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Controlling Chaos at the Annual Meeting

It was surreal, recalls Alvin Wasserman, director of asset management for Fairfield Properties. At an annual meeting that was supposed to be routine, a unit-owner made allegations against one of the board members. Her husband became very upset. Insults flew until a shouting match erupted. Then it went to the next level. “The husband took the table where the board was sitting and flipped it towards them,” says Wasserman. “Then he threw it at the guy.” The meeting was shut down. In theory, annual meetings for co-ops and condos aren’t a big deal. Shareholders and unit-owners sign in to ensure a quorum and drop off their completed ballots. There’s old and new business, a reading of the financial report, a Q&A. Done. But in practice, has an annual meeting ever been so simple?

"There’s no predicting,” says attorney Jeffrey Reich, a partner at Schwartz Sladkus Reich Greenberg Atlas. “Meetings I go to that I think will be horrible, go smoothly. And meetings I don’t expect to will break out into all kinds of nonsense.” He and other professionals can all recount instances of fisticuffs and handcuffs, anger and alcohol, and gadflies holding court and holding up ballot counts. What can a savvy board do to avoid such problems? Are there methods to calm the waters and keep the meeting running smoothly? There’s no foreseeing everything that might happen, but several attorneys and managing agents can readily recite some of the most common issues, and offer advice on what to do about them.

No Quorum

Your managing agent handles the nuts and bolts of the annual meeting: securing a space; sending out notices, ballots, and proxies to shareholders or unit-owners; coordinating with your accountant on the financial statement; and arranging with building staff to have tables and chairs available. But it may take a concerted effort of the board and the manager to ensure a quorum, without which an official meeting cannot be held. New York’s Business Corporation Law specifies that notices announcing the annual meeting must go out no more than 60 days and no fewer than 10 days before the event. So to ensure a quorum, it is wise to send the notice 60 days beforehand, giving residents plenty of time to clear the date. Send follow-up reminders 30 days and 10 days ahead of the scheduled time. Those should remind people about the proxy form – a document authorizing a specified person to vote in the owner’s stead – generally sent with the notice. Proxies count toward fulfilling the quorum. If they aren’t forthcoming, solicit them.

Get residents signed in quickly, so they don’t get frustrated and either leave or take their frustrations out during the meeting. In larger buildings especially, a team of people should sign in the shareholders, suggests attorney James Glatthaar, a partner at Bleakley Platt & Schmidt. Even with all those precautions, there might still be problems. “I was at one meeting where, after balloting had closed, someone tried to rush in with a handful of proxies,” recalls Reich. “They’re pushing proxies at the managing agent, and then a board member pushes that unit-owner’s hand, and the unit-owner starts screaming, ‘Assault!’ I saw it – it was just a push of the hand. And one could argue that pushing proxies to the managing agent was an assault. The police were called.”

An Inadequate Venue

The meeting venue can make a difference. If the space is too small, too warm, poorly ventilated, or lacking enough chairs (forcing people to stand), you’re not going to have a smooth meeting. “Get to the venue well in advance,” advises Dan Wurtzel, president of FirstService Residential New York. “If you get to the meeting a half hour in advance and something’s not right, you may run out of time [to fix things]. If you get there 60 minutes in advance, you have plenty of time to deal with any nuances and get them corrected. If the room’s too warm, find a way to cool it down. If tables aren’t set up in the right places or there aren’t enough chairs, there’s time to correct it.” In his own condo, Richard Klein, a partner and the head of the co-op and condo department at the law firm Romer Debbas, went to a meeting recently where the room was too small. “It was very hot, and so people left,” he says, adding: “If, at a meeting for a building I represented, I saw a lot of people leaving, I would adjourn the meeting and get our managing agent to find a nicer accommodation and reschedule.”

Hostile Homeowners

Fist fights have broken out. “My favorite example is a Fifth Avenue building with very prominent people living there, and different factions seeking to take over the board,” says Reich, who was the board’s attorney. “Two older, very distinguished gentlemen got into a pushing match, poking each other in the ribs. And the attorney for the insurgents was in the middle of this, getting crushed.” Reich, who admits that he is “not a big guy,” had to jump in and separate them. There’s no set protocol for such flare-ups. In this case, the meeting continued. With others, you may want to shut down and clear the room. Calling in the police is the nuclear option that will have repercussions in ill will and morale. Having the intimidating presence of security may be almost as bad, but “in some extreme cases,” says Reich, the presence of security might be justified.

