The Rules

As with most issues in shared interest communities, the question of who can run for the board of a co-op or condominium is spelled out in the community’s bylaws and governing documents.  

“It goes back to the governing documents,” says Danielle Halevi, an associate with Moritt Hock & Hamroff, a law firm located in Manhattan. “It’s all about what the bylaws say.”  Halevi goes on to explain that “The power to change bylaws is given to both the board and the shareholders/owners through the governing documents.” The rules are the rules, and if the board or residents want to change those rules, they have to do it through the proper channels and according to the specific guidelines set out in their community’s governing documents.

This raises an important question: does a sitting board with the power to nominate members for election also have the right to exclude certain shareholders or unit owners from board service? And if so, under what circumstances?

A Case in Point

A recently decided case illustrating this issue is McCardle v. Edgewater Park Owners Cooperative, Inc., Index No. 810194/2024E (Bronx Co. Sup. Ct. May 14, 2025)

Halevi explains: “The case involves a large bungalow community in the northeast Bronx organized as a cooperative. The co-op owns a building on the grounds used for community events, part of which is leased to the Edgewater Athletic Association (EAA). The EAA is an organization that many of the co-op’s shareholders belong to, but which in recent years has become embroiled in disputes with the co-op board over complaints about excessive partying and other issues.

“Ahead of last year’s annual meeting, several shareholders who were also members of or otherwise affiliated with the EAA submitted applications to run against the incumbent members of the co-op’s board of directors Those four shareholders’ applications were rejected on several bases—including what the current co-op board alleged to be ‘conflicts of interest’ due to their affiliations with the EAA.”

“The co-op’s bylaws set forth two requirements for board candidacy: (1) the candidate must be a stockholder of the co-op corporation and (2) an occupant of one of the co-op’s bungalows. Notably, however, the bylaws lack any requirements addressing purported conflicts of interest or financial arrearages, much less anything addressing affiliations with the EAA. Moreover, the board accepted the candidacy of a different shareholder similarly affiliated with the EAA, seemingly ignoring their own self-imposed—yet unwritten—rules.

The excluded candidates sued, and, notes Halevi, “The court held that the board’s decision to reject the four shareholders’ applications was ultra vires (e.g., beyond its legal power or authority), and therefore not protected by the Business Judgment Rule. As the court put it, ‘The structure contemplated by the bylaws assumes that the shareholders, not the board, serve as the final arbiters of who may hold elective office. Concerns about conflicts of interest, dual loyalties, or ethical lapses can and should be aired at the shareholders’ meeting prior to voting. The board’s exclusion of these candidates amounted to an improper preemptive veto by the board based on political or institutional disagreement.’”

What the Decision Means in the Real World

What’s important in this case, notes Halevi, “is that the decision emphasizes that the board was trying to decide which shareholders were or weren’t eligible to run.  The court ultimately said the bylaws set certain conditions and that the current board was creating their own rules. The main takeaway is that if a board wants to have specific qualifications as to who can run for the board, those qualifications have to be written into the bylaws. If those conditions aren’t there, you’d have to amend the governing documents.”

And how does that affect the day-to-day operations of other buildings? Stated simply, this case applies more broadly than just to itself; the holding isn’t limited to eligibility or qualifications to the board of directors, but rather to all requirements in the bylaws. If a new rule does not reflect what is in the bylaws of a given community, there would have to be a formal review of the proposed new rule through the amendment provision in the bylaws—boards can’t just declare a new rule to be in effect without going through the proper procedure spelled out in their own governing documents for doing so. 

And perhaps most importantly, adds Halevi, “If you’re going to set a rule or requirement, it must be applied evenly across the community. In this case, they were applying an unwritten rule, unevenly, to only some of the shareholders running.” The moral of the story is that in order to avoid litigation, acrimony, and all the other negatives downstream from that, boards must operate by the book, fairly, equitably, and transparently.