How a Bronx Co-op Board Sold Shareholders on a New Lease

Most co-op proprietary leases are boilerplate documents cobbled together during the conversion wave of the 1980s. But times have changed, and some co-op boards want their leases to reflect those changes. Easier said than done.

The board at the 65-unit co-op at 6300 Riverdale Ave. in the Bronx recently rose to the complex challenge — and persuaded the required two-thirds supermajority of shareholders to approve an ambitious four-item lease update requiring shareholders to do the following: carry apartment insurance; hold the co-op harmless for certain damage to apartments; agree to a definition of “sublease"; and grant the right of the co-op board to levy fines.

“Many shareholders will not be very quick to want to approve amendments,” says Carl Borenstein, president of Veritas Property Management, who manages the seven-story building. “For example, why would you want to give the board carte blanche to give you fines? Or if I’m looking to move to Florida and have my son move into the apartment, why would I give them the OK to tell me that this is a sublet?”

Good questions, and the board realized it needed to come up with good answers if it hoped to achieve the required supermajority to pass the four amendments. Its first task was to not overreach, while keeping things as simple as possible. “They didn’t want to put out 25 amendments and inundate people,” Borenstein says. “They said, let’s pick the most important ones.”

Rather than allowing shareholders to vote on each of the amendments separately, the board bundled them together and decided to gamble on an all-or-none vote. The gamble required an education campaign, especially on the question of fines. "It’s hard to get people to give someone else, a board in this case, the ability to impose fines," says the board's attorney, Domenick Tammaro of Smith Buss & Jacobs. "It’s human nature."

The board sent out mailings and emails explaining what the lease currently said and what the board hoped to change — and why. The board asked for questions or concerns before they held a meeting so that people had an opportunity to look at it. The board  also canvassed shareholders informally and collected proxies from people who couldn't attend the meeting.

"And at the meeting itself," Borenstein says, "they had the attorney attend so that before they put it to the vote, the attorney could address anybody’s concerns or questions."

It worked. The four-amendment package squeaked over the supermajority bar by a single percentage point. The narrow victory in this complex campaign came down to a simple realization.

“I think the convincing arguments were that you live in a community, and you want to have the power to be able to make everybody own up and be responsible for their actions,” Borenstein says. “I think it came down to how you would want to be treated and the way you’d want to act.”

In the end, the shareholders decided to make cooperation a part of their cooperative's daily life.