You just said that they can be amended by a 2/3 share vote OR 2/3 vote of the board (excluding board compensation) so yes, it appears that they can be unless there are other by-laws, such as board compensation that you mention, and to prevent the board from amending without share vote.
If your by-laws allow for the board to amend by-laws, then they have the authority to do so including establishing fines for violating house rules.

There is nothing wrong with them amending the property lease if it is in the best interest of the co-op, i.e. protects the co-op and for example, by adding a clause identifying that "house rules must be observed and any violation are subject to fines". A clause such as this ensures that the person signing prop lease is fully aware of their responsibility to abide by the house rules and consequences. It protects your co-op.

Somewhat surprisingly, our attorney told us that the board cannot vote to impose monetary fines, whether by altering the by-laws or otherwise. Such a fine would be considered a material term of the proprietary lease, and most leases can only be modified by a supermajority vote of shareholders (2/3 of shares, in most cases).

Your proprietary lease may be atypical - and you should check - but it would be very unusual for the board to have the power to amend the lease in any way. And they certainly can't vote to give themselves a power they don't have! The by-laws, however, can typically be amended by the board alone, but not if the changes exceed the scope of the board's authority. "All shareholders must paint their apartments entirely in purple."

Your lawyer is right and wrong at the same time.

House rules such as a late fine for not paying maint on time etc the average owner does not know in a court of law you cant enforce it. We charge them, put them on the bill and folks pay them.

It is time consuming to do a 2/3rds vote and then to update your by-laws require legal fees and a trip to Albany. Meanwhile 90% of time it is not necessary.

Your lawyer is spliting hairs. You can set up"house rules" the question of whether legally you can enforce them is a different matter.

CondoGuy1, you're right that a board might get away with instituting a fine that can't be legally enforced. The board might even get shareholders to pay fines that they aren't obligated to pay. But it looks really bad if the board gets caught exceeding their authority, especially if they *knew* they had no right to impose those fines. And even if the fines were enacted with the belief that they were okay, it's still pretty embarrassing if the truth comes to light.

There have been numerous cases where boards passed seemingly reasonable fines in good faith, and had to back down when they were challenged. This doesn't instill confidence in the board, and undermines shareholders' perceptions of the fairness and competence of the board.

A postscript to my own posting -

I do agree that token fines for objectively clear misdeeds aren't going to raise many hackles in practice. No one really objects to a small late fee for an overdue maintenance payment, for example, especially since the board *is* entitled to interest in that case.

The problem is imposing larger fines, or enacting fines for more problematic areas such as violations of house rules. Someone who's a big enough jerk to regularly violate house rules isn't going to fork over a fine without a fight. And unfortunately, they'll win the argument about the fine, possibly undermining the board's legitimate argument about the house rule in the process.

OP here.
I'm familiar with the North Broadway Estates decision holding that a Board may not amend House Rules to create fines. But, have other courts reached the same decision? Did this rule survive Levandusky?

Also -- In my case, the Board would not be using its authority to amend the House Rules, but the authority to amend the By-Laws. It's one thing to say that a Board's authorization to amend House Rules is not sufficient to allow the Board to impose fines. But the By-Laws are one of the core governing documents. If the Board is given the authority to amend it, why can't it exercise that authority under the BJR to impose reasonable fines?

No, Levandusky doesn't give the board the authority to impose fines. One of the prongs of Levandusky is that the Business Judgment Rule (BJR) only protects the board's actions if they are acting within the scope of their authority. They can't create new powers they don't have.

It's true that the by-laws are a core governing document, but they don't trump the lease. A board's inability to impose monetary fines is a special case of a larger issue: the board can't change any material term of the Proprietary Lease. That can only be done by shareholder vote, in the case of most leases.

We have an inefficient, and ethically questionable President and Secretary of the Board already for 15 years; The Board is making constantly wrong decisions and doesn't like to be questioned. I am highly surprised reading all your comments, how most of the shareholders have access to some information that in our Building we do not even heard about. For example "Contracts", once my husband who is an attorney asked in one of the annual meetings about a specific contract which was a disaster, and the President said "me" my husband asked: "did you read it? his answer was: "no" and there are so many examples. Eventually, there are some of us that want to do something to change this situation. Do you have any suggestion?

