At a typical annual meeting, co-op and condo residents elect board members but not officers. That’s not because of apathy, however. It’s because of the offering plan. Most plans state that while the owners elect candidates to the board, it’s up to the board to select its officers.
Boards typically consist of seven to nine people, and there are usually four officers: president, vice president, secretary, and treasurer. It is very important for the governance of co-ops and condos to choose these officers wisely because they play a crucial role in the lives of cooperatives or condominiums. The officers have great responsibility and great authority.
In a typical set of bylaws, for example, the president of the corporation has managerial control or authority to run the corporation in between board meetings. Typically, when important matters come up – for instance, if a contract needs to be signed – the board meets. But sometimes it doesn’t meet more than once a month. In between those meetings, the president has the authority to make binding decisions on behalf of the co-op or condo. There can be a lot of discussion if the president makes a decision that the other board members don’t like. That’s why boards must choose their presidents wisely.
Another example is the role of secretary. It’s also an important position. The secretary maintains and keeps the minutes and, in many plans, is responsible for sending out notices. Here’s an example of what could go wrong if the secretary doesn’t understand the role. The secretary could be served by shareholders with a notice to call a special meeting to remove a board member. The board may want to analyze that petition. However, if the secretary receives the notice, he or she may have the authority under the bylaws to say, “I received this, and it’s my responsibility to send out notices.” And suddenly, notices have been sent for a special meeting and the board hasn’t been consulted on it.
Political winds shift, and boards change. Who’s on the board this year? Who’s not? When they shift, it may not be just a result of a shareholder meeting. It could come about because of the resignation or death of a board member. That may constitute the beginning of a new group that doesn’t like what the former group was doing. And if that’s the case, one of the first things the members of this new group should do is to ask, “Do the officers need to be changed?”
Seth Sahr is a partner at Novitt, Sahr & Snow.