Warning Signs

Throughout my 37 years of co-op involvement, I have attended hundreds of annual meetings and most of them have been collegial and productive. Issues are aired and problems discussed among adults with a shared goal of protecting and preserving their homes, investment in the building, and quality of life. Unfortunately, I have also attended a few meetings that seem more like a combat zone than anything else, a gathering of a mob seeking to tar and feather the board rather than trying to have a rational discussion about the issues. It’s easy to lose sight of the fact that we are all human, and we all make mistakes – including boards.

A defensive board might be tempted to write off an angry disruption at the annual meeting as an aberration – especially when a dissident claims that board members are getting paid off by someone. It shouldn’t. The disruption may be a warning sign of a more serious problem and, like all warning signs, it is not meant to make a board stop everything it is doing but, rather, to slow down, take note, and investigate. When a board is faced with an accusation of drawing financial benefit from anything - from choosing a certain contractor to tackling a renovation project - it should be concerned. It could be that certain board members are actually getting “perks” of which they are not necessarily aware. Whether we realize it or not, the building staff and the managing agent, who both see the board as the boss, often react to board members differently from how they react to building residents. It’s wrong, but it happens. I have found that when I am not on the board of my co-op, there is sometimes a very subtle difference in staff response to my requests. They still follow-through, but it takes a little longer. So if a board is confronted by an angry resident, then perhaps there is something going on that they may not see.

There may also be problems with the managing agent that the board may not realize. For whatever reason, he may not be as responsive to requests from residents as he should be. You may have an irate shareholder who complains all the time – sometimes about minor things – and the manager treats him like the boy who cried wolf. That person complains about the manager to the manager, who may then not report it to the board, or if he does report it, dismisses it out of hand. The board might then be blissfully ignorant about what is going on – and thus treat vocal complaints from dissidents as rants. Better to investigate the smoke and see if there’s any fire.

Perhaps the problem is that the manager is perceived to show favoritism to certain residents. Or perhaps the manager expects to be compensated for doing required work on an alteration that has continued for months or years. The board needs to investigate these types of accusations.

Whenever I am at an annual meeting and the rancor begins, I warn the board against attempting to stop it for two reasons. First, nothing can assist dissidents more than a board attempting to shut down debate or discussion. Second, it’s easier to diffuse the situation if the board lets an angry resident discuss an issue in the open.

This sort of advice sometimes angers board members, but it has been very successful in the past in dealing with these issues. Board members may get defensive and even angry that the time and effort they devote to their building is met with derision, and may be tempted to scream back or resign. Neither is appropriate nor helpful. I once represented a co-op with a very capable board that, because of vocal dissidents, chose to not run for re-election. Unfortunately, the new board, dominated by the dissidents, cut everyone’s maintenance and then had to dip into the reserve fund to pay the bills. A year after they had taken control, the reserve fund was gone. The former board, which had been so criticized by the dissidents, had always balanced the budget. So it was a very expensive lesson for everyone.

Remember, anger at a meeting could be irrationality, but it could also be a warning sign. Take heed.