Page 12 - NY Cooperator July 2019

BUDGET & FINANCE T he board of a building or com- munity association has a fiduciary out of control. It’s the willful mismanage- duty to uphold its community’s ment and misappropriation of funds that governing documents, act in good faith, can lead to severe problems, which need and advance the interests of the commu- nity at large. Occasionally, boards fail to carry out this duty – sometimes through management or misappropriation is to mismanagement and poor decision mak- ing, and sometimes through willful dis- regard for the association’s bylaws. In the pears to be involved, contact the office of latter situation, there’s usually one unit- ing motivator: money. When a board or manager mishandles Firm in Purchase, New York. “This usual- association funds (whether they are from ly results in swift enforcement action, in- operating accounts or reserves), the neg- ative ramifications can be felt across the restitution of the misappropriated funds. entire community, impacting individual \\\[Without\\\] proof, it will be difficult to get owners’ and shareholders’ investments. the district attorney’s office interested. So it’s in everyone’s best interests to have And a civil lawsuit would be problematic, competent management and legal pros since you’d eventually have to prove your helping the board guide members along case, and will incur legal fees while trying the straight-and-narrow path. It’s also to do so.” crucial to have a robust insurance policy in place and to identify mismanagement an individual is caught engaging in before it becomes debilitating. Identify and Act Budgeting and bookkeeping mistakes as the perpetrator. For obvious reasons, are inevitable, but diligent accounting this can be tricky. “If someone commits a will usually catch them before they spiral to be rooted out. “My advice to clients faced with mis- gather proof – often via forensic account- ing – and then, if criminal conduct ap- the District Attorney,” says John J. LaGu- mina, Partner at The LaGumina Law cluding requiring the perpetrator to make There’s also the reality that even when shady business, it can fall to that person’s friends and neighbors to out him or her Facing Financial Mismanagement When Boards or Managers Are at Fault BY MIKE ODENTHAL 12 THE COOPERATOR —JULY 2019 COOPERATOR.COM Since 1958, out clients have been assured of excellence in building management. We don’t like our boards to be surprised. Good building operations, capital planning and prudent nancial guidance translate into well-run buildings. No surprises equals secure owners. At Buchbinder & Warren, we understand your apartment is not just an investment...it’s a home. Please call us to learn more about our services. One Union Square West • New York, NY 10003 212.243.6722 PLANNING www.buchbinderwarren.com ISTOCKPHOTO.COM Back-up Power that ack-up Power that SavesSaves 781.466.6400 www.tecogen.com 45 First Avenue, Waltham, MA 02451 | | HURRICAN MATTHEW 2011 MATTHEW 2011 HURRICAN HURRICANE IRENE 2011 HURRICAN MICHAEL 2018 TROPICAL STORM PHILIPPE 2017 HURRICANE FLORENCE 2018 TROPICAL STORM CINDY 2017 TROPICAL STORM BILL 2016OPICAL STORM BILL 2016 TR Resilience from the Grid B TM June marks the start of Hurricane season!