What's So Important About a Co-op's Board Minutes?

July 28, 2015 — Our lawyer is reviewing the board minutes of the co-op we want to purchase. What's important?

The state's Business Corporation Law requires co-op corporations to maintain minutes of all board meetings. Reviewing the minutes could also reveal issues involving the heating system, plumbing, roof, or façade of the building. A review may reveal if the board is using assessments to offset proper budgeting. The minutes may state that the board is contemplating a major project that may result in an assessment or substantial increase in maintenance charges.

Questions may arise: Why are so many assessments needed? Is the board overspending? What work has been completed and what work is still outstanding?

By reading the minutes of the board meetings, you may find information leading to any physical or financial issue in the building.

Another topic to be concerned about in the minutes is arrears. Why does this building have a large number of people in arrears on the monthly maintenance? What is the board doing to address that issue? Is the attorney involved? How proactive is the board in its actions to obtain payments? The building collects the monthly maintenance and operates from those collections. If a large number of shareholders fail to pay on time, the building may be unable to pay its bills, which can lead to many other issues.

Brian Scally is executive director of management at Garthchester Realty.