Seth Sahr, Partner, Novitt, Sahr & Snow

At the annual meeting, co-op and condo residents rarely vote for president, vice president, or treasurer. It’s not apathy. It’s the offering plan. Most state that the owners are voting people onto the board as directors (in a co-op) and managers (in a condo). When the shareholder meeting is done, the board would convene and by a plurality of the vote decide on the officers.

It is very important for the governance of co-ops and condos to know who the officers are because they play an important role in the life of a cooperative or a condominium. And a lot of people don't necessarily know the officers. The board typically consists of seven to nine people, and there are usually four officers.

This is important because the officer positions can carry great responsibility and great authority. An example: in a typical building's bylaws, the president of the corporation has managerial control or managerial authority to run the corporation subject to the control of the board.

Typically, when important matters come up the board would meet – say, if a contract needs to be signed or decided on. But the president has the authority to sign on behalf of the co-op and to bind it legally. Boards don't meet every night, and sometimes they don't meet more than once a month, and, sometimes they might meet every three months. In between those board meetings, the president has the authority to essentially make decisions on behalf of the co-op cooperation and bind the corporation. Now there can be a lot of discussion about what would happen if the president was doing something that the other board members didn't like. That's why it's important who's the president.

Another example is secretary. Some people think that's not an important position, but it is. The secretary maintains and keeps the minutes and, in many plans, is responsible for sending out notices. Here’s an example of what could go wrong if you don’t understand your role. The secretary, for instance, could be served by shareholders with a notice to call a special meeting. Maybe it's a special meeting to remove a board member. The board may want to analyze that petition. However, if the secretary receives the notice, he or she may have the authority under the bylaws to say, “I received this and I'm responsible to send out notices.” And the next thing you know, notices are all around the building for a special meeting and the board hasn't even been consulted on it.

In theory, if you don't elect those officers immediately after an annual shareholder meeting, the bylaws state that the prior officers would continue in power until they're removed, or their successor has been appointed, or they've resigned. So in theory you could have people who aren't on the board acting as officers of the corporation.

People do not realize who can be an officer who can be a board member. Every bylaw is a little bit different. A lot of them are similar throughout the city, but they have nuances and you need to read yours because what applies to one building may not apply to another. The officers of the corporation do not always have to be shareholders, nor do they have to necessarily be board members.

So the board could get together and tap another person in the building – someone's wife, maybe the building's accountant – as an officer. That might be permitted under the bylaws. But you have to keep an eye on that. In most instances, a court is going to uphold a contract if an officer is acting in good faith, if the officer believes that he or she is acting in the best interests of the co-op and they happen to sign a contract that the board hasn't fully reviewed. And if a contractor says that he signed in good faith, that contract will most likely be upheld by the courts.

A lot of times you're involved in your co-op and you go to the annual meetings. Political winds shift, boards change. Who's on the board this year? Who's not on the board? When they shift, it may not be just a result of a shareholder meeting. Let's say it's a result of a resignation of a board member or a board member dies and the board elects a new person. That may constitute a new political group that doesn't like what the former political group was doing. And one of the first things they should do, if that’s the case, is think about who are officers and can they be changed?