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We had a Board Members vote on whether or not to refinance our building early for much more than our current mortgage in order to pay some debts and future improvements.Our current loan is good for another three years.
At the meeting, it was revealed that two of the five members on the Board will be moving within the year. Is it proper for them to be voting on an issue as important as this one, which will increase our debt twofold when they are selling their shares so soon? Is it a conflict of interest? They do not want to discuss it with Shareholders beforehand. The vote was 4 to 1, I abstained as I do not feel we have enough information and, as treasurer, I have questions about the details of the refi they are going to greenlight. What should I do?
A letter just went around the building from the majority board members that we want removed. It states the following: The purpose of this memorandum is to reiterate that the Special Shareholders election ("it was not an election, it was to remove")to vote whether to remove or not remove 4 members of the Board, specially ---,---,---,---,resulted in one member being removed, ----, and the other 3 members remaining on the Board. ("first of all our petition read to remove four members, when they saw they lost in a plurality vote, they applied the cumulative method to remove only one member in which they, the three remaining members voted the same person back on the Board two weeks later".
to continue the letter: Please be assured that the Board of Directors has confirmed via counsel that the cumulative voting method to elect or remove Directors is in fact established via the By-Laws("now they refer to the By-Laws, not the BCL as they did at the meeting"). Issues voted upon at a meeting other then the election or removal of Board members can be elected by means of a plurality.
In fact, counsel advises that based upon the number of shares voting against removal, in relation to the shares present, it appears that the shareholders voting against removal had sufficient votes to keep all 4 Directors, had they elected to do so. ("we collected 54% of shares through proxies including attendance at the meeting, they had only 42%, what are they comparing?").
Therefore, subsequent to the January 28th. meeting, the Board appointed Mr.----- to serve until the next Annual Election pursuant to section 3 of the By-Laws.
Our argument is according to our By-Laws which they only addressed part of the process to remove, they did not address the bottom part of the Statue which contains: That they MAY vote HIS SHARES cumulative for election or removal, ("MAY", is an alternative), "alternative to what, Plurality"?) it is plausible that plurality precedes. All elections shall be determined by a plurality vote and unless other wise specified in these By-Laws or the Certificate of Incorporation the affirmative vote of a majority represented at any meeting of Shareholders shall be necessary for the transaction of any item of business (other than election of Directors) and shall constitute the act of the Shareholders. There shall be NO CUMULATIVE VOTING(pG 232, SEC 5, BY LAWS).
It was not established at the Special Shareholders Meeting or in the proxy how the voting process will be decided. When the opposing attorney for the building saw that the vote was not going their way at the time of the count they changed the rules for their benefit against the will of the majority of the Shareholders that voted. Being that the method of voting was not established on the proxy before hand and based upon the language of the proxy the logical conclusion is that the Shareholders were at no time made aware of the method to be used to calculate their shares voted or allocated, this meeting was to remove all four members and not individually, therefore, it was understood at the signing of the proxy that the method to be used was plurality, to remove all retained.
We recently had a Special Shareholders meeting. We counted the votes and when the attorney for the building, Mr. Karl Bikhman saw that his clients were losing by plaurality, he than stated the BCL and bypassed the By-Laws. The BCL read as he stated that if the election was counted as Culmative than the Special Shareholders Meeting should count that way too. Our By-Laws clearly states that the meeting should be voted as plaurality and that the majority shares is needed to remove the four members as petitioned. Mr. Bikhman only allowed one Board member to be removed and two weeks later replaced him back to the Board because the other three that were left on the Board had a majority on their team. The Board is comprised of 5 vs. 3, they had five in collusion and we had three opposed to the five. We now want to go back to Supreme Court and let the Judge render a decision. The reason we are going back to court is because when we had 30% of Shareholders calling the Special Shareholders meeting the Secretary and the Attorney refused to acknowledge our demand for the meeting and we than had to hire a private attorney Mark Hankin of Hankin and Maisel, in which he allowed Mr. Bikhman to take charge of the decision, without due diligence of our Black Book in which was in his possession since August of 2009. What help of advise can anyone give us, the Board is corrupt,our money is dwindling, decisions are only in favor of those who support them. The list goes on and on, it is almost impossible to live under these fascism dictatorship, we feel as if Resbuton is back as our President, Hitler as the Treasure, Stalin as the Secretary and Machiavelli as the Vice President.
i was a shareholder at the conversion oer 25 years ago. i was a board member during the first 10 years. The board always kept the ratio of shareholder to subtenent/unsold shares at a strict 20% magamum to ensure the financialaqnd skin in the game wellbeing of the co-op.
