The best place to start may be to read through these posts, try the Cooperator at http://cooperator.com/ also for allot of useful info.. between hab mag and them you can keep real busy for a while. there’s of course always this board to post any specific questions you have... good luck to you

~AR

My advice is to relax and attend the orientation meeting with open mind and open ears. Actively participate in the meeting by asking questions when something may not be clear to you. It may have been poorly stated or the person assumed that the language used to express a problem or a concept was familiar to you.

To prepare for the meeting, you may wish to review the board minutes for the last 12 months to know what were the major issues and current ones. From these, you may have a short list one of those that are still outstanding.

You may also request a copy of the financial reports for December 2007 to get an idea of the expenses, budget against expense report; also, you may ask for the past 4 months monthly reports. Examine the arrears, take a look at the expenses without passing judgment as being too high or too low, and the current financial position of the co-op.

If you are not too versed in accounting, don't worry; financial reports are very much like your checking account or a credit account. Just read them to familiarize yourself but don't loose sleep over it!

Aymara

NewBM,
This may sound simplistic but read the mang contract, house rules and by-laws carefully. Last year, six months into a new board, we discovered that three of our new members did not have copies of the Mang contract or house rules -- and had not read the By-laws.

The Mang company had taken advantage, and were running the building as if they owned it. Fees, SH complaints and calls were not returned, unauthorized checks written,,,etc.... They no longer work for us.

Also, pass rules and make decisions that looking into the future, you as a Shareholder, not board member, can live with.

Be careful of going along with Board-team-decisions -- that you know are wrong. Although bm's admitted the old Mang was incompetent, we kept this Mang co, for an extra six months because Board members did not want to offend other bm who supported and were friends with the Agent. Two bm's refused to be part of the team, joined a group of Shareholders (dont underestimate the SH) sent out a petition which was signed by 80% of the CoOp, and fired the Company.

And finally: Leave you Ego at the door.
AliceT

Yes, you're right!

I overlooked these very important documents. Without them, you cannot really make decisions.

Ignorant BM of the contents of the documents make poor decisions.

Thank you!

AdC

I advise new board members to read the executive minutes as far back as you can. It gives you a quick history of what has gone on before both good and bad.

As others have mentioned, the Proprietary Lease, By-Laws, and House Rules are fundamental (but dry) reading. Going through recent meeting minutes is also a good idea. For more interesting reading, the Habitat archive is a gold mine. Habitat is the *only* magazine I read cover-to-cover every month.

Also, don't be shy about asking a more experienced board member to sit down with you and talk about how things work. Then Google some articles on "What is a Co-Op?" and that sort of thing.

They have a ton of rights as a New York tenants. Here's the Web site http://www.tenant.net/ of a well-known and very scrappy tenants' rights group. They are in fine shape unless the new lanlord want them out, and if he does, he need to jump through quite a few legal loopholes to do so.
In my opinion nothing changes. The new owner must honor existing lease agreements for the term specified and at the rent specified.
When the lease expires, normal renewal practices are in effect (i.e., if the building is rent-controlled, the same requirements apply as if they were renewing under the old owner).

Nothing will change except the address they mail the rent to.

Yes, the Sponsor may sell any apartments he owns -- occupied or not -- to anyone, without Board approval. The tenants will almost certainly stay in the apartment until they die, since their rent is typically hundreds of dollars a month less than operating costs, much less market rent.

Where this is going to get sticky is the next round, when the investor who buys the rent-controlled apartment eventually sells it to someone else. Does *that* sale require Board approval? It depends on the definition of "Holder of Unsold Shares," which is still in some dispute. Check out the decision in Kralik v. 239 E 79 from 2005 and the alternative view in Sassi-Lehner v. Charlton from 2007.

Sponsors are exempt from a number of things that Shareholders enjoy:
- Board approval of residents/potential buyers
- Board review and approval of structural changes
- Board review/approval of renovations of ANY kind
... all to the frustration of many a Board, I'm sure.

