Pursuing Truth

I was board president for four years at a mid-sized co-op in Manhattan where I lived until recently. We were a typical cooperative, although we had one element that was not so typical: a small number of shareholders who advocated, among other things, for stringent enforcement of sublet rules.

Now, I thought our policy was carefully thought out: no one could have a sublet for more than two years out of four, the board had to approve of subtenants, and shareholders would be charged a sublet fee that was 10 percent of maintenance. After all, too many sublets can affect the ability of new buyers to get financing and of residents to refinance their mortgages.

Nonetheless, for many years, a minority of board members was focused on this issue. Often, a significant portion of our meeting time was taken up discussing and debating the particulars of whether someone was or was not an illegal sublet. At the same time, the apartment corporation was facing major concerns regarding capital repairs (deciding on the scope of work, obtaining financing, etc.). In retrospect, I feel that I let the issue of addressing illegal sublets take undue precedence over more serious issues in the building.

The board created procedures for communicating and enforcing the sublet rules, including: prominently posting the rules; advising shareholders by memo to report any potential illegal sublets; instituting tracking of suspected illegal sublets, including communication with each unit and status of collection of a sublet fee; and soliciting advice from the apartment corporation’s legal counsel.

I thought that these guidelines were clear and should have sufficed, but our board still engaged in time-consuming discussions on the topic. We spent a great deal of energy trying to define who fit the category of “illegal sublet.” Some people in the building assumed that any unfamiliar face was an illegal resident, or that a sure sign of an illegal sublet was someone carrying a large suitcase. However, our apartment corporation’s governing documents allowed shareholders to have guests for up to 30 days with no requirement to notify management or the board. Shareholders were allowed to have roommates with no board or management oversight beyond the shareholder providing the name of the roommate to management. Some “illegal sublets” turned out to be guests.

Even though it was the security guards’ role to enforce who should and should not have been in the building, our co-op had a troubling history of confrontations between some board members and guests. One guest – apparently assumed to be an illegal sublet – endured a 30-minute conference call interrogation by a persistent board member.

Perhaps feeling unsettled by all this, the shareholders who charged that their guests had been confronted were themselves not outspoken in their complaints. They communicated mainly in writing, and did not share their experiences at annual or informational meetings. In contrast, other shareholders were quite vocal. They saw sublets everywhere; on encountering unfamiliar faces in the building, they immediately jumped to the (probably erroneous) conclusion that each of these people was an illegal resident. This lopsided dynamic led to the perception that the building was overrun with illegal sublets, while more subtle counterpoints to the issue quietly disappeared.

Happily, there is a new board in place at my former building, which does not include the board members who made such an issue of illegal sublets.

The lesson to be learned: the board should not be cowed by a not-so-silent minority. It should stand up for the truth and be a voice of reason in such situations. The facts should guide you, not the obsessions of a few. Otherwise, you’re in for a rough time, spending time and money pursuing shadows...while real problems get less than their due.