I have found out that many of the new people that have moved into the buiding are not shareholders. but children,grandchilren of the shareholder. The shareholder never moved in and the board with the approval and support of the manging compsany has promoted this. A couiple of the board mebers, are directly involved. Board members we assumed were shareholders were actually violators of the proprietary lease"par 14". We knew which apartments were unsold shares. Found out from a disgusted board member this previously undisclosed information. Ine of the new Board members bought two apartments, both 1 bedrooms and moved his adult children in.
i Am trying to do a count, but ti know the real owner occupuied apsartmernts are possible lessw than 50%. I couldn'tfigure out why more new owners ( i assumed) were not getting involved in the running of the co-op. There were no owner occupiers.
The presdienr is also violating the proprietary lease par:14, he and his wife no longer live in the building, his son occupies their apartment.
the addresses on the BOD voting profiles for the last 10 years list the coops adrress as their address.
At this years annual meeting i asked for the board members contact information to be posted someplace in the building or in the minutes or in a memo, one board member stated she refused to have her info given out, the rest remained mute, and my request along with other request for transparency were ignored and not in the minutes.
This is only one of a multiple of large problems that i have uncovered since a flag went off when a $27k mathematical error in the 2007 budget caused by a dropped zero was not told to the shareholders until after the 2008 election in which the president was running.
I have questioned the BOD president in the 2009 annual meeting, as to when the budget error was discovered, he refuses to give a answer. The board member i spoke to said he was not informed of the budget error until the week of the annual meeting. the president is super controlling and
doesn't share info with the BOD, yet they do nothing to correct this.
We’ve got a bit of a problem here in the building. Three people (four, if you count one who moved away) have felt threatened by a particular SH.
The incidents occur one-on-one. Full disclosure, I am one of the four people and I did manage to record one of the incidents on my iPhone. I also still have a threatening email from this SH to me.
The only language I can find in the prop lease that would seem to address a problem like this is folded into the section on noise: “No Lessee shall make or permit any disturbing noises in the Building or do or permit anything to be done therein that will interfere with the rights, comfort or convenience of other Lessees.” (Emphasis mine.)
Recently a building resident alerted a board member to a disturbing encounter she had had with this SH. This board member shared the communication with the rest of the board. (I am on the board.) I recommended that the board at least document that it had received this email, or add the email to the record. For this I was vociferously voted down and even accused of having an agenda against the SH in question.
I find it unusual that a number of people in the building have had disturbing one-on-one encounters with this particular SH. I also find it unusual that a number of people in the building refuse to communicate with him verbally (only in writing).
What, if anything, can be done in a situation like this? What recourse do people have? What is the best plan of action, if any? Frankly I find it a bit alarming, but perhaps all buildings have situations like this. Mind you, I haven’t heard of things like this going on in other buildings.
I have ben living in a Coop Sherwood Village b ,this is one of the most incompetent people I have been with in my entire life so far ,they are unable to understand the word progress ,they believe in arnachy and dictating to others which had led to many financials disaster in our coop ,The Coop secretary is too busy making financials decision rather than concentrated on Coop files and making the bylaw is followed to it's principle,nobody is perfect in this world but the stupidity in my coop is beyond the norm of any human being.Our Board President cannot even managed the coop meeting let alone make a decent decison he thinks he own the coop making all decisions unilaterally and we as shareholders have to deal with the consequences,At the present we are trying to get the politicians who care enough to help us find a solution to eradicate the socio path of egotistical maniac ruinning everyone else investment,It does not matter who our managemnt company is anyone come in into our coop realized on the first day that they are dealing with a bunch of morons.So they decided to take full advantage they even made up falsify financials statement,they cannot tell the shareholders what happen with our tax abatement taking over the years but our coop secretary is driving a BMW with our coop money.
I live in a co-op with a no pet policy. However, permission was granted to those who had small dogs before we all became residents of this newly built coop back in 2004. However, lately, I'm seeing more dogs and bigger dogs. How can the policy be enforced? We have fees in place, but sensitive to enforce. And, I can only imagine an even worse scenario, what ever happened to Spot?
What is a good policy for "flip" tax, especially when you want to incoporate grandfathering in a coop? Most owners are original (bldg 2004). We had about 5 sales since.
Hello,
I have read what I could find in past messages about boards creating new policy and grandfathering. I am ambivalent about grandfathering and I wonder if there is any widely accepted best practice or law that could offer guidance as we (my fellow board officers and I) consider the pros and cons.
