The smooth operation of a New York City cooperative or condominium requires the oversight of a qualified board of directors or managers. Bylaws, in large part, provide the legal authority the board members use to make decisions that guide the future of the building, manage its finances and select its board members.
Review the critical components that should appear in board bylaws.
Meeting and voting requirements
Both co-op and condo owners have ownership interest in the buildings in which they reside and have the right to elect individuals to the board of directors/managers. The bylaws must outline the process for holding annual meetings as well as special meetings.
The bylaws also establish the voting power of each owner, indicate how many owners must be present to hold a vote and pass a motion, and how many directors/managers will be elected at each meeting. If a Cooperative has cumulative voting to elect board members, that right must be set forth in the corporation’s certificate of incorporation.
Director qualifications and terms
The bylaws list the required qualifications for members of the board of directors/managers. They may set forth whether the director/member must be a resident or shareholder and will establish how long the board members serve. Since many owners are now putting their co-ops or condos into trusts for estate planning purposes, it is possible the by-laws may need to be amended to allow the resident or the trustee to run for the board. The by-laws will also set forth the grounds and process for removing a board member or how vacancies should be filled between elections.
Board authority
The by-laws will set forth the limits of the Board’s authority and powers. Condominium by-laws will often contain a restriction on the board’s authority to borrow money or how much they may spend on improvements without unit owner approval. The by-laws will often set forth the board’s ability to assert liens, unpaid common charges or maintenance. The obligation and extent of the Cooperative’s or Condominium’s obligation to indemnify its directors is also set forth in the by-laws.
As is evident, the by-laws are a crucially important document in running the cooperative or condominium. Many building by-laws are decades old and have not kept up with statutory or case law changes. They should be reviewed by experienced attorneys like those at Tane Waterman & Wurtzel, P.C. to determine whether amendments are appropriate or whether the Board has the power to do what it seeks to do.