No matter if they're overseeing a towering high-rise or a sprawling suburban association, co-op and condo boards usually have their fair share of problems to be solved and emergencies to be defused. Talk to enough people who have dealt with these situations and they can tell you that it’s no picnic—at times quarrels between neighbors can get ugly, and elected administrators act selfishly instead of for the greater good.

So how should a board conduct itself? Perhaps a better question to ask is how a board should not conduct itself. With these anti-pointers, conflicts and long, drawn-out battles can be avoided to create a more enjoyable, functional living atmosphere for all.

Simple Things

According to management pros, the most common board mistakes usually start with the easiest things to handle. Common errors include failing to bill residents properly, making mistakes on billing records, underbilling residents and making petty clerical errors that can cost either the building or the residents dearly, both in money and in acrimony.

“It’s painful to go back a year or two later and tell a resident they owe $15,000 because of under-billing,” says Dennis Greenstein, an attorney and partner with the law firm of Seyfarth & Shaw in Manhattan. The way to avoid that kind of misery is to get organized and stay that way—and when errors inevitably occur, prompt admission and swift resolution are crucial.

Making rules and regulations known and available to all shareholders is also important. Little things like what kind of pets are allowed in the building and where they can roam around should be clearly stated in the bylaws, and clearly communicated to the residents. “It’s just a basic concept that all boards should follow,” says Greenstein.

Greenstein also cites instances he’s seen where boards fight over whether there should be a transfer tax implemented on unit sales. Transfer taxes or 'flip fees' produces revenue for the building, he says, but two thirds of the shareholders usually have to agree to it. The process for adopting it starts at the board level, and “The best thing to do is to put it to a vote.”

And the board itself should have the appropriate number of members—not too many, not too few. Some boards can have up to 15 members, says attorney Marc Schneider of Schneider Mitola, LLP, a law firm with offices in Manhattan and Garden City, but five to seven usually works out best. Obviously, having an odd number of board members is preferable for tie-breaking purposes.

“If you have an even number of board members, voting can come to a deadlock,” says Greenstein.

You’re Not The Expert

Many boards end up fumbling because they disregard or reject the advice of hired professionals and take complex issues upon themselves. For example, says Schneider, some board members don’t address big capital repairs with the accountants, architects, engineers or attorneys they've hired to navigate those very things.

Schneider says he’s experienced one such situation where the board voted to keep patching a deteriorating roof, making band-aid repairs instead of committing to a full replacement. He acknowledges that in today’s economic times it’s understandable that boards are worried about how to finance big projects, but in the long run it usually costs less to do the job right.

“Many board members are sitting in the room asking, ‘How am I going to pay for this?’” he says. “But the board ultimately wound up spending more money patching the roof over and over than it would have cost to replace it. Once you replace, you don’t have to touch the roof for many, many years.”

By the same token, choosing a professional who will lead you in the right direction is just as important, says Stuart Saft, a partner and the chair of Dewey & LeBoeuf's Global Real Estate Department in Manhattan. He cites one instance where the board of one of the buildings he represented wanted to pursue what he felt was a lost-cause lawsuit in order to win control of a commercial space.

“I thought it was a mistake, but they didn’t want to hear it,” he says. The board replaced Saft with another attorney who took the case on and lost, costing the building several hundred thousand dollars. The board members were so burned from the whole experience that none of them ran for re-election the following year. Additionally, restrictions were put on future boards requiring informational meetings to be held before taking any legal action.

“All they did was shop around for someone who would take their case,” says Saft. “They refused to listen to the facts.”

Schneider concurs with Saft, and says that boards should take the advice of their experts when it comes to how a project should be done, rather than striking out on their own only to find that mistakes have been made and will have to be unmade at significant cost.

Enthusiasm is one thing—but it doesn't take the place of experience. “Board members are volunteers,” says Schneider. “If you’re not comfortable following the advice [of your professional] for legitimate reasons, then hire another professional. You have the right to a managing agent, attorney, and engineer,” he says. “What you’re paying for is what you need. Challenging advice is fine, as long as you’re challenging with the right purpose.”

Schneider says that he’s seen cases where boards make a petition midyear to call for the removal for board members who don’t act in good faith. Additionally, if a repair—or lack of one—ends up hurting the building, legal action can be taken by the unit owners. Board members must keep in mind that they are elected to watch over residents' investments, which in a co-op or condo building are also their homes. In light of that, it's crucial that they set aside their own egos or personal opinions and let their chosen professionals do the job they were hired to do—and replace them if they are unable to do it.

It Isn’t All About You

Occasionally, a board will find itself saddled with a member whose primary motivation is his or her own self-interest.

“The biggest problem a board faces is when a board president becomes the board,” says attorney Al Pennisi of the law firm of Pennisi Daniels & Norelli LLP in Rego Park. “They get power-hungry, and he or she decides to make executive decisions without calling a meeting or asking the rest of the board.”

“You have to take off your personal cap and put on your board cap,” agrees Schneider.

Pennisi cites instances where board presidents have signed contracts with vendors, fired contractors and even made major purchases on behalf of the building without the rest of the board’s approval. Almost without exception, this behavior eventually ends up costing the board money.

According to Pennisi, contractors work under “apparent authority” where even if a board claims that they didn’t approve the work to be done, judges tend to favor the contractor and the contractor would get paid regardless of whether the board member had appropriate authorization to engage the contractor's services.

In other cases, board members hire friends or family members to do work in and around the building. These people may be competent—or they may be inexperienced, uninsured, or completely unqualified to do the job properly, adhering to safety codes and professional standards. If a theft, injury, or other mishap occurs in the course of such a job, it could end up in lengthy litigation. The premature termination of an existing contractor or vendor without following proper legal procedure could also lead to lawsuits, Pennisi says.

To avoid such problems, board members should make it a point to attend conferences and training seminars for board members, and should apply what they learn there to their own building communities.

Favoring is a Big No-No

Aside from board members illegally hiring contractors and other vendors under the premise of friendship or family ties, unfair favoritism happens in other corners as well.

Pennisi says he’s seen instances where a board president favors sponsor unit owners over the rest of the building. Sponsors sometimes own multiple buildings and if a board president is a real estate broker, for example, the sponsor will commission them to sell units in other buildings and as a “thank you” gesture of good faith, the board president hires help to do repairs or maintenance in the sponsor’s unit—a fiscal responsibility that rests upon the unit owner.

Greenstein points out how important it is to follow the rules of confidentiality, regardless of social status with residents.

“Board members should resist telling their friends and neighbors things like why the board rejected a prospective buyer,” he says of shareholders who are trying to sell their unit. Too much information can lead to residents trying to take too active of a role in the process that is already complicated.

“Boards have absolute discretion with these matters,” he says, continuing if shareholders find out why a candidate was refused, they try to argue that the basis on which they were rejected has no validity and sometimes follow it with legal action.

Follow the Rules

At the end of the day, most condos and co-ops function properly and follow rules.

“The bulk of co-op presidents do great,” says Pennisi.

But in the instances that a board member gets out of hand it’s up to the rest of the board to keep tabs on what happens in their buildings and accurately assess the role of their board members. Doing so not only creates a happy working environment for the board members but a happy living environment for the residents, which is what it’s all about.

Bernadette Marciniak is a New Jersey-based freelance writer and a frequent contributor to The Cooperator.