Where was *your* closing attorney in all this and what did they have to say or advise you?

Our attorney was not the best. We are aware of our mistake. Now, we want to know if this is legal, and whether we can bring to small claims court.

CondoNYC - At this point, I think it is best that you find a new attorney and ask them for advice. You're asking questions of a legal nature, and there are not many attorneys on here who will answer without an official attorney/client relationship.

Good luck!

You get a free half an hour. Google it. It used to be in Midtown.
Probably the thing to do is write "paid in protest" on the subject line of your check and then take them to small claims after it is cashed.

OMG! This was an over due building bill? How can they do that? Yes get another atty, Don't let this go without a fight. This mgmt comp. needs to be investigated. I don't know who you can report this to, but I'm sure there is a higher agency that they can be reported.
Good Luck! Let us know the solution.

The new attorney hired by the OP will know all the proper legal procedures. I strongly advise the OP not to take *any* additional actions, but let their attorney handle it from here on.

And yes, I agree this should be pursued to the fullest extent possible. I think the A/G's office is the proper venue. But again, let your attorney do the talking.

Is the work the board member doing related to their being on the board, or entirely different like a plumber fixing a leak?

If it is related to work they do in their capacity as a board member, then I believe it violates the Bylaws or a NYC regulation, and should be brought to your board attorney's attention.

If they are doing work as a contractor or some other unrelated capacity, then it is a conflict of interest, but is allowed provided the conflict is fully disclosed to the rest of the board (not shareholders), a contract is signed that includes performance metrics and specifications, how the board member is being paid and is approved by a majority of the board. A complete description of the conflict and the vote must be entered into the board minutes. You might also check with your attorney.

We've had this situation in my building. A board member was a high-end renovation contractor. If we had a job that met these requirements he was allowed to bid on it. He had to recuse himself from all decisions to eliminate the perception of any inside influence.

Thank you for this.

It’s the President of the Board and to me it’s beyond inappropriate and a conflict. I think it’s like construction but I think it’s just him and not his team as if he owns a company so wouldn’t he need to follow the same rules and have a license and the co-op insurance needed as a vendor? If we have a construction company and plumber etc already why would one person be needed?

Sounds like a conflict of interest that would need to be reported to all shareholders:

https://www.nysenate.gov/legislation/laws/BSC/727

Once it has been reported, shareholders can discuss it and take any necessary action at the annual meeting.

I don't believe a board member performing work for the co-op or having a financial interest in a company performing work for the co-op is a "conflict of interest" and is certainly not illegal, provided all the qualifications are met:

* The business relationship of the board member to the entity performing the work is fully disclosed to the board before the contract is signed

* All regular procedures for hiring a company (i.e. competitive bids, references, licenses, etc) are followed

* The nature of the conflict and the results of the board vote are recorded in the monthly meeting minutes

* The conflict is reported to the shareholders in the annual report (thanks, Phil!).

Essentially the board has to be able to certify the board member and/or their company were treated exactly like every other contractor and the contract was awarded on the merits and not on the relationship.

Shareholders do not normally have the power to alter or override a contract or other action authorized by the board. The exception is to call a special shareholder meeting for the purpose of altering or overriding a board action or removing a board member. Your Bylaws should contain the rules and procedures for special meetings.

I think you have a much larger problem, and that is work requiring a licensed or master professional is being performed by an unlicensed individual. Not only can you receive hefty fines and other punitive actions by the Dept of Buildings, but it is also an out-and-out safety violation and hazard with your building and shareholders at risk.

Instead of worrying about a conflict of interest, you and your board should immediately look into the licensing requirements of the work being done by the president. If they do not have the proper licenses and required insurance in effect, the board, through your attorney need to have them stop immediately.

As always, check with the co-op's attorney before taking any action. I am not a lawyer, and my suggestions and advice are worth what you're paying for them.

Thank you both!!!!

Definitely a conflict of interest, unethical, and possibly illegal
Board members have fiduciary responsibilities example reviewing and discussing bids, and proposals are often times sealed too. They need to recuse themselves from doing independent work that if also done incorrectly can potentially lead to lawsuits against the Coop. Better to stay away from it.