Let your angry Shareholders know that any "holders of unsold shares" (shares that have never been sold, but reside with the originator of the co-op) have -- usually, depends on the Proprietary Lease -- broad rights, especially financial. And quote them the exact passage in your PL where these rights (and exemptions) are outlined.

This is everyone's problem: why the sponsor...?

My question is:

What is the percentage # of shares that the sponsor still holds in your builidng?

Consider then, this percentage as the amount that you subsidize the sponsor by way of flip tax $ every time a unit sells.

If the percent # shares is still significant, then the policy was ill-conceived. The assessment method of raising funds would have been FAIR and EQUAL for all shareholders.

Sorry, but I'm not sympathetic to the flip tax. Only would consider it if a person were to sell the apartment prior to the first 18 months after buying the unit.

AdC

Its been a while since I was here... anyway..
I manage some sponsor units, (as well as many others), each offering plan outlines the exemptions for the sponsor, some place specific timelines on how ling the exemption is in effect.
I have one building where the sponsor is exempt for any assessments, taxes and fees for the only the first 5 years.... I have another where we have a great sponsor relationship and even though he is exempt, they did agree to contributing to the cause by 1.5% as opposed to the 3% regular shareholders are required to pay.
So, the answer you are seeking is clearly spelled out in the original plan to convert and/or its amendments.

Additionally, you have to realize that eventually everyone pays. with less transfer fees coming in, the shareholder maintenance must be raised to compensate.

On the sponsor side, he may argue that it is because of him you own your apartment in the first place and his exclusion from certain fees such as this are part of the price paid for that privilege.

~AR

Depends on the Board qualifications (if any) outlined in the By-Laws. Does a Board Member have to be a Shareholder, a resident, or are there any restrictions? Our co-op has no restrictions whatsoever; in others, a BM must be a resident. If the Board Member you ask about lives within the building, it would seem that he is still eligible for Board service.

If a BM in this co-op needs to be a Shareholder, the Board Member in question should consult an attorney.

First, I think the board should find out why the agent and atty could not make exact plans and stick to it.
If the agent agrees to be there and does not show up, unless it was an emergency, I would hold them responsible for the atty's fees.
The atty needs to really explain why he can't represent you without the agent there.
Why would this be in small claims court?? I don't think you need an atty for that type of court, depending on the situation.
Make both parties explain why this is going on and the board should put their foot down. Someone from the board may just have to go and get this matter dealt with, even though you may not want to do it, you may have to.

Good luck...

did he assist in causing a condition that caused the small claims claims? If you have several claims, you may have a big problem. Like: mismanagement.

Check your management contract first and see if there is a provision for court appearances. (so you cam hold it in front if him/her)... An adjournment does cost time and money and someone has to pay.. since it is small claims, is it an evening court? Ask the manager directly why he does not go and how the situation can be rectified, then start seeking new management because you are not being represented properly...if it is a larger company, ask for a new agent.

~AR

Please make sure that the vote of shareholders is necessary in your by-laws as a result of the first few years of operations or the sponsor involved holding a certain percentage of the unsold shares of the corporation. Otherwise, the by-laws have tied the hands of the board more than necessary by not being able to assess when necessary, i.e., capital emergency repairs, raising reserves, etc.

Now, returning to your question, if the board proves you wrong because you believe that you need to vote, then you get the late fees.

AdC

that if the holder of unsold shares holds any shares then there must be a vote (he has plenty) . it also says if the reserve fund is under $15,000. OUrs is way over that. while they sort this out, they are apparently calling the reserve fund a slucsh fund.( I do believe shareholders would vote it in if it were an emergency. ) - but it it is a bylaw it must be upheld, no?