You say you've hired a lawyer, and that person should be your guide on this. That said, here are a few comments from a non-lawyer:

* How the co-op was advertised at the time of purchase isn't relevant now. Any argument you have there would be between you and the long-departed seller. It is very unlikely you could pursue any action against the seller after 17 years.

* The offering plan should have the definitive answer on exclusive rights to the roof deck. It's possible that your board is right and the language is vague. This is very much a question for your attorney and has no fixed answer. But if you can show that the offering plan really does give you exclusive rights to the roof deck, it would be hard for the board to mount a reasonable argument against that.

* Increasing the shares is the most eyebrow-raising part. This sounds like the board has decided the offering plan really does give you exclusive use of the deck, and they want some compensation for that. But unless you have an unusual proprietary lease - or have actually signed some sort of agreement after the initial purchase saying that you accept the additional shares - this seems unlikely to hold up. If your co-op uses the template common to many 1980s conversions, check paragraph 6, "Changes in Terms and Conditions of Proprietary Leases." Ours has this phrase: "The proportionate share of rent or cash requirements payable by any lessee may not be increased ... without his express consent."

Again, you need to talk to your lawyer about these points. Make sure you have an attorney who is conversant with the intricacies of co-op law. Your general-purpose family lawyer may be excellent, but would be the wrong person to handle this for you.

I agree completely with Carl's advice and observations. Check your offering plan to see if the roof deck is included in the schematic of your unit.

Something you might research is a set of statutes called "adverse possession". Adverse possession basically states that if you've been using property that doesn't belong to you "open and notoriously" (meaning that you didn't try to hide your use), after 10 years the property is yours. In NYS most laws regarding real property at taken to include co-op ownership as well.

I am also not a lawyer, so I don't have any idea of adverse possession applies in your case, but it would be interesting to look into.

Couple of questions to clarify:

-You are paying $725 - is that more or the same as other units your size?
-Do other units of the same size (same maintenance fee) have a balcony or an outdoor space that they have exclusive right to?

Oh boy. That's all I can really say. Our 12 unit co-op took the legal route and ended up in several different courts with no good outcome other than emptying out our wallets. Of course, board and building did try everything under the sun prior to seeking legal route. In our case shareholder did not not abide by the "carpet rule", noise was terrifying, police were called, child services was called - all to no avail. Shareholder was in violation of other house rules as well, denying everything. Shareholder was also a lawyer and began several negative campaigns in and out of court, personally going after board members, even going on fox news Long story short, the whole affair left the building a mess.
I was left with the feeling that there really isn't much a Board can do when someone violates house rules or other tenant to tenant issues. That's unfortunate.
Our building did revise our PL and House rules giving Board more power to enforce and possibly use penalities. But, it boils down to people behaving neighborly, respectfully and taking ownership when in violation.
Sorry, it this wasn't much help.

I would simply prepare a letter from the board to the reported violating unit advising them that you have received a reported noise nuisance complaint with the reported sounds of what appears to be furniture being moved or dragged and large items dropped on the floor in the late evening/early morning hours. Then just cite your house rules that apply for noise, end the letter by asking them to contact you if they have any concerns and see if they respond. Advise the complainant that a letter has been sent to the unit.

You could send a letter to units beside the unit making the noise and across from them advising them that board has received complaints regarding noise nuisance from unit XX and that it would be helpful if they have experienced noise issues to contact the board.

If a board member lives in close proximity to the complainant and is willing, offer to come to their unit to listen first hand (providing availability). You will either hear the reported noise - or not.

I think after all these steps you will find out if there is noise, consistently or not, or you just have a "complainer" on your hands, in which case and after all these steps have been taken, advise them to report the noise to the Police directly and to advise the board accordingly.

