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On the Record

Gerard J. Picaso, president of the Gerard J. Picaso management company, remembers a lengthy debate one cooperative board had about a resident's dog that had been defecating on the building's front stoop.

"There was a long discussion at the meeting as to how to discover whose dog it was. One member was positive it was the guy in 8D with the Great Dane. The member had called a vet who had told him that the size of the stool could only come from a Great Dane. Another board member said, 'We'll scoop it up and confront him with it at the next board meeting.' And they talked about how to preserve the stool then, and that went on to a discussion about the other dogs in the co-op."

When the minutes of the meeting came out, it was all there, in black and white. Picaso was appalled. "It was an absurd waste of time," he observes. "It proved nothing. It meant nothing. What could have been said in the minutes was, 'According to the vet, the feces found was from a Great Dane. The only Great Dane is owned by 8D, which will be approached.'"

Many boards don't know, understand, or care about minutes, seeing them as a chore to be treated lightly, if at all. Some accounts are full of typographical errors and colorful descriptions of the people at the meeting. Others devote pages and pages to speeches on how the garbage is packed. Still others refer to everyone present by their first names ("Billy requested that Jean and Joe go see a contractor named Lew") in chatty discourses like this one: "Meeting was called to order at 7 P.M. Jim said that it had been a beautiful day... At about 7:15, we had a long talk about the lobby. Sally said the color scheme was all wrong. Dan told her it was just right. She disagreed. Bill remarked that designing lobbies was a woman's job anyway."

Verbose and unfocused ramblings may be fine for a personal diary, but as a public record of a corporation, they can spell trouble. For minutes matter. They can be used to defend the board in court, explain actions to shareholders (and future boards), and offer a picture of the building to potential buyers. How well they are kept reflects on the corporation. "Minutes are the official record, required by law, of what took place at every board meeting," says Picaso. "They show that decisions were made by a majority in a businesslike fashion."

There are five good reasons to be concerned about minute-taking:

Minutes offer the basis of the decisions of the board and the rationale behind them. New boards should be able to piece together what happened in the past from the minutes.

Minutes are an outline of the issues discussed and serve to justify the board's actions. The minutes should always include all the important facts. They serve as the institutional memory of the property. Minutes should record the action taken by a board: did it act reasonably and use reasonable business judgment?

Minutes serve as a reminder of future action. The board can evaluate the progress of projects by tracking them in the minutes.

Minutes should offer pertinent information to third parties not present at the formal meeting. Outsiders, such as potential buyers, can and do examine the minutes to judge the financial and physical condition of the property. The minutes are also reviewed by owners to evaluate the competency of the board.

Minutes are confidential and, once approved, can be used in court. Minutes are admissible in court and can be used for a property, to prove it acted responsibly, and against a building, to prove liability.

So what should a board seek in its minutes? What should (and should not) be included? And how should the information be gathered, reviewed, and presented?

SETTING PARAMETERS

When Miriam Marcano-Bender took over as board president of her 65-unit Yonkers co-op, one of the first things she did was review the minute-taking process. "The minutes were very sloppy," she recalls. "I talked with our attorney and got guidelines from them on what to include in the minutes."

Bender had the right idea. In devising your minutes, savvy boards will set parameters. Most agents agree that less is more and that the amount of detail boards include can sink or save them in court. During litigation, everything is examined: boards can run into trouble if a member makes a defamatory remark, which is duly written down, or when it rejects a buyer and then explains why.

For instance, one set of minutes reports that the president "requested that [name withheld] give the subletting tenant in 4W a talking to because he's been cooking smelly curry dishes too often. [Name withheld] agreed and added that sometimes even the lobby smells like curry and it's disgusting. We agreed to not extend 4E's sublease when the time came." Phrases like "a talking to" and "smelly curry" are simply not professional, and the entire paragraph could leave the board open to discrimination charges.

The minutes should report the fact simply and without comment. "You want them to be accurate but you also want to allow for a confidential forum to make a decision," says Don Levy, director of management at Lawrence Properties. "Long dialogue exchanges should not be part of the official record." If there are debates, there is no need to include all the details. The secretary can simply note, "A ten-minute discussion followed."

