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What Happens When a Super Buys an Apartment and Gains Control of a Board?

Bill Morris in Board Operations on August 6, 2013

Freeport, Jackson Heights, New York City

Aug. 6, 2013

"It played out horribly," remembers the co-op's managing agent, Steve Greenbaum, director of property management at Mark Greenberg Real Estate. "He had his own faction that had its own agenda — catering to investors, not residents. Everything that could go wrong went wrong. The landscaper he recommended was horrific. Some repairs got done, others didn't. As a managing agent, how do you discipline an employee who's also your client?"

The experience, and several similarly grim ones, has driven Greenbaum to give a piece of advice to all the co-op and condo boards with which he works: "Don't let your staff buy apartments. If you do, stipulate that they can't run for the board."

The Sweet Buy-and-Buy

Don't let staff buy apartments.

If you do, stipulate that

they can't run for the board.

Abbey Goldstein, a partner in the law firm of Goldstein & Greenlaw, agrees. "A person shouldn't be both employer and employee," he says. "Mixing the two roles is untenable. I can't say it's illegal, but it's an abuse [because] he's judge, jury and executioner. He does favors and builds up a lot of loyalty. I've seen supers become owners of one or many units, collect all the proxies and eventually control the board. You can get rid of him in his capacity as super, but he still lives in the building and he may be a bitter individual who can cause problems. The conflict is quite obvious."

Tara Snow, a partner in the law firm of Novitt, Sahr & Snow, which represents some 50 co-ops and condos in the city, agrees with Greenbaum and Goldstein that allowing staffers to buy apartments and serve on boards is a "horrific" idea. She adds that boards need to remember that it's unwise to underestimate the importance of a staffer's popularity. This came home at a co-op Snow represents in Jackson Heights, Queens. The board terminated the super's contract shortly before an annual meeting — and promptly got blindsided.

"We thought nothing of it," Snow says. "We went to the annual meeting — and it was full of irate shareholders who felt they should have been consulted. They loved their super. We explained to the shareholders that the board makes these kinds of decisions. It's not for the shareholders to decide. But people were very, very unhappy." 

Which brings us back to the desirability of sticking with the professional over the popular. When dealing with staff, boards should remember those famous words: It's not personal; it's strictly business.


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