Let's use an example from real life,

One of the members of my board owns a high-end general contracting business. He has a top-notch crew, works with good suppliers, and gets a steep contractor discount.

The co-op is renovating the super's apartment ford about $100k.

Question. Should the board member be excluded from bidding on the job simply because he is a board member? He's done a lot of work in shareholder apartments so the quality of his work, materials, and schedule adherence is well known.

Should he be allowed to bid on the renovation? He commits to recusing himself from all reviews and votes. His estimate is 25% below all others because he's not marking up the cost of labor or materials. He'll be able to start the job sooner because of the size of his company.

Which would be a breach of board fiduciary responsibility to the shareholders, paying 25% more for the renovation, getting lesser quality appliances and other hardware items, and having to wait an extra 3 months while the job is slotted in, or letting the board member compete for the job after a full conflict of interest disclosure?

This is not a trick question.

Since we have a conflict of opinions,I think the best course of action is to ask your co-op's attorney to render an opinion. Conflicts of interest are not an illegal thing nor even a bad thing. They become the stuff of lawsuits when the conflict is hidden or is not disclosed to the rest of the board.

It it patently unethical for a Board member to receive payment for services rendered to the Coop. You should send a copy of Coop Board ethics to each member and shareholders.

Exactly why isn't the email working? When you state that, then you can go from there. Doesn't understand internet, no phone? Doesn't have either? Is there a third party(neighbor/family member) who can relate issues? Emergency contact? Notices under door? Do they care for themselves/live alone? Maybe just don't want to give out their email. Financial issue? I'm sure someone can help IF1 they really wanted a useable email. Forcing someone to get an email will not work!

Sandra, I don't think is makes a difference what the reason is the condo owner doesn't or won't receive email. I believe there is a line somewhere in the Bylaws requiring all official notifications be delivered by USPS. I also believe an exception was made during the pandemic and I don't know if its been rescinded.

Your safest course of action is to carefully read your Bylaws and House Rules to see if there is any explicit wording on not requiring USPS delivery. To be totally safe, it's a simple question you can ask your attorney.

Before moving any of your co-op's cash around, I suggest you have a chat with your co-op's attorney about the rules regarding investing co-op assets. Remember that as a board member, you are a fiduciary and required to act in the co-op's best interests.

One of these interests is the full preservation of co-op assets ahead of a desire to produce income via dividends or asset appreciation. Cash is of course acceptable as are T-Bills. But mutual funds and ETFs get more squishy the more they expose the assets to investment risk. Targeted mutual funds, index mutual funds, and even bond funds should be evaluated for the risk of loss of principal.

This being said a CD ladder up to $250k is acceptable. Anything above $250k is uninsured and subject to the risk of loss. For example, Silicon Valley Bank. Check with your attorney for the finer points of the regulations.

Where do you hold your cash - which bank? We are at Webster and Apple. Wondering if others have recommendations and if its generally in money market accounts. Thank you

I would ask your co-op board's attorney for an opinion. there can be a lot of complications in the ownership setup you describe. In my non-lawyerly opinion, there can be conflicts.

Thanks Steven424 :-)

I totally agree it's a conflict of interest should never be allowed. Cases of slips and falls, accidents, and the workplace will impact each other, Union, and RAB involvements too.

Bill Rank is the best, having done our Co-op's audits for more than 20 years. He's located not far from you in Purchase.

William J Rank
Tax Preparer | CPA

Bloom And Streit LLP

2900 Westchester Avenue,
Purchase, New York - 10577
(914) 253-8484

I guess this question is somewhat obvious, but I would still appreciate any insight from others who've dealt with apathetic Boards.

At a bare minimum, the attorney who handled your closing should have requested at least 1-2 years of monthly minutes as part of their due diligence. Ask them for a copy.

If your attorney allowed you to close without a review of the minutes or a good reason why he couldn't review them, I don't think he did an acceptable job for you. I don't know what the legal standards are for a proper review of co-op documents, financials, and minutes, but there should have been something he could look at and give a copy of to you.

Thank you - that is good to know.