In short, wording is important, which is why agents - and on legal matters, lawyers - should review how minutes are phrased. On the plus side, well-written minutes can be used to defend actions taken. For example, one rejected buyer charged discrimination, saying no one had ever been denied a unit before. The minutes, however, showed that eight people had been turned down in three years. In another case, a person injured in an elevator accident reviewed the minutes to see if the board had discussed the elevator's condition. They hadn't, so that limited liability.

For better or worse, wording can also disguise tensions in the board. At one meeting, arguments about a lobby redesign resulted in a fist fight, broken glass, and a wrecked chandelier. The minutes only reported "a very intense discussion" took place, adding that the director owning the glass and the chandelier would be reimbursed for "accidental damages."

Beware, though: careful wording is one step away from falsifying - and that should be avoided. Besides being illegal, it can blow up in the board's collective face. One building had a plumbing project. The vote was unanimous to undertake it. By the next meeting, however, problems had developed. One director tried to avoid responsibility by insisting he had voted against it and demanding changes in the minutes to reflect that. But changing the minutes to rewrite history only undermines the credibility of the board. Don't change the minutes. Change the policy.

One final note on what to include: some boards record every vote, including how the different directors cast their votes. Some say that this is the responsible thing to do, since owners have a right to see how the board voted on the issues that affect the vote. "We always include tallies of who voted for a maintenance increase and who didn't. It keeps board members accountable," says Bridget McCormick, assistant to the general manager at the 2,904-unit Glen Oaks Village co-op in Queens.

Others say that such reporting simply politicizes the process. "We don't recommend it," says attorney James Samson, a partner in Bangser Klein Rocca & Blum. "It can be used as an intimidation tactic. This is not congress, where people run on their records. Politicians always vote for tax reductions in congress, but deficit-spending does not work well for co-ops. Naming names can create politicking on the board rather than serious attempts at resolving issues."

IT'S ABOUT ORGANIZATION

Beyond wording, there is the matter of how you organize your minutes. All must include the basics: the date of the meeting, where it was held, who was there (using full names), who presided, who was the secretary, the topics, the votes taken, and the resolutions passed.

How you present the topics, the votes, and the resolutions is open to interpretation, however. Most minutes follow a chronological progression, based on the agenda: a call to order, followed by an approval of previous minutes, then discussions of finances (a presentation of the monthly financial report, including maintenance collection and arrears), the manager's report, and any other ongoing issues facing the property (capital/repair projects, lawsuits, and so on), concluding with a time and place for the next meeting.

If the agenda is not strictly followed, or the discussion at the meeting rambles, the minutes often reflect that, jumping from roofs to arrears and back to roofs again. Actions are tabled and then forgotten, only to be recalled many meetings later. One board member of an Upper West Side building recalls searching in past minutes of his building to find out what had been done about a leak. "Discussion of it came and went but I found it hard to discover what actions had actually been taken," he recalls. "It was very frustrating."

His board then reorganized the minutes - and the agenda upon which the meeting and minutes were based - into a more rigid format. After the basics (the date, location, who was present), the data was broken down into: "Projects Completed/Actions Taken" (since the last meeting), "Issues Discussed" (by topic, capital, finance, etc.), "Projects Assigned," and "Projects Tabled." "We felt it presented things more clearly," explains the board member. "At a glance, we could track projects and see where they stood."

Others organize the minutes in a more traditional manner, and include a list of "action items," or an extract of tasks that management is supposed to do in a separate list. Such a list holds the manager accountable and avoids issues getting lost between the cracks.

Whatever method the board uses, the key is to have a well-organized agenda. "It is critical to have a tight agenda," explains Barbara Dershowitz, who ran a minutes-taking organization for 13 years and is currently principal of Business Communications Workshop. "You need a very carefully crafted agenda. If the managing agent sees that the board is diffuse and rambles, it behooves him to impose a structure. An unstructured board reflects an unstructured building."

One board president, for instance, distributed an agenda that included approximate timings for discussion ("6:30 PM: Approval of minutes from previous meeting. 6:35. Discussion of Water Heater Installation. 6:45. Long-Term Financial Report and Impact on Capital Work 7:00. Long-Term Building Capital Improvement Report. 7:15. Discussion of Necessary Short-Term Repairs," etc.). Such techniques make the minutes easier to organize.

