Ron Egatz in Board Operations on April 11, 2017
When a co-op or condo board stages its annual meeting, the most pressing question is: do we have a quorum? Without one, no official business can take place – no new members elected, no votes on flip taxes, no alterations to the governing documents. No quorum means no meeting.
Of course a 100-percent turnout of residents is the gold standard for annual meetings, but the historical record does not indicate that this has ever happened. As a result, boards have tried various techniques to attain a quorum. Attorney James W. Glatthaar, a partner at Bleakley Platt & Schmidt, recalls some of his clients using enticements. One raffled off a big-screen television. Others used food. Some boards have announced an impending maintenance increase or lobby renovation – two of the more controversial issues a board can tackle – only to take those items off the agenda when a large turnout of irate residents showed up at the gathering. It might qualify as bait-and-switch, but it’s perfectly legal and it achieved the goal of reaching the elusive quorum.
But changing times call for changing techniques, and some boards are using tools more sophisticated than big-screen TVs to achieve a quorum. Some are changing the numbers. One Tribeca condominium has it written into its bylaws that if the building cannot reach a 51-percent resident quorum, the board may wait a required period, then try for a 33-percent quorum, and then, failing that, wait a required period and go for a 25-percent quorum.
“There is typically nothing in the bylaws that provides for a set period of time to pass between meetings,” observes attorney Richard Herzbach, a partner at Certilman Balin Adler & Hyman, who uses this method. “But, typically, the notice provision in the documents requires a minimum of 10 days’ notice before the scheduling of the next attempt to achieve a quorum.”
“A building I work with has done this,” says attorney Deborah Koplovitz, a shareholder in the firm Anderson Kill. “The developer drafted into their bylaws a clause that says [if they don’t get the minimum required for a quorum] they can lower their numbers and reschedule another attempt to achieve a quorum. If you’re lucky enough to be in a condo like that, you just don’t have to worry about it. You can have your meetings and conduct your business.”
It may sound even worse than bait-and-switch – an end-run around the democratic spirit of quorum rules. But boards need to face reality: if shareholders and unit-owners lack interest in the running of their building, the board still has a corporation to run. This is one of those Machiavellian cases where the end justifies the means.
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