Serve on the Board – or Pay Up

Many co-ops struggle mightily to find people willing to take on the thankless job of board service. That’s not surprising. The job comes with some to-die-for perks, including long hours, endless meetings, heavy fiduciary responsibilities, late-night phone calls from angry neighbors and, best of all, a paycheck that’s full of zeroes.

To overcome the understandable reluctance to take on such a job, some small co-ops require potential buyers to agree to serve on the board periodically as a condition for approving the apartment sale. Others take steps to avoid burnout for those who get stuck serving year after year after year. Some boards go a step further, according to the Ask Real Estate column in the New York Times. 

“While some or many owners may wish to avoid taking responsibility for what they own, ultimately they are either going to participate in the decision-making or pay for the consequences if they do not,” says attorney Marc Luxemburg, a partner at Gallet, Dreyer & Berkey.

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, Luxemburg advises. 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. 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.

The importance of sharing the responsibility of board service is particularly acute in smaller co-ops. But large or small, every co-op could solve this perennial problem by hitting shareholders where it hurts most: square in the wallet.