Buying into a co-op is a tremendous investment. It is the largest investment many of us will ever make. It is a huge life decision. I can understand why grandfathering would make sense and would be the fairest course of action in certain cases.
Say a TV producer buys into a co-op. He pays careful attention to what the sublet policy is, because his work requires him to be in New York for long periods of time, and then in California for long periods of time. He loves the building and wants it to be his permanent base, but also anticipates possibly needing to sublet for several years at a stretch. The prop lease stipulates that shareholders must occupy their apartments for two years, after which time they may sublet. There is no time limit placed on subletting. Our hypothetical TV producer happily lives in his apartment for several years, after which time he is offered work on a show in California. He accepts the offer and starts making plans to sublet. Around this time, the board decides to impose a sublet limit of three years, after which time shareholders must either move back into their apartments or sell. Because the TV producer has no guarantee that his work obligations in California will end in under three years (the program may last four years, five years), he feels forced into a position where he has to sell his apartment.
In this case, because the investment is so enormous, the fairest thing to do, it seems to me, is to grandfather. Otherwise, it is almost as if one party has broken a contract. Agree? Disagree? If you disagree, can you tell me why?
Or, say a man who loves cats and has always owned them and plans always to own them buys into a co-op. He carefully scrutinizes the prop lease, making sure that the buildings he looks at allow pets before making such a large investment/life decision. He buys into a pet-friendly building. After he purchases, the board decides to implement a no-pets policy. In this case, too, not to grandfather seems unfair and similar to breach of contract. I have heard of cases where a SH may be allowed to keep the current pet, but after that pet dies must abide by the new no-pet policy. This, too, seems unfair to me.
Basically, I have problems with policies that change the conditions of original purchase and that essentially force people into a position where they have to sell. I really believe that people prefer to have as much autonomy and flexibility as possible vis-à-vis a very considerable investment.
This is not to say that I prefer a lax environment with no limits. But I do think that boards sometimes cross the line between looking after the shareholders’s collective investment and infringing on personal autonomy, personal decision-making. Boards need to manage, indeed, but micromanaging can really backfire imho.
On the other hand, I am aware of what seems to be the golden rule of business law: treat all shareholders the same. I just don’t know if that is possible or ethical in the case of policy changes. Otherwise things could change whimsically from year to year and people would never really know where they stand, and might find it quite difficult to make major life decisions.
I have been on this board for a year and I am disturbed by what I have seen here. I was under the impression that when I came aboard it was to make a difference but after being here for a year I am applaud as to what goes on here. It has been one fight after the other for me with the president he make all decisions some times with us but for the most part behind us. I believe he has secret meetings and persuades the board member to agree with him. All these members but two are not able to be persuaded and slowly a few others are starting to see things more clear. The shareholders are also starting to see a difference the way that some things are being handled and they are not happy. I feel that the board of directors should be a term position and twenty five years is too long for someone to be an officer for the same co-op. I believe it interferes with their perception as to the real reason why they are their. Elections are coming soon and I'm hoping for a new change in leadership because it is long over due. What can you advise in this situation.
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Dear MR,
Your question is a tough one for the same reason you feel uncomfortable with the new mortgage – lack of information. A building generally has four ways to fund capital repairs: sell treasury stock (owned units); assess; use operating excesses; and borrow.
Loan rates are generally low right now. So, is the fee for paying off the old mortgage early less than the savings on the interest rates minus the new loan fees? If so and in my opinion, then it could be a good deal. If not, then I would question it if no urgent life/safety repairs are needed.
Also in my opinion, the loan balance is not generally that important (though it can give one sticker-shock) except if the building is reaching the point where it can't borrow anymore. I would look more closely at the proposed monthly payments – can the building afford these would be the more relevant question?
In my opinion, if you are Treasurer and you are not informed of the terms and fully understand them - this gives me great concern.
Regarding conflict of interest: many times the collective building's interest and the individual interest of a shareholder/board member are aligned. I would say that if the 'future improvements' include life/safety repairs or cost saving repairs they would probably be fine. However, if the repairs are entirely cosmetic (a lobby re-do, for example) which might drive up the value of their units prior to sale you may have a point. However, even here if it drives up everyone's value, it still could be valid.
My suggestion would be to become more comfortable with the loan terms. In my opinion, this will allow you to make a more informed decision. I would also place a call to your corporate Lawyer and CPA to obtain their opinions on the matter.
Good Luck!
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