Hi, QT,

I've lived in two co-ops and in both the abatement was offset by an equal charge. If your by-laws restrict assessing so dramatically then, as AdC points out, your board is severely limited in its ability to raise funds

But the board can always work around the limitation. Instead of calling it an "assessment," they could call it a "surcharge" or "fee" and avoid the issue. Why don't you make that suggestion?

hi treasurer,

is it legal to just plunk on a fee like that? without it being in house rules etc? we also have had a 19% mntnce in crease in the last three years so shareholders are restless.

I'm not a lawyer, so don't take this as legal advice!

But just you would charge a shareholder for other work -- such as an emergency leak, where the super calls a plumber & the plumber bills the co-op -- you can certainly charge for this.

I'd urge you to call your lawyer first if you want his/her opinion.

oops! i was replying to a different thread -- sorry ... anyway:

Check your bylaws. What do they say about a surcharge? Or one-time fee? I'm no lawyer, but I don't see why a corporation should be prevented from raising money under N.Y. State corporation law. Sure, it's using a loophole to your advantage, but if it's the board's decision that you need the money to stay in the black, you have the authority raise the funds.

As mentioned in my mistaken response, check with your lawyer (or property manager) for more info.

Our board and our manager have contacted several of Habitat's advertisers over the past couple of years. Each was courteous and helpful, and our board ultiimately hired them both. One was a management company and the other the company advertising on your site now.

Our Board contacted, interviewed and ultimately hired a storage contractor from the advertisers in Habitat.

The magazine is an invaluable resource in more ways than one.

Thank you RLM and AJ Gregory. Your input is appreciated. Happy to hear your experiences were positive.

In our co-op the by-laws stipulate that the shareholder can be assessed attorney fees, period, win or lose.

But in some cases, the behavior, e.g.: contacting our attorney, contacting a supplier with whom we have a contract, etc., can, under certain circumstances, be deduced as tortuous interference. One needs to assess the situation to see if this behavior incurs the tortuous interference rules.

Yes, we have taken action against a shareholder who enters into such behavior.

Yes, we have imposed legal fees upon a shareholder under circumstances permitted by the by-laws.

Further, in our co-op, our attorney never answers a shareholder letter, unless the board is contacted and the board agrees. After all, one needs to understand that the attorney is the corporation’s attorney, not the shareholder’s attorney.

Hi, George,

Bill is correct. The corporate lawyer works for the corporation, i.e. the board. If a shareholder chooses to hire the lawyer on his/her own (and engaging a lawyer, at his/her office, in a legal question is in fact hiring a lawyer), then the shareholder should pay for the lawyer's time.

Look at it another way. If the board has an electrical firm they always hire to do electrical work, and I decide to call that electrical firm to re-wire my apartment, who should pay -- the co-op or me?

Think of it this way. If the shareholder turns up her/his nose and chooses not to pay, who does? The shareholder AND every other shareholder in the building! (That's because the co-op's income comes from shareholders paying their maintenance fees.) If I lived in your building, I most definitely would NOT want to pay for my neighbor's legal questions!

If shareholders were free to contact the board lawyer without paying the legal fees, any shareholder who wanted "free" legal advice would do the same thing. Of course, it's not free, because the board would have to raise your maintenance fee to cover the dramatically increased legal bills.


On another point, allow me to clarify a misunderstanding in your posting, George, You write that a board "must follow the ... house rules." Well, yes, but the board is the group that sets the house rules, so it's really a moot point -- especially since the house rules cover residents. It's the bylaws that cover the board. I would also suggest that neither of these is one of the "basic legal obligations" of the board. The single and paramount obligation of any board is its fiduciary duty to the owners. Wouldn't you agree?

Hi there's no free lunch:

Since the coop's attorney freely engaged in communicating with a shareholder without disclosing any potential fee associated then the shareholder is not responsible. Too, there are no provisions in the governing documents and at the last shareholders meeting an amendment was shot down to cover such activity. The coop's attorney was responsible in declaring that he does not represent shareholders and needs to get board approval to engage in corresponding with a shareholder. None of this was done so it is a matter strictly between the attorney and the board to work out compensation.