That was true at a meeting attended by attorney Michael Manzi, a partner at Smith, Gambrell & Russell. “It was a large complex and a contentious election,” he recalls. “One person had been trying to get on the board year after year. She was there with her supporters in full force. The board president alleged at the meeting – while she was talking over him – that she had threatened his and his children’s lives. Pandemonium ensued. A group of young men [affiliated with the woman] proceeded to march in front of the dais back and forth in a threatening manner.”

The management company had suspected something like this might occur. “So they had sent their largest, most imposing agent to the meeting,” Manzi says. “The building also had security.” The meeting ended without an incident. One specific piece of advice many professionals give that might help avoid arguments: try not to schedule the annual meeting while hallway/lobby renovations are being contemplated or are about to take place. “I have seen that some of the most hotly contested meetings are either right before or right after a hallway renovation or lobby renovation,” says Wurtzel of FirstService.

Hijacked Q&As

You want to give everyone a chance to speak, but you cannot let anyone hijack the meeting. There are both long-range and immediate ways of mitigating this. The first is to communicate with residents throughout the year. “Lack of information is what drives a lot of anxiety and a lot of potential animosity toward the board,” observes Wurtzel, who urges boards to communicate with residents regularly. This could mean emails or town-hall meetings during the year, or even a special meeting if there’s a big topic such as a capital improvement.

Another way to help prevent hijacking is to set clear ground rules at the start of the meeting. “Distribute an agenda when owners sign in. Managing expectations will create a sense of meeting organization,” says Wurtzel. “Then you have an order that is followed: reports by officers and, if necessary, committees; election and other voting (i.e. amendments); and close with a Q&A.” But the main purpose of the meeting is the election.

Whether by a written handout or an announcement at the start of the meeting, you should inform residents of the agenda. Manage expectations by saying there will be 15 minutes or so for general questions. Remind them, as Glatthaar phrases it, that “this is not the forum for personal attacks.” You may still get a gadfly who wants to make a speech or ask “a dizzying array of minutiae questions,” he says. “You try to convince people that this is not the time to bring up that the porter walked by a Snickers wrapper in the front planter three weeks ago. That particular example is extraordinarily real. It invariably happens. There should be a forum for homeowners to air their grievances. But the annual meeting is not the time for it.”

One way to handle long speeches is to ask the speaker, “Is there a question here?” Or you can suggest that the speaker might consider running for the board. “That quiets them down,” says Klein, the attorney, “because usually they’re not interested in putting in the time. You can also say, ‘We’re trying to get the meeting to move along, so please hold on to that thought and after the meeting come speak with the board.’ You’re not censoring them, just telling them to wait.” “You have to walk a fine balance between saying, ‘Enough already,’ without being obnoxious about it,” says Manzi, the attorney. If a board – as opposed to the managing agent – is running the meeting, its members are usually reluctant to step in and cut someone off when they’ve run overtime. Most managing agents don’t mind taking the heat, since there’s a patina of professional authority. Residents are less likely to take things personally if they come from a managing agent. If questions are raised about problems in a particular apartment, the board must explain that the purpose of the meeting is to conduct the corporation’s business. To resolve individual problems, residents should be advised to write to the managing agent. Working in the board’s favor, says Glatthaar, is the fact that most residents just want to find out what’s going on in their building. They’re not interested in someone’s pet peeves. They want to hear about the finances, plans to keep the building competitive in the marketplace, the budgetary outlook, and what happened in the prior fiscal year.

Meeting Overtime

The best way to keep a meeting from running overtime is to hold it it someplace other than your building. It’s a tradeoff: holding the annual meeting at a nearby venue costs money, and it might lessen turnout since people have to make a trek. But, says Reich, “if you’re having meeting at a local church or temple or school, there’s always an end time. That’s the benefit of meeting outside the building.” And if you can’t do that, then simply tell people the polls are closing. “Tell them that management’s going home, and the attorney has to go home. It’s unreasonable to think your professionals should be out at a meeting after 9 o’clock at night.”
Finally, as an addendum to all these problems and solutions, keep in mind you’re only human, and don’t beat yourself up if something goes wrong. “You can handle the process as well as you possibly can handle it,” Wurtzel says, “and it still can go off the rails.” n

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