Page 7 - CooperatorNews March 2022

COOPERATORNEWS.COM
COOPERATORNEWS —
MARCH 2022
7
QUESTIONS & ANSWERS
Legal
Q
A&
A Window Into the Records
Q
I live in a co-op. Last year we had
new windows installed, but the
cost was greater than we’d initial-
ly been told, due to a DOB law requiring all
apartments to have a set amount of air and
light that necessitated the use of a diff erent
type of window than originally planned.
According to the board, the change was
based on an examination of just 11 apart-
ments; it was determined that given the
results of this sample, most apartments
failed to meet the DOB standard. I’ve been
asking for the apartment numbers of those
11 apartments that were used as justifi ca-
tion for this additional cost for a number
of years, and the board refuses to give that
information to me. Is this legal?
Secondly, based on the fact that I own
stock in the co-op, am I entitled to know
the executive manager’s salary and the
amount of bonus paid to that individual
and the resident manager? Th e board
claims that there is a non-disclosure agree-
ment which prohibits them from giving me
that information. Is that possible?
—In the Dark
A
“As a shareholder in a coop-
erative, you have a right to cords. In the leading case of
review certain books and
records, but not necessarily everything you that under common law, unit owners have tion is not obligated to provide you with
are asking for,” says Stewart Wurtzel, part-
ner at New York City law fi rm Tane Water-
man & Wurtzel. “Th e right to inspect books Court held that a unit owner has a right, those are from a review of the complete
and records comes from three sources: the whether statutory or under the common shareholder list to which you are entitled,
proprietary lease, Business Corporation law, to examine monthly fi nancial reports, the board minutes, and a review of the bills
Law Sec 624, and common law. Most pro-
prietary leases provide that a shareholder ings, and appropriately redacted legal in-
has the right to review ‘books of account,’ voices. Th e Court also noted that not only prohibit disclosure of salary information
but you must check your lease to see if do the unit owners have the right to exam-
there is anything diff erent set forth therein. ine those records, but they have the right shareholders are the ones ultimately paying
Th ese leases generally do not defi ne what to make electronic copies (in other words, those expenses through maintenance), but
is meant by ‘books of account’ but usually bring your phone and take pictures). While again, a review of the books and accounts
encompass the records of payments made
by the cooperative and the invoices sup-
porting those payments. Business Corpo-
ration Law 624 provides that a shareholder corporate books and records must be made of the bonuses that were approved.
shall have the right to examine ‘its minutes in good faith and for a proper corporate
of the proceedings of its shareholders and purpose. Proper purposes are those rea-
record of shareholders.’ Th is is the minutes sonably related to the shareholder’s inter-
of the annual meeting of shareholders and est in the corporation. Th ey include eff orts poration to make these records available to
does not, on its face, encompass board to ascertain the fi nancial condition of the you for inspection.”
minutes.
“While the proprietary lease and the conduct, and to obtain information in aid
statute give limited rights of inspection, of legitimate litigation.
the common law gives the broadest right
to shareholders to inspect corporate re-
Pomerance
v. McGrath
, the Appellate Division held and for a proper purpose), the corpora-
a right to receive a list of unit owners and the list of the 11 aff ected apartments. How-
their contact information. In addition, the ever, you may be able to fi gure out which
building invoices, minutes of board meet-
Pomerance
was a condominium case, the might reveal the payments that were made
common law applicable to co-op disclo-
sure is identical. In any event, inspection of the minutes may refl ect the dollar amounts
cooperative, to investigate management’s
“Applying these standards to the re-
quests you made (and further assuming
that the requests are made in good faith
paying for that work. I am suspect of any
confi dentiality agreement which would
of employees to shareholders (aft er all,
to the executive and resident manager and
“Be aware that if the corporation con-
tinues to ignore your requests, you have
the right to go to court to compel the cor-
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