You might consider consulting an acoustic engineer to see if any equipment could be set up to monitor and record noises in the apartment. They might also have suggestions as to the source based on their experience.

I assume that you are on the board of directors and if you are, then call your insurance company and ask if they had been in conversation with your MA regarding a sidewalk repair. If, for example, the insurance company did a site visit and the repair was recommended, then it was done in good faith and to protect you. If not, then you have a problem as the MA was either lying or made an assumption that it was an issue and acted on it. To avoid this, you should have some stipulation in your agreement regarding their limits of authority regarding expenditures and quote requirements, e.g. board requires 3.

I am not an attorney, but I would agree with your assessment. This sounds like a dicey situation, especially if a dispute should ever arise between the board and the sponsor/agent. If the sponsor still owns any shares in the co-op, it would be the same as if the board shared an attorney with the shareholder.

It should not be difficult for your board to engage its own attorney. The Council of NY Cooperatives and Condominiums can recommend attorneys who specialize in co-op law. Habitat Magazine may also have a list of co-op attorneys. If the sponsor has representatives on the board it may be more difficult to disengage, but it is something I recommend you do.

If you don't feel comfortable asking them get a neighbor to ask.
The sponsor always has a separate lawyer. Our coop, unfortunately, has gotten flawed advice from its lawyers so choose wisely.

It's only a conflict of interest if a conflict arises between the 2 parties in which case the attorney would declare it as a conflict. If you have a good working relationship with your MA, then I would not worry about it for the time being and agree with Steven and in the interim shop around. Depending on your contract with your legal, you may not even have to tell them that you have found new legal.

It is a great percentage, but what will the rate be when you need to refinance again in 10 years? Also, do you want to incur new closing costs every 10 years?

If you are considering a refi, I would strongly suggest a regular 30 year self-amortizing mortgage. The rate may be higher now, but you won't be playing rate roulette every decade. Unfortunately the time for qualifying for 30 year mortgages may be running out because the proprietary leases for most co-ops formed in the early 1980's expire in the 2050's. Banks may not be willing to risk lending if the underlying source of repayment funds (the PL) expires before the mortgage is paid off.

Check with your accountant or managing agent if they have any expertise in this regard and can advise you.

If it is a large enough savings it may well be worth the prepayment penalty.. What the rates are in ten years is irrelevant since this is amortizaion and not interest only. Can someone knowledgable reply?

Sorry - to clarify - flip taxes were instituted to capture money from the rapid flipping that often took place just after buildings converted to cooperatives due to people selling who bought at 'insider' prices. Our building missed that wave. The sponsor currently owns aprox 1/3 of the apartments and will not be paying any tax yet will benefit form regular shareholders who get drained by this fee. I understand it is highly unusual for an older coop (30 years in our case) - to institute a flip tax when we already missed rapid turn-over, have 1/3 of apt who do not have to pay and can also anticipate very few sales in the near future. The excuse is that a tax is commonplace however I think this is partially a myth if you really examine finances and I do see many apartment listings advertising NO tax as a selling point.

I disagree with the analysis. Once the initial offering plan and flips go thru, a flip tax which should be exclusively written to go directly into the reserves, can be a significant income stream especially to coops with no commercial or retail income. A small building in a high price zone can see significant returns. It should be a two stage process in that owners of less than 3-5 years should have to pay 3% to prevent flippers, and longer term shareholders 1% or 1.5%.
It's a payback from the seller to the Coop for all the years of benefit from owning there, in a well run coop with a nice appreciation in realized asset valuation I.e. profits to them. Since they are leaving, the tax is on them not the purchaser, and therefore of little concern to the purchaser, just like the sellers Agent's fee.
Doing a % based on the gross sale price keeps it nice and legal vs. Dollars and shares, which is a problem.
It's a win-win all around for remaining shareholders and new shareholders alike.
After years of highly questionable to downright ridiculous applicants, as a Board President I was disabused of any feelings of owing the seller anything. And really surprised when past Board members sponsored purchasers who would pay a high asking price because they were totally unqualified to own.
Remember the purchase price is what the seller walks away with. What you have to ascertain is after paying that price, can the prospect show financial holding and stability, income and projections to meet future demands of maintenance and possible unknown assessments.
We don't know: future oil/fuel costs, RE taxes, water or insurance costs.
Surprise, surprise - OPEC, 9/11, Hurricane Sandy, global warming impact on water, utilities, temp, oh yeah and Local Law 11 - what's that new crack in the facade all about?
We can't predict the future, so we need to make reasonably sure we are financially healthy. Reserves and shareholder capability. Flip taxes are a reasonable and legitimate small revenue stream that should never be used in calculating operation budget projections. They are a serendipitous addition to your reserves.