It's my understanding that since the halls are "common elements", and change to the ownership of any part of a common element requires a shareholder vote. In these instances, no special status or privileges are conveyed to board members and board officers. They are treated the same as all shareholders.

It's my gut feeling that what the president did by arbitrarily appropriating a part of a common area, even if they paid for the space and improvements out of their personal funds, is not allowed.

My suggestion is to hire an attorney to review the co-op's foundational documents and advise on how to proceed. It would be helpful if you could get other affected shareholders to split the cost. Unfortunately, since you raised the issue after the additions have been completed, you may have to bring a court action to have anything reversed. This is not cheap. The attorney you hire will advise you.

Something else I just thought of. Measure the width of the hall at the narrowest point and research if this is smaller than fire and building codes allow. If the FDNY decides it's an unsafe condition, the dispute becomes your building vs the FDNY and Dept of Buildings and you can remain out of the action.

Good luck.

Hi

You should double check that your condo/building didn’t pay for this? Check the monthly financial reports now that you’re on the board. Also did they need a permit to do this? Who did the work?

The fact that it wasn’t communicated to you and it affects you is wrong !

Hallways are a minimum of 3 feet wide, an Engineer should have been retained to get drawings submitted to the DOB and approvals and have permits pulled, Cover your bases and exposure to lawsuits, Definitely a means of egress concern plus the, C of O " Certificate of Occupancy. Action is required.

Also check the monthly board meeting minutes. All this had to of been discussed multiple times and a Board vote should have taken place to do this project.

Per: "If the FDNY decides it's an unsafe condition, the dispute becomes your building vs the FDNY and Dept of Buildings and you can remain out of the action." ... Keep in mind that if it doesn't meet FDNY safety standards, your coop can/will get fined. That's an issue between the FDNY and your coop or board. And unfortunately, fines that fall on the shareholders. ; (

The overall footprint of the shareholder's property increased too there could be a cost associated. Flipside common areas shared by everyone is more of an issue no dought.

What is this and where does it come from? I do not recognize it as any of the official co-op governing documents. What vote or other means of adoption gives it any legal standing? Has anyone checked to see if any part of it contradicts the Proprietary Lease or Bylaws?

Has an attorney reviewed the contents of Code of Conduct and opined they are legal and binding on board members?

This appears to be an attempt to supplement or circumvent the PL and Bylaws, which can cause huge problems if a decision or action taken on their behalf is legally challenged.

If not already done so, I *strongly* suggest you ask your board attorney if they have any value whatsoever.

As far as I am aware, since board members are directly elected by the shareholders, only a majority or super-majority of shareholders can remove a director, and only at a special meeting requested by a defined number of shareholders. If an attempt is made to remove a director that is not 100% compliant with the PL and Bylaws, the director can sue, and you really don't want to deal with that.

Steven - You're correct about the ways to remove a member of the Board, but there is one other way - if the By Laws are amended (passed by a 2/3 vote of the shareholders) to allow removal by a majority vote of the Board - **but only with legitimate good cause**, which may include, but is not limited to...

- Breaching confidentiality
- Not acting in the best interest of all shareholders
- Making prejudiced/racist remarks towards s/h (including Board members)
- Not acting in a sound fiduciary manner
- Falsely accusing other Board members, management, accountant, of
financial impropriety

What is considered *not* good cause? A personal dislike of another Board member or disagreeing with another Board member's opinions and viewpoints.

This amendment to the By Laws was passed in our co-op after some outrageous behavior by a Board member.

We felt it was important to have this option because if a Board member goes rogue, the co-op's ability to make sound and confidential decisions on behalf of the s/h will be compromised. If it takes weeks or months to have that special meeting of the s/h to discuss/decide the matter, the co-op might be irreparably harmed.

I just read through the entire Code of Conduct, and the Subject of your post is very misleading. The CoC only mentions removing a board member from a board meeting, and not from the Board of Directors.

I suggest in the future you limit your posts to just the relevant parts of a document and not reproduce the entire document, and that you include a narrative at the beginning of your post describing what you are hoping other posters in this forum can help you with.