How should board (eventually shareholders) handle a president who engaged a company to remove asbetos without proper certification? None of the safeguards were applied? including having the employees help with the removal. There is an open violation and when EPA comes back they will want to see that all paperwork was correctly filed. We are going to be faced with massive penalties.

HabitatReporter here again, with another opinion from Ellen Kornfeld of the Lovett Group. Ms. Kornfeld writes,

"If a Board member or Officer of the co-op engages a company to remove asbestos by a non-certified company, the questions we have are, did the other board members or managing agent know about this, and were other bids obtained for the project by certified companies? If the answer is no to both of these questions, I would ask for the President's resignation. The Board President did not conduct himself as a fiduciary and not only violated building code and EPA rules, they also exposed their employees to asbestos and could be faced with lawsuits down the road. The Director's and Officer's liability insurance would most likely not elect to cover the board should a suit be brought due to the failure to adhere to EPA requirements. It is for this reason that the board should require the President's resignation because the D & O coverage could be in jeopardy if someone were to sue the coop. D & O coverage would not cover acts of a President if they were illegal."

Several other bids from certified companies were solicited by management. President at board meeting came in with a significantly lower proposal. Board and managing agent became aware that work had been completed when agent sent another certified company to bid on the project. They in turn notified agent that work had been completed. When management asked if the appropriate paper work for asbestos removal was completed president replied yes. Yet to date has not been able to produce it and insists that remodeling company has licensed. A board member contacted the state and company is not licensed to remove asbestos and is now out of business. Majority of board members are not concerned yet managing agent says we are due for hefty daily fines as this is an open violation. Do shareholders have recourse against the board as a whole, if these fines are imposed?. What about the staff that I have recently learned were also part of the removal of debris?

In the end, if the Board made a conscious decision to use an unlicensed company, there is negligence. Your in a predicament, but not one that cannot be fixed. Fines are heafty... Was there an ACP-5 or 7 done?

Unfortunately the information required to accomplish this is a lot more than can be transferred through a post and some things with this type of liability should not be posted.

I do not usually do this, but I included a link to my email above and would be willing to talk with you concerning this and let you know what actions some other people in similar situation have or would have done.

~AR

AR: would love to speak with you! no email was in your respose.

Sorry I did not respond sooner, I have been on vacation (finally!)

Please feel free to email me at REAPLLC@aol.com
Anthony

You're a welcome addition. My question revolves around a contractor who worked without any authorization from the Board. We had urgent work to be done on our roof, put it out for bids, his was $4,000. I asked the management agent to get his proposal in writing. The next we heard, the superintendent (who is new & on probation) gave him access, and he did the work. The mgt agent said he must have thought it was an "OK" to do the work because she asked for a written proposal. We all know that that's malarky, but how do we handle this?

It's a 2-pronged job, he started both at the same time, and he's still on the 2nd part. We had our engineer check his work and the engineer required he modify what he's done before completing it.

Thank you for your input.

HabitatReporter here, with an expert opinion from Ellen Kornfeld, representing the Lovett Group. She says,

"If a contractor were to work on any property we manage without approval or written authorization, that contractor would not be paid for their services. The Superintendent should have checked with management to make sure the contractor was permitted to work and that the managing agent had an insurance certificate naming the building and the managing agent as additional insured before giving them access. When did the managing agent find out they were working without a contract and who put it out to bid (managing agent or engineer)? Since the Superintendent is new, what experience did he have being a Superintendent? Certainly, the Superintendent knows the difference between a contract and a proposal if he worked in this industry before. This incident would make me question the Super and his ability to handle affairs at the building and I would consider letting him go before the probation. I would be concerned that the contractor took it upon himself to determine what needed repair. If it were my property, the contractor would be charged for the cost of having the building's engineer inspect and review the work and for any re-inspections needed for changes that have to be made."

www.twitter.com/habitatmag

Thank you very much for this important information. I'm going to share it with the full Board of Directors when we meet next week.

To answer your questions, the managing agent put it out to bids. When I heard the bid I asked management to have the contractor give us a written proposal. The next communication from her was that the work was already done but that it was just as well because "it needed to be done". The superintendent is on probation with us but has several years of experience working for a rental building (and still working there after his full day here). The sup't. showed the contractor the job, and then according to management, allowed him access to do the work without clearing it with them. I doubt that management has an insurance certificate because it was done without being put into writing, but will check into that.

Thank you too for your suggestion to charge the contractor for the engineer's examination & follow-ups of his work. (I'd asked management to ask the engineer to check it to examine the quality of the work.)

- Can an In-House Managing Agent in a small Co-op (who with spouse owns 60% of the Shares) vote to hire themselves for pay?

- Can this pay be in the form of a 50% maintenance reduction? If so, should this considered taxable income, and as such, a deduction on the Co-op's tax burden?

Myself and the other Shareholders believe this situation is a violation of the Business Judgement Rule and have voted to hire an independent Managing Agent. The current Managing Agent/Shareholder has sued us to block it. Our case is in Court now, and we suspect the outcome may be of interest to your readers.