Page 11 - NY Cooperator June 2019

COOPERATOR.COM THE COOPERATOR —JUNE 2019 11 lawful and legitimate furtherance of the co- op’s or condo’s purpose. In short, this means fi rm of Marcus, Errico, Emmer & Brooks, that boards must follow their own rules and P.C., which has offi ces in Massachusetts governing documents.” An attorney can help keep a board on owners are typically familiar with provisions the straight-and-narrow as well. “From legal of the documents having to do with open counsel’s perspective, helping a client focus meetings, the availability of records, when on legitimate goals helps prevent bad con- duct,” says Michael Gelfand, a senior partner etc. One of the biggest mistakes I see boards at the law fi rm of Gelfand & Arpe in West make is not following their documents and Palm Beach, Florida. “As we counsel asso- ciation directors, we help them keep in mind of information to the contrary, owners will that they volunteered to do the right thing. oft en assume that the board is up to no good. In Florida, directors must attend a two-hour class or sign a paper stating that they have failure to properly handle the association’s read and will uphold their governing docu- ments. When a director refl ects on that cer- tifi cation, they invariably fall onto the road keep up their fi lings with the state, the cor- of good intentions, especially when they’re poration can be involuntarily dissolved. Or, reminded that in Flor- ida, most association records are accessible to owners.” Failure to Adhere Again, acting out- side the rules laid out within an association’s governing documents not only opens up the off ending board member to penalties, but can put the entire association at risk. “When \[board members\] deviate from the proper execution of the document by the their governing documents, it exposes the proper parties.” board to liability,” says Cummins. “Th ere- fore, as an attorney to many condominium ing scale, and not every overstep amounts and cooperative boards, most of my advice to a high crime. “Th ere must be a balance pertains to keeping those boards protected between threatening the proverbial wrath of by the business judgment rule. Th is oft en the gods, punishment for transgressing legal means that I am called on to interpret oc- casionally ambiguous governing documents, recognition in the community association or to amend governing documents. “But one of the biggest pitfalls that I see to a standard stricter than the business judg- occurs when boards ignore issues rather ment rule,” says Gelfand. “If you constantly than face them,” she continues. “Ignoring threaten that aforementioned wrath for ev- an issue and failing to make a decision of ery transgression, then no one will volunteer, any kind on it also exposes a board to liabil- ity. Th e business judgment rule protections the documents will be concerned with mak- only apply when a board actually makes a ing an error and being held liable. Addition- decision. Th erefore, even if an issue will un- doubtedly be voted down, it is important for is not entirely appropriate; they are not paid, boards to consider and vote on all issues that but they are usually draft ed in a manner come before them.” Additionally, while apathy can certainly without being perceived as abandoning their be an issue in any association, boards are community.” Gelfand goes on to say that hopefully acting under the watchful eyes of some residents agree to serve on the board an engaged community of residents. “Hu- man nature is such that the owners who are no one serve (and a court taking over), or not on their association board oft en feel an having less-than-competent people on the imperative to scrutinize the board, and to board who will make whatever challenges or assume that anything they haven’t been in- formed of is a nefarious plan in the making,” says Gary Daddario, a partner with the law and New Hampshire. “In light of that, unit fi nancials are supposed to be distributed, missing such an event. Again, in the absence “Other common trip-ups include the ‘administrative’ details,” he adds. “If an as- sociation is a corporation and they do not a vote on an impor- tant issue might be challenged if some- thing was lacking in the meeting notice. Another example would be that an amendment could be challenged if the formalities \[for making that amendment\] were not complied with. Th is includes not just the proper voting, but Of course, rule violations occur on a slid- thresholds, and reminding of \[the state’s\] context that volunteers should not be held because even the most studious follower of ally, the term ‘volunteer’ for most directors that makes them feel as if they cannot refuse because the only other alternative is having issues the community is facing signifi cantly “One of the biggest pitfalls that I see occurs when boards ignore issues rather than face them.” —Leni Morrison Cummins continued on page 17 www.norrismclaughlin.com Dean M. Roberts Burt Allen Solomon Gerard Proefriedt Ezra N. Goodman Sharyn A. Tritto Michael T. Reilly Norris McLaughlin, P.A., (formerly Szold & Brandwen) offers full service representation of cooperatives and condominiums, based on over 90 years of experience, including:  Construction, professional and service contracts  Commercial, retail and professional leasing  Litigation  Landlord/Tenant proceedings and actions  Corporate governance  Shareholder disputes  Special expertise drawn from other areas of practice in the firm The firm’s cooperative and condominium clients range from smaller buildings to large multi-building developments. All receive timely and responsive service from our team of experienced attorneys. Naureen S. Rashid 875 Third Avenue, 8th Floor New York, NY 10022 t: (212) 808-0700 | f: (212) 808-0844 e: info@norris-law.com