Boards Can Use a Second Shareholders' Meeting to Diffuse Tension

"They hadn't kept up with their maintenance increases like they should have, so we needed to have a special assessment. We needed to spell everything out in the financials and tell them why," says Joseph L. Bavaro, senior vice president at Finger Management. "We got about 30 of the shareholders together, and the board was a little nervous, because they thought it was going to be a free-for-all. But it really turned out well, because everybody had the same sentiment that said, 'At least you told us why. We're glad you called this [special] meeting, and we're glad that you explained it to us. If [we need a special assessment] then that's what we have to do.'"

Many professionals and board members agree that having more meetings is generally a good thing. "The shareholders appreciate it and it's a better form of communication than just putting out a newsletter or a memo. It's more of a face-to-face situation," says Stanley Greenberg, board president of Le Havre. Indeed, the more information people have, the better they feel about the building. "There's more transparency and trust with the board," says attorney Geoffrey Mazel, a partner in Hankin & Mazel. "When you see the numbers, and they're in black and white, and your maintenance goes up — whatever, five, ten percent — it resolves the issue in your mind. You don't have to like it as a shareholder, but those are simply the facts of life in your building."

Of course, there is always the danger of depressing turnout by having too many meetings, but most experts agree that you should err on the side of more rather than less. Although it is not widely publicized, a large number of boards in properties ranging from small to very large are now staging biannual — sometimes even quarterly — meetings with all the residents. And they're getting attendees. In fact, rather than being a burden, such meetings are helping boards govern more effectively while keeping many residents satisfied.

"It's an open exchange of information and allows owners to be more informed," says Dawn Dickstein, president of MD2 Property Group. "People have to make a major investment in their apartments, and a lot of times, they want to know what's going on more than just once a year."