Read: Recovering legal fees, by Bruce Cholst, Esq. The Cooperator. "Another limitation set forth in the typical proprietary lease clause regarding collection of attorney's fees is that it does not allow the recovery of any attorney fees prior to the commencement of a formal action or proceeding. Thus any pre-action analysis, correspondence, etc would not be recoverable."

So you see the shareholder has no liability for legal fees especially when the attorney made it clear to the NYSBA that he billed the coop and not the shareholder.

Any additional thoughts on this?

GU

Hi, GU,

I stand by my previous response.

The exception to Bruce Cholst's point is this. There is no "action" taking place in the original commenter's note. Instead, the shareholder was, evidently, trying to get an alternate point across.

After all, if no individual shareholder is responsible for the fees associated with getting legal advice, then what's to stop all shareholders from doing so?

And remember that the individual shareholder, even if she isn't charged for the entire fee, will in fact end up paying for the legal fee: her maintenance check will go toward paying the bill, as will every other shareholder's maintenance.

The question is really this: does every shareholder chip in to pay for one person's legal bill, or does the individual? If I lived in the building, and if I hadn't agreed to let my neighbor ring up legal bills, I certainly wouldn't want to have to pay for them. Would you, GU?

Hi:
What's to stop shareholders from contacting the coop's attorney? Plain and simple: the attorney! From the start the attorney should disclose any cost associated with engaging in communication or simply not respond. Period.

In this instance, the Board might also fault the attorney for not contacting the Board immediately for instructions. He/she is responsible to the Board, and is hired/contracted with by the Board, not its individual Shareholders.

I'd advise the Board president/managing agent to try to work out a compromise with the attorney.

Of course -- the attorney should disclose fees, but maybe the attorney a) assumes that people who are sophisticated enough to buy real estate/invest in a co-op in NYC are also sophisticated enough to know that there's no such thing as a free lunch, and b) is motivated not to explain the free-lunch cliche because he has mortgage payments just like you and me. I mean, if there's a shareholder in this day & age who believes attorneys work for free, well, maybe this is the tough-love way to learn.

It's like I said before. If my co-op has a go-to electrician, and I call that electrician to re-wire my apartment, who should pay the bill? And if the electrician just assumes I know that I have to pay it and so doesn't explain it in advance, does that mean my neighbors should pay the bill instead?

I would say no, and I think my neighbors would too.

How ridiculous making assumptions on behalf of an attorney, totally speculative! And, if anyone employs an electrician an estimate on potential work is done.

Hi, George,

Allow me to point out that not all electricians in New York have the scruples you suggest, although I certainly wish each did. As I mentioned, the case of the electrician was meant as a figurative comparison. Estimate or not, would you want to pay your neighbor's electrical bill?

I don't want to get into a shouting match with you, George, so let me conclude this discussion by referring to my original reply to your question.

The fundamental obligation of any board is its fiduciary responsibility to its shareholders. Any board that charges the expenses that one shareholder racks up to all of its shareholders is treating all the others unfairly.

In the state of New York corporations are required by law to treat all shareholders equally. If your board allows one shareholder to charge her bill to her neighbors, the board must charge all individuals' expenses to all shareholders. If the board allows exceptions, it risks violating the law.

The attorney charged the coop, period!

Read your PL regarding "coop recovery of charges".

It is my personal opinion that recovery of charges may be a grey area in issues of repairs, since the co-op needs to resolve them to the greastest satisfaction possible and, in doing so, unavoidable legal charges may be incurred.

The process of resolving issues pertaining to co-op /shareholder responsibilities start IMMEDIATELY and as follows:

(1) When the incident takes place, the managing agent writes a report to all involved stating the facts and delcares who is responsible for the damages. The co-op attorney gets a cc for information only.

