Lisa Prevost in Board Operations on June 3, 2016
Since Marissa Mack moved into the co-op at 325-327 Pleasant Avenue in East Harlem in 2010, she has served on the board all but one year. Many of the shareholders in the 16-unit co-op are elderly, so Mack, 36, has provided a much-needed burst of energy.
But as dedicated as Mack is to the co-op’s well-being, she’s beginning to feel overburdened. She says the board is caught in a dilemma: “We just don’t have a big pool of shareholders to pick from. But our current board is kind of burnt out.”
“It’s a big problem,” says Ralph Westerhoff, the chief executive of BrickWork Management, which specializes in small co-ops and condos. “In many cases, you’re lucky if you get enough people to serve to fill all the slots on the board.”
Burnout occurs more often than you might suspect. “We have this problem in all small and even medium-sized buildings,” says Martin S. Kera, president of Bren Management. “There aren’t enough people with time and interest. If you’re lucky, you might have one person to carry the ball in the building.”
Buildings often end up relying heavily on the managing agent. “It’s not a great situation because you’re turning over control to the managing agent,” Kera says, “but the building wouldn’t function if we didn’t do it. There’s nobody making decisions.”
Some buildings have tried to deal with the problem by mandating board service for all buyers. But that can backfire, warns Patricia Kantor, a lawyer with Mintz, Levin, Cohn, Ferris, Glovsky & Popeo. “You’re taking on potential liability and fiduciary obligations,” she says. “Do you really want people who aren’t interested in being on the board doing that?”
Setting term limits for board members is a way of staving off burnout, but it may be the wrong approach if there aren’t enough candidates available to step in. Smaller co-ops commonly have board presidents who have been serving for many years, notes Kera. “They get accused of being dictators by some dissident voices, but it seems to me that the small buildings run best with a dictator,” he says. “They make decisions and get [things] done.”
Smaller co-ops can take other steps to avoid board burnout. Here are some strategies:
Don’t meet every month
Unless the building is in a crisis of some sort, meeting every single month is overkill, says Westerhoff. In his experience, a quarterly meeting is usually sufficient. If monthly meetings are required under the bylaws, the board will have to vote to change that requirement.
New York State law allows for virtual board meetings, Westerhoff says. The board just needs to enter into the house rules a formal section on electronic and virtual meetings and how they are to be conducted. Attorney Howard Schechter, a partner at Schechter & Brucker, a well-known specialist in New York State co-op law, says that there are only two permissible ways meetings that are not in-person can be held: by a conference call at which some or all of the directors participate by technology that allows everyone to hear what everyone else says; or by unanimous written consent, which can be accomplished through e-mails in accordance with established procedures. New York State law does not permit a vote by e-mail.
According to Stuart Saft, president of the Council of New York Cooperatives & Condominiums and a partner at the law firm of Holland & Knight, a board meeting conducted via e-mail is not valid. The New York Business Corporation Law, Section 708(c), states: "Unless otherwise restricted by the certificate of incorporation or the bylaws, any one or more members of the board or any committee thereof may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting."
Set up committees
Get other residents involved in building business by asking them to serve on a committee that might be of interest. Committees can relieve the burden on the board, while also training people for future board service.
Allow property managers on the board
Some bylaws require board members to be either shareholders or the spouse of a shareholder. Kantor knows of one building that amended its bylaws to remove that requirement – then filled a board seat with their property manager.
However, that approach could set up potential conflicts of interest, says Ken Jacobs, a partner at Smith, Buss & Jacobs, a law firm. “The managing agent would have to be very careful about recusing himself in votes that might affect his position, and in distinguishing what benefits him from what benefits the co-op,” Jacobs says. He would rather see fewer board members, or the involvement of the property manager only when needed to break a tie.
Stagger the terms of board members
Having to run for re-election every year only adds to the burden on board members. Jacobs suggests establishing three-year terms for each seat, and rotating them so that each year, a different seat is up for re-election.
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