There's