Ann Farmer in Board Operations on June 6, 2019
Most attorneys are not known for being cute. But Bruce Cholst, a shareholder at Anderson Kill, is not most attorneys. “I was trying to be cute,” Cholst recalls of his unorthodox idea to entice shareholders to attend a co-op’s annual meeting several years ago. “I suggested having a raffle of two or three months’ free maintenance.” To be eligible for the prize, shareholders had to vote in the annual board election either in person or by proxy. “As the idea rolled off my tongue,” Cholst continues, “I thought it wasn’t so flippant at all. It just might work. And it did work – and it’s perfectly legitimate.”
Enticements, in fact, have grown ever more common among co-op and condo boards that have difficulty drawing a quorum for their all-important annual meeting – when shareholders or unit-owners vote for next year’s board.
What constitutes a quorum is determined by the bylaws. Most co-op bylaws mandate that holders of 50 percent or more of the shares must be present, or accounted for by proxy. (Some co-ops have a one apartment-one vote rule.) Unless otherwise specified, most condo bylaws state that holders of 50 percent or more of the common interest must be present, or accounted for by proxy. Without a quorum, the same board rolls over, sometimes for decades.
A couple of months of free maintenance might succeed at attracting a quorum, but some boards have been known to exhibit a bit more flair. Steve Greenbaum, the director of property management at Charles H. Greenthal, has seen boards attract attendees with lavish catered meals and raffle prizes, including a flat-screen TV, a Kindle, and a $200 gift certificate. “Those worked pretty well,” he says.
Alvin Wasserman, director of asset management at Fairfield Properties, says one of his properties holds a cocktail party afterward. Another particularly zealous board wanted to waive a month of maintenance for everyone who showed up, an idea nixed by their accountant as unaffordable. “They offered coffee and cake instead,” Wasserman says.
Attorney Jim Glatthaar, a partner at Bleakley Platt, says one of his co-ops recently treated attendees to gourmet burgers and fries fashioned onsite by a food truck operation. Another takes a more refined approach, engaging prized speakers, including the mayor and a city historian.
Why people don’t show up can range from child-care complications to apathy. “People buy a co-op or condominium because they want someone else to take care of everything,” says Wasserman. But add some controversy to the mix and attitudes change. Two sure-fire draws are a proposed lobby make-over and a proposed increase in monthly maintenance or common charges.
“If there is no pressing issue,” says Wasserman, “no hot debate over whether or not to lease ground-floor commercial space to a restaurant or to increase the cost of parking, there is oftentimes not enough of a galvanizing issue to force people to come out.”
Greenbaum says the threat of a $50 administrative fee drove up attendance and proxies in one instance. In a more cunning ploy, a board issued a letter ahead of time stating that a maintenance increase would be discussed. It wasn’t true, but there was a quorum. “Look,” says Greenbaum, explaining the board’s thinking behind such a ploy, “it costs a lot of money and takes a lot of time and energy to set up an annual meeting.”
As another option, residents of co-ops and condos can amend their bylaws to lower the quorum threshold. In co-ops it can be as low as one-third of the shares, while the Condominium Act does not establish a minimum for condos.
There’s a rub to this approach, however. “To lower the quorum,” Greenbaum notes, “you need the approval of a super-majority of residents to change the bylaws.” And then you’re back where you started – trying to get out the vote.
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