I disagree with the analysis. Once the initial offering plan and flips go thru, a flip tax which should be exclusively written to go directly into the reserves, can be a significant income stream especially to coops with no commercial or retail income. A small building in a high price zone can see significant returns. It should be a two stage process in that owners of less than 3-5 years should have to pay 3% to prevent flippers, and longer term shareholders 1% or 1.5%.
It's a payback from the seller to the Coop for all the years of benefit from owning there, in a well run coop with a nice appreciation in realized asset valuation I.e. profits to them. Since they are leaving, the tax is on them not the purchaser, and therefore of little concern to the purchaser, just like the sellers Agent's fee.
Doing a % based on the gross sale price keeps it nice and legal vs. Dollars and shares, which is a problem.
It's a win-win all around for remaining shareholders and new shareholders alike.
After years of highly questionable to downright ridiculous applicants, as a Board President I was disabused of any feelings of owing the seller anything. And really surprised when past Board members sponsored purchasers who would pay a high asking price because they were totally unqualified to own.
Remember the purchase price is what the seller walks away with. What you have to ascertain is after paying that price, can the prospect show financial holding and stability, income and projections to meet future demands of maintenance and possible unknown assessments.
We don't know: future oil/fuel costs, RE taxes, water or insurance costs.
Surprise, surprise - OPEC, 9/11, Hurricane Sandy, global warming impact on water, utilities, temp, oh yeah and Local Law 11 - what's that new crack in the facade all about?
We can't predict the future, so we need to make reasonably sure we are financially healthy. Reserves and shareholder capability. Flip taxes are a reasonable and legitimate small revenue stream that should never be used in calculating operation budget projections. They are a serendipitous addition to your reserves.

I disagree with the analysis. Once the initial offering plan and flips go thru, a flip tax which should be exclusively written to go directly into the reserves, can be a significant income stream especially to coops with no commercial or retail income. A small building in a high price zone can see significant returns. It should be a two stage process in that owners of less than 3-5 years should have to pay 3% to prevent flippers, and longer term shareholders 1% or 1.5%.
It's a payback from the seller to the Coop for all the years of benefit from owning there, in a well run coop with a nice appreciation in realized asset valuation I.e. profits to them. Since they are leaving, the tax is on them not the purchaser, and therefore of little concern to the purchaser, just like the sellers Agent's fee.
Doing a % based on the gross sale price keeps it nice and legal vs. Dollars and shares, which is a problem.
It's a win-win all around for remaining shareholders and new shareholders alike.
After years of highly questionable to downright ridiculous applicants, as a Board President I was disabused of any feelings of owing the seller anything. And really surprised when past Board members sponsored purchasers who would pay a high asking price because they were totally unqualified to own.
Remember the purchase price is what the seller walks away with. What you have to ascertain is after paying that price, can the prospect show financial holding and stability, income and projections to meet future demands of maintenance and possible unknown assessments.
We don't know: future oil/fuel costs, RE taxes, water or insurance costs.
Surprise, surprise - OPEC, 9/11, Hurricane Sandy, global warming impact on water, utilities, temp, oh yeah and Local Law 11 - what's that new crack in the facade all about?
We can't predict the future, so we need to make reasonably sure we are financially healthy. Reserves and shareholder capability. Flip taxes are a reasonable and legitimate small revenue stream that should never be used in calculating operation budget projections. They are a serendipitous addition to your reserves.

