was that their building had a size/weight limit with respect to pets. The shareholder threatened to sue the board when, in reliance on the board member’s assurances, she went to contract and her purchaser was rejected because his dog was over 20 pounds.”
Typically, the board president take the role of responding to shareholder inquires or the managing agent will respond on behalf of the entire board. If a correspondence requires an easy answer, sometimes the board secretary or a committee set up for correspondence will reply.
According to our experts, boards should respond to shareholders’ communications and inquiries through the managing agent within a week, however it would be best to acknowledge a message and response to that shareholder with an expected time of a more detailed response.
Juda Engelmayer lived in a co-op on the lower East Side for more than 20 years and has been a board member for a dozen of them. He believes that communication breakdowns are a common problem because the board is often comprised of owners with no particular expertise on real estate, management or business.
According to Engelmayer, long response times might occur if there’s an issue that may have legal ramifications, such as discrimination in sales or rental approvals, faulty repairs, an accident, etc.
“Most questions about whether the hallways will be painted blue or green, or when new grass was going to be planted in the walkways are easy ones to field. Improvements, simple finances, advice, all should be answered by the board,” he says. “Items that carry potential for legal action must be reviewed by a person who is in the know and can help guide the board in order to protect all of shareholders from mistakes or what some may deem to be bad decisions.”
Of course, not all questions or complaints require a detailed response from the board or the managing agent. There are some circumstances where a short answer can suffice, if only as a placeholder.
For example, if an owner complains about noise, the board should have the managing agent acknowledge receipt of the complaint and let the owner know it is being looked into. This assures the owner that he or she is not being ignored and allows the board a reasonable time to investigate the complaint.
“The managing agent should notify the owner when the investigation has been completed and the results thereof,” Kantor says. “If the investigation discloses there is a problem, the owner should be told how it will be handled; if the investigation discloses no actionable noise issue, the managing agent should convey that to the owner as well, but should be sure to explain that the complaint was taken seriously and carefully investigated.”
For the owner who has a particular grievance and repeatedly raises it with the board, a short note from the managing agent letting him know that the matter has already been thoroughly investigated and closed may be appropriate.
“Even if they are hostile, all correspondence should be answered,” Cohen says. “We don’t want our board members getting involved with hostile situations and its best all responses come from site agent.”
At Barton Management, the company recommends all inquiries be addressed as experience has shown that ignoring a shareholder’s question will only aggravate an issue further, which can lead to a more litigious situation.
If an unrealistic or hostile communication from a shareholder does pop up, Barton says that sometimes it’s best to have the managing agent handle the matter or arrange to have a face-to-face meeting with that shareholder to help ease any animosity.
A shareholder would be best to write from a point of helpfulness and appreciation rather than hostility and accusation. Hostility, lack of appreciation or concern just drives discontent and animosity.
Engelmayer suggests setting up a gripe blog, and responding fast to show that real concerns are answered and minor ones are addressed, if only to thank them for input and offer valid reasons why a idea cannot work, or what an answer cannot be easily given.
For a building that is experiencing a great deal of tension between its board and shareholders due to a lack of communication, particularly if there’s been a problem with unresponsiveness in the past, the board should do something to change the perception.
“To show good faith and attempt to enhance communication, some boards take initiative to send quarterly newsletters or holding semi-annual meetings or arrange a holiday/summer party,” Barton says. “Anything to get people communicating and getting rid of any animosity that exists,” she says.
While it is important to be responsive to owners, owners should not expect an immediate response when they raise questions and/or grievances that cannot be addressed by the managing agent in the ordinary course. Boards rarely meet more than once a month and its members are volunteers who often have careers and other priorities that make it unrealistic, not to say at times unfair, to expect them to be able to answer every question and concern when it comes up. However, a board is wise to acknowledge receipt of written inquiries and complaints and to follow up with owners about the resolution within a reasonable time.
“My experience is that the more hostile it is, the bigger potential there is for more trouble if you ignore it,” Engelmayer says. “Answer them all, even if the answer is that you are unable to answer, and guide the shareholder toward feeling more secure that at least you are communicating and they hear his/her concern and will try to help.”
Keith Loria is a freelance writer and a frequent contributor to The Cooperator.