(2) If you do not get a letter within the first week of the icident, then YOU take the initiative to write the letter documenting the issues, who responded for the co-op, the day, and what you were told.

(3) Shareholders should communicate with the Board through the Management Agent for resolution if they do not agree with the letter received or what you were verbally told.

(4) Shareholders may even request to speak with the Baord at a monthly meeting to further explain the situation if no satisfactory answer is given.

(5) The board should follow the visit with the results of the deliberations and copy all the time the co-op attorney.

(6) If the shareholder is not in agreement and feels that he has the right, as it was expressed before, he/she should have hired its own attorney. A letter from the attorney representing the shareholder is important enough for the board to reconsider the case and actively engage the co-op attorney.

(7) The board reconsiders the matter with the co-op attorney and denies or accepets to pay for the issue. You pay your attorney, the co-op pays for its counsel. There is no recovery.

(8) No resolution: Then the shareholder may be free to start a court case at its own expense for repairs.

In such cases there are no charges that may be recovered because clarification of responsibilities and PL matters are being debated.

AdC

I have tremendous success using the services of Sammat Research Michael Gordon can be reached at (212)(212) 645-4496 or email at
samatt4@aol.com.

this is mean. why dont you just be nice?

You are joking right? I am one of the kindest Landlords in NY and have been told so by a judge on one occasion. This woman is doing something illegal under NYS law and as such is STEALING from the Landlord. She is not Rent Controlled, She is not elderly, She is not destitute, She is not handicapped...Now do you think this is mean?

Why evict a tenant because the apt she rents from you may not be her primary residence? Maybe it's a "good thing" if it isn't. How much damage or wear & tear can there be on your apt if she isn't there that often?

Anon - you said "this woman is doing something illegal under NYS law and as such is stealing from the landlord." If she's doing something illegal prove it, and prove how she's stealing from the landlord. But IF she isn't doing anything illegal, causing problems and is minding her own business, you think it isn't mean or unjustified to evict her just because she isn't elderly, destitute or handicapped? Sorry, but maybe I'm missing something here.

If your tenet is not paying NY taxes,,, you can evict! Otherwise you have to prove that this is not their primary res.

As far as being nice,,, This landlord is running a business and its one thing to be the owner, and anoter the renter.
Good luck..VP

People - Please stay on topic - I am not looking for your opinions and thoughts on this matter. I know the law, I know my business. I know what I can and must do.

All I asked for is references for the name and number of a good investigator who does Non Primary Residence Investigation.

I did not ask for a debate on the topic and what I should do with this woman. You apparently do not understand NYC Rent Stabilization law which is fine. I would not expect you to, just as I probably do not understand the intricacies and implications of what you do for a living either...

Did you call Mike Gordon? He's the right guy for what you need. Just ignore the other postings, they are trying to be helpful but really don't know what you are looking for.

Thanks Anon - will be calling Mr. Gordon today.

Thank you so much. This woman is impossible Peggy

Wouldn't the voter registration roll help? A person is supposed to be registered where his domicile is, i.e., his principal residence. Voter registration records are open to public inspection.

The scenario you mention (a board president having to sell his apartment to cover legal fees) isn't ringing any bells for me, but I'm interested in the question of boards being sued by shareholders for negligence/breach of warrant of habitability and would appreciate it if you would check back and let us know what you find out.

Officers generally have insurance to buffer them against such action. See, e.g.: http://www.cnyc.com/code/archive/conference/conference-sum04.htm

Also, here's a rather old article from the NYT that is not without interest: http://query.nytimes.com/gst/fullpage.html?res=940DE3DF103AF937A15757C0A96E948260&sec=&spon=&partner=permalink&exprod=permalink

Good luck and please keep us posted.

Broome v. Biondi, a sublet discrimination case, is the best-known example. Biondi's legal fees were covered, but he was held personally liable for the punitive damages, which insurance cannot cover under NY law. Biondi ended up selling his apartment to pay the six-figure punitive damages.