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Should Co-op Board Service Be Compulsory?

Murray Hill

Compulsory Service
Sept. 13, 2016

The problem at a 32-unit co-op in Murray Hill will resonate with many co-ops across the city: a core groups of shareholders does the heavy lifting of board service, rotating on an off the board. Now, three of the five members are burned out and quitting for good, and the co-op can’t find enough candidates to fill the vacancies. A shareholder poses an intriguing question: Can an amendment to the proprietary lease require all shareholders to serve on the board periodically or face an increase in maintenance charges?

Your co-op could enact a rule requiring all shareholders to run for a seat on the board every certain number of years or pay a fee, attorney Marc Luxemburg, a partner at Gallet Dreyer & Berkey, tells the Ask Real Estate column in the New York Times. Depending on your co-op’s governing documents, the board might be able to make this change by amending the house rules, which would require a vote by board members, or it might need to amend the proprietary lease, which could require a supermajority vote of two-thirds of the shareholders.

How about paying board members? Most bylaws prohibit paying board members for their time, but your board could consider changing that rule to encourage engagement, Luxemburg says. Changing the bylaws also usually requires the support of a supermajority of shareholders.

In our June issue, we laid out a variety of strategies for avoiding board burnout.

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