$280 is way too low to charge in maint. Obviously your reserve account is near zero and your have some big bills or repairs coming up. A 7 unit building has great difficulty borrowing and most likely does not have full audited financials or even a outside managing company.

You elected board to represent you. I guess they feel the need to do this. Also you should have brand new financials. Financials and tax returns for 2014 should have been due in April. They normally get mailed out or sent to owners by late May.

A lawyer is useless at this junction. I would say you need to look at the financials first and talk to the Accountant for building if you have one. Also does building have a lawyer on retainer?

Honestly, I am on a board. And as soon as an unit owner starts talking they are hiring an attorney to sue me I no longer talk or communicate with them.

at that maint of $23,800 for an entire building how is that even possible. Casualty Insurance on a small building, liability insurance, D&0 insurance, paying the CPA to do financials and mgt fee/legal fees would be 100% eaten up on a $23,800 budget with no money left for maint, repairs, heat/electricity water common areas and snow removal let alone reserving for a new roof etc.

Otherwise I cannot make sense of your posting. What sum are they trying to collect?

It's a self managed 5 years young building. We do have separate "repair fund" which we contribute to as well. $280 covers water, electricity, insurance and cleaning/snow removal. Other expenses come covered from "repair fund". The maintenance was increased to prevent me from selling the unit. I would love to know myself what sum are they trying to collect. I am eager to pay them instead of attorney. But When I asked what sum are they looking to collect the only thing I was told that the number is "catastrophic". I don't want to sue the board, but they keep me as a hostage here. Needless to say that all other unit owners are Russian family members and friends and at the meetings a lot of time they speak Russian and I have no clue what are they talking about. Any ideas on how to communicate with the board to make them release financial statements, reports and budget, tax return....and justify the increase???

why do you need to sell the unit and who are you selling unit to?

I am treasurer of a condo in NY. I dont give owners stuff like reports, budgets and tax returns. What I do give them which is required by law our the annual financials. Usually due around a month after tax return is filed. It compares current year to prior year. If you have that plus the prior two years financials it gives a buyer a four year financial history. Pretty much you can see if you are spending more every year then your are taking in for maint and if folks owe arrears.

NYS does not require a reserve study. But is this a new building. Or was it an existing building? What could happen to a building in such a short time.

Who is the accountant? I mean even small building do a compiled financials even if not audited. I mailed my financials for 2014 to my condo last week. Also who is treasurer?

BTW small condo buildings rarely do a budget.

I accepted a new position within my company in headquarters in Dallas, TX. It's a permanent job and I have moved my family there already. Nothing is holding me back in NY. Buyer is a very intelligent family with Russian background. In by-laws it says that the board "doesn't have the right of first refusal".
As much as I appreciate your input in my question I get a feeling that you agree with my "board" and their actions. How is it fair to me to be told to pay $2000 a month without a single explanation. I offered to pay my share in one installment. I offered $10k, $15k, $20K but they don't let me pay. They want the maintainance to be $2000 ( how did they come up with this exact number is a mystery) and prevent me from closing on my unit. No buyer would want to buy a small condo with no amenities and $2000 maintenance. And the building was a brand new brick construction. Built in 2010, received c/o in 2011.

The treasurer is a guy who filed 3 lawsuits in a small claims court against the board ( for about $12 total) for some defective repaires that he performed on his unit). At the time of the hearing "The President" who is a friend of course had no objections and agreed to pay him requested amount. what do you think now about my board?

Your postings contain incomplete information and/ or uninformed info.. If people could post full correct facts on this site , it would help elicit short, correct replies and advice.

Your postings do not make sense. There is something you are not telling us.
Have you paid all your bills and taxes in full?

This is a very interesting question! If you haven't already been on their website, the Real Estate Finance Bureau might be a good place to start. http://www.ag.ny.gov/bureau/real-estate-finance-bureau. It's part of the A/G's office.

Good luck!
--- Steve