In addition, notes attorney Richard Siegler, a partner in Stroock & Stroock & Lavan, "it's important to have the agenda circulated three to four days in advance so board members can prepare. You can attach such materials as financial reports and materials on security. The minutes then become a checklist of actions taken."

Agrees Alvin Wasserman, director of Fairfield Property Services: "We generally recommend that minutes should be succinct; they should look more like bullet points than a narrative. It should almost become like a 'to do' list, so when the board reviews minutes with the managing agent each month, they can check off and see what's been accomplished and measure the work flow."

You may also want to prepare and update an index. "It is helpful to have an index where resolutions, motions and discussions of topics can be identified by topic," says attorney Steve Wagner, a partner in Wagner, Davis & Gold. "When Barbara Dershowitz was preparing minutes for my boards and I needed to check out a topic, she would go into her index and save me countless hours of research by sending me all of the resolutions on anything occurring about that topic in the minutes."

MINUTE-TAKERS

Who takes the minutes? Although by law the secretary is responsible for the minutes, he or she can delegate the duty. Although many boards have the secretary take notes and prepare the minutes, there are other methods.

Some have the manager or the lawyer act as minute-minder. For instance, at Georgetown Mews, a 929-unit Queens cooperative, the manager takes and drafts the minutes. "We find that works well for us," says Mary Fischer, the board president. "He follows the agenda and distributes the minutes for approval."

Nonetheless, many feel that having a board member - or even the managing agent - taking notes could limit that person's ability to take part in a discussion. Dershowitz even claims that using a manager for such a role is a conflict of interest. "It's easy to skew things in favor of management if the manager is responsible for writing up the minutes," she says. "He can conveniently 'forget' to put in information that reflects badly on him."

A number of buildings use an outside minute-taking service. For fees starting at $250, companies such as Adison-Thorne Enterprises will prepare draft minutes (including composing/word processing), deliver draft minutes for review (usually within ten business days following the meeting's adjournment), provide revisions, and deliver approved minutes for the corporate file along with a resolution report, summarizing the actions taken.

"Why should people use us?" asks Ann Miller, principal in Adison-Thorne Enterprises. "We're impartial. We don't have a stake in the outcome of issues. We have found that boards frequently utilize an ad hoc minute-taker chosen from among their ranks or provided by the managing agent, which often results in inferior documentation that lacks substance and quality. We offer a solution to this problem. We will eliminate the consistent inconsistency of ad hoc minute-taking."

Adison-Thorne, like other such firms, can also prepare newsletters, transcripts, and minutes of annual meetings. Robert Friedrich, president of Glen Oaks Village, has worked closely with Adison-Thorne for about a year and calls the minutes prepared "superb. They are accurate and fully professional." If you hire such a service, however, you must set out the parameters of what is to be included, along with a statement of confidentiality.

REVIEWING THE DRAFT

Accuracy is always crucial. To ensure it, boards should conscientiously review a draft of the minutes before approving it. Most agree that this should be delivered to the board members and managing agent within a week (if not a few days) of a meeting.

"The minutes draft should be typed within one to two days of the meeting," says Wasserman. "From the management point of view, the minutes are a working tool for the manager. The agent is taking notes at the meeting but sometimes things get lost in the translation. Getting him the draft one or two days after the meeting gives everyone a chance to clarify responsibilities immediately."

The draft should be discussed by e-mail and/or at the next board session and then approved as the first matter of business. "I find that having them early is very helpful," says Joe Witte, former president of his Upper East Side board. "You can read them at home over a cup of coffee rather than in two minutes at the beginning of a meeting. You can give it more thought."

Approving the minutes can range from the ludicrously extreme - one board member wanted to change the phrase "coffee and cookies will be served at future meetings" to "coffee, cookies, and cake will be served" - to the legalistically precise.

Once your minutes are written, approved, and filed away they are the history of your property. And if you want to be judged well - and understood - by future boards, let alone potential buyers, be careful about what you write. "These are the written records of decisions reached and actions taken," says David Kuperberg, president of Cooper Square Realty. "You don't offer opinions or speculations. It's just the facts."

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