Winston Churchill once said that “Attitude is a little thing that makes a big difference,” and that couldn’t be more apt for those who live in multifamily buildings.

Co-op board members and managing agents sometimes complain that residents have what they call a 'renter’s mentality'—-based on viewing themselves as tenants of their board and management company, instead of rightly regarding themselves as shareholders in a corporation. They aren’t aware that a board or property manager is not the same as a landlord, and their monthly maintenance fee is not equivalent to rent.

When a person buys into a co-op, they are not just renting an apartment in a building; they are buying into a collective enterprise. They are a shareholder, and must collaborate with their fellow shareholders to protect their common investment, which is the building.

Understanding the difference between renting and shareholding is crucial for a resident of such a community, but of course in New York City, many folks lead very busy lives and don’t pore over their building’s governing documents. So they don’t always know all of the details of the arrangement into which they now reside. Boards and managing agents can help shareholders and apartment owners understand the distinction between being a renter and a shareholder, as well as understanding their duties in a cooperative setting. It takes time and information, as well as neighbors talking with neighbors.

Cooperative Effort

People don’t always recognize the cooperative elements involved in being a co-op shareholder. It’s not like renting, where a resident pays money for an apartment and its maintenance, but has no vested interest in the building. Folks in co-ops and condos are owners, and part of a corporation that governs the building, though getting residents to understand the difference can be trying for both board members and property managers alike.

Sometimes, residents are unfamiliar with their building’s governing documents. A general lack of involvement with the building’s management also can be a culprit; those who don’t see the ins-and-outs of managing their building don’t always understand their rights and responsibilities and how much work goes into ensuring the community is a smoothly-functioning enterprise.

“People send in their maintenance and common charges and they are not involved in the ongoing dynamic of the community,” says Rosemary Paparo, director of management for Buchbinder & Warren, a Manhattan-based property management company. “The poor board members are like the landlords, while the other shareholders aren’t participating in the management of the property. It places an unfair burden on members of the board.”

Very distinct legal differences separate landlord/tenant and board member/shareholder relationships. When you buy into a co-op, you buy the shares and become a 'tenant shareholder.' But pursuant to your proprietary lease in a co-op, you have the right to remain in your apartment as long as you’re a viable shareholder, says Richard Herzbach, a partner with Certilman Balin Attorneys, in East Meadow. Also, the “rent” you pay is dependent upon the amount of your shares. You’re technically a tenant of the ownership of the building, which is the corporation.

“As an owner in a condominium, you have the right to stay in the apartment you’ve bought, and also have an ownership interest in the common elements of the building,” Herzbach says. “You pay your maintenance fee based upon the percentage of common interest you own, which is generally determined by the square footage of your apartment.”

But as a shareholder, you’re also responsible for maintenance of your apartment. The problem is that when a shareholder thinks and acts like a renter, that renter mentality can cause problems with the management of the building. Residents who think like renters sometimes withhold fees owed to the building because they don’t think they should owe the money. In the meantime, everyone in the building must float the residents’ share of the financial burden while the matter is worked out.

“While you’re technically a tenant under a proprietary lease, you’re also a shareholder in the company that owns the building,” says Robert Braverman, a managing partner at the law firm of Braverman | Greenspun. “There should be a greater proprietary interest in the well-being of the building.”

In some cases, such a wrongheaded entitled attitude can lead a resident to run for a seat on the board of directors in order to pursue an agenda that is contrary to the governing documents and harmful to the community—such as working to ensure free maintenance repairs for all.

“People who purchase into co-ops and condos who were renters can sometimes expect the same kinds of services as a tenant in a rental building. That may get contentious, because they expect maintenance obligations that now are the owner’s responsibility,” Herzbach says.

An absence of community spirit is the problem, no matter what the impetus of that lacking might have been, says Margie Russell, executive director of New York Association of Realty Managers (NYARM).

“Many boards operate on a need-to-know basis, but it should be the opposite. Everything should be out there, except for those things that non board members shouldn’t be privy to, such as personal info about residents or employees,” she says.

Avoiding Pitfalls

Problems can arise in a building when a resident doesn’t think he should have to pay for something, based upon a misconception of what his duties are in the community. For example, if a resident just bought a fully renovated apartment and then a pipe in the wall broke, damaging his apartment and the one below him and he doesn’t think he should pay for repairs and that the building should, an impasse could follow.

The resident might withhold fees from the building for this or another reason, such as his mistaken belief that he shouldn’t be paying for a service or improvement to the building which is the collective responsibility of all the residents. The answer is simple, though he doesn’t know it because he hasn’t read the governing documents, which detail the parts of the apartment that are his responsibility to handle.

In such a case as the plumbing problem scenario, the property manager or board must inform the resident of his obligations under the proprietary lease, as gingerly as possible, of course.

“Sometimes you have to cite chapter and verse,” Paparo says. “Other times you have to refer to the building’s attorney for clarification.”

Unfortunately, oftentimes people don’t want to know everything they should know about their apartment until a problem is at hand. Say a resident wants to renovate their apartment in a certain way, but the board says it’s not OK to do that; problems with the resident could follow. That’s why education of residents is an ongoing, never-ending job. And it’s also why community involvement is essential.

“If a person is on the board, they become more sympathetic to the plight of keeping things running smoothly,” Paparo says.

The first step a board or managing agent should take to avoid a shareholder having a renter’s mindset is to let her know the rules and obligations of residents when she joins the community. The duties of a shareholder are laid out in the building’s house rules and certain parts of the proprietary lease, including what, if any, mechanical [apparatus] belongs to the building or the unit owners and what places are common areas.

“Some people with a terrace might be very surprised to know that the maintenance cost of their terrace, as listed in the offering plan, is their responsibility to bear, for example,” Russell says.

A simple way to start the process of informing new residents of their duties is to provide the building’s governing documents and other pertinent information such as names and contact numbers of building staff and management, to the new resident in a welcome kit delivered when he buys an apartment. The process just begins there, though.

Communication through well-established methods such as newsletters, bulletin board postings and emails are crucial and the positive effect of such simple efforts cannot be overstated, Russell says. While some industry pros suggest frequent newsletters, not all property management firms handle such a task. If needed, a resident should be tapped to create and send out a newsletter, at least bi-annually, Braverman says.

Residents need constant education, with the help of the board of directors and managing agent, to understand their responsibilities. One way to accomplish that learning process is by getting them involved in the management of the building. That can be done by creating committees that handle different aspects of building management such as a gardening committee, a quality of life committee, or a decorating committee.

Also, it’s wise to target the help of professionals in the building. Get your neighbors involved by appealing to their vanity. “You’re a top-notch CPA, Sarah and we could really use your help on the board to manage our financials,” a board member might say to her neighbor to start the process of recruiting much-needed new blood on the board.

After all, getting involved in your community’s management makes good business sense. For many people, the investment they’ve made in their apartment is their largest investment. Few people would go a year without looking at their stock portfolio, but many residents might not show up for a Board of Directors meeting until they hear a special assessment will be made.

Another helpful tactic is to have quarterly informational meetings of the board, during which issues can be addressed and residents can ask questions of board members. Such meetings can be held 45 minutes before the board’s regularly planned monthly meetings.    

Jonathan Barnes is a freelance writer and regular contributor to The Cooperator.