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2005 Annual Financial Statement STILL not in.Apr 18, 2007


I have purchased a co-op approx. a year ago in a building where the units are still around 50% Sponsor owned, but the board supposedly is in control, and we are going through numerous issues of which not having the ANNUAL FINANCIAL STATEMENT FOR 2005 is the biggest.It is now 4/18/07. Many shareholders have been trying to refinance and SELL their unit, but without this financial statement have been unable to do so, also resulting in more than a couple contracts of sale being terminated. The official excuse was that our accountant fell asleep (he is a one man show) and they fired him and have engaged a large firm which is now working on them diligently. I believe this action was just taken in January, and half of our board is new and inexperienced. As shareholders we KNOW that they are now in the works and should be done soon, but being only one of MANY issues that we feel have been handled incorrectly, I guess we are all wondering who is really at blame here, so we do not misdirect our anger. Is it LEGAL to not have a financial statment in so long? how do we make sure this doesn't happen again? Is the Co-op as a whole liable to the shareholder for sales that have been voided and their costs? Everyone has been playing a blame game here, how long should the board have waited to fire the accountant? 3 months? 6 months? a year?? I mean we still don't have financials from 2005!!!, Is the board at fault? Should the management co. be at fault?? they have represented the building for years, even for the Sponsor, should they be fired??? I would like to know the thoughts of other's who have a more experienced and educated take on this. without this statement, the mgt.co. has stated there is no reason for a meeting, so none of us have been able to display our anger, or even come together to propose changes. I put in a request for a list of Shareholders with the mtg co. who said they would not comply, speak to the Board Pres., who never responded to my request,and 6 months later am still waiting on that.
any comments appreciated.

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You've answered your own question. - C/CS Apr 18, 2007


Should you fire the agent because the financial statement wasn't done? Nope...not something the agent controls.

Should you fire the agent because you were denied a shareholder list? Nope...that's the board's call.

You should fire the agent, after you've put a competent board in place, for arguing that there's no point in having a shareholder meeting without financials. Obviously, you have much to discuss & work out.

You're doubtless required to have a timely annual statement. Since that's in the works, I suggest you focus on the future. Keep in mind that it's the board president that calls a meeting, not the agent. Put pressure there.

However, you state that half your board is new...that implies an election, which implies a meeting. Was that before you purchased?

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Firing the Agent. - Jeanne Apr 19, 2007


It is the responsibility of the Agent to procure the material for the financials to the accountant. Therefore he does control the statement.

Since the agent sends out all the monthly billings he/she
has the necessary shareholders list to supply.

It is necessary to have financials for annual general meeting therefore the agent should see that they are available to the board. Putting pressure on a board president to hold a meeting is just waste of effort if the financials are not available on time.

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No...the board is responsible. - C/CS Apr 19, 2007


I respectfully disagree.

My main point was that in this situation, shareholders need & deserve a forum at which they can ask questions & learn why they've been so poorly served. If the financials aren't available by the meeting, the main agenda items should be what went wrong, when it will be fixed, & what's being done to prevent a recurrence.

Both the accountant & agent report directly to the board. If either or both haven't performed, the board is responsible for taking corrective action, & for informing shareholders.

Of course the agent has a list of shareholders...but it can be released only at the board's direction.

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Board responsibility - steve w Apr 19, 2007


I agree withi C/CS: the board is responsible. The agent and accountant are employees and act at the board's instructions.

And there is, in fact, you can do if the board is in violation of its bylaws and/or proprietary lease in re the financial statement. The state attorney general's office oversees corporations (of which your co-op is one). See this page for help:
http://www.oag.state.ny.us/realestate/coop_prob.html

Note that the a.g. recommends, as have others here, that you are familiar with the requirements in your organizing documents before contacting them or hiring a lawyer.

Steve W

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Release of sharholders names.. - alicet Apr 20, 2007



This (BELOW) is from the AG's office. We recenly discovered that our manangeing agent/board had not kept an up-to-date list of shareholders -- which is one of their most basic responsibilities.
Many of your questions can be answered at this link from the AG's office

http://www.oag.state.ny.us/realestate/coop_prob.html

THE FOLLOWING IS CUT AND PASTED DIRECTLY FROM THIS SITE:

The corporation must keep minutes of shareholder meetings and correct, complete records of names and addresses of shareholders which it must make available for inspection by a shareholder or the shareholder's agent or attorney. (BCL Section 624)

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practice v. theory... - C/CS Apr 20, 2007


Yes...boards are absolutely required to provide current shareholder contact information; in practice, they often fail to comply. This is one of the most common tactics used to discourage/disarm effective opposition to incumbents.

Though the BCL is plain on this point, I've never seen an agent provide data against a board's wishes.

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2005 financials - J Apr 19, 2007


Check all your corporate documents - bylaws, articles of incorporation, occupancy agreement - It should be stated in at least one of them that you must get your financials by a certain date - It is in mine but they are always very late - the reason for this is that the board is not doing their jobs, and why are they willing not to have financials on time and of course when you do not receive financial information there is always the question of why - what are they hiding although how many people really know how to read them and you don't have the backup information - Unfortunately there is no agency to complain to which again is why anyone can and does do whatever they want - as to holding board liable that you have to check with lawyer - not necessarily the lawyer retained for the board - because it should have been his duty to make sure that you have the financials - how do you have annual meetings without financial information - not saying that what is in the financials is correct information

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Re: 2005 financials - RealtyCheck Apr 19, 2007


thank you both for your thoughts, BUT yes that is one of the problems, we have not had a shareholder meeting in the whole year I have owned (14 months now), and obviously for sometime before then, considering the last financials anyone has for the building is 2004
and yes potential buyers into the building having to wait 2 months for 2005's financials that are already over a year late does make them and ME wonder what is wrong with the financial condition of the building.( if they are not among the 2 that voided their purchase contract's)
On top of the fact that we were just handed a 10% maintenance increase to meet our budget (the boiler and a steam pipe burst this winter) ALTHOUGH, they wasted our reserve money this past Fall to totally redo our backyard (very ill-advisedly, and with out, as we now see, the assistance of a much needed design professional) that only a few children utilize. depleting our reserve to not be ready for these emergency's we have encountered, now resulting in a maintenance increase.
on top of the fact that our building is badly maintained
Porter and Super half of the time MIA
I apologize for using this forum just to complain at this point, but I am extremely frustrated with my new "home"

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No annual meeting - steve w Apr 19, 2007


No annual meeting in 14 months? That's a sign that there is something wrong -- maybe no more serious than inexperienced board members. But it is violation of your by-laws (right? be sure to check them) and, therefore, in violation of New York State corporation law. Did you check the attorney general's site I posted earlier? Please do.

It sounds as though your co-op needs some serious fixes, but you're taking the first steps now to make those fixes. Talk to the other shareholders, find out how they feel, find out who you would like to serve on the board with, and then fan out to campaign.

When the others ask, "When's the election?" and you say "At the annual meeting," you'll get to explain the current board's mismanagement. It shouldn't be tough to coalesce support for a new board.

Good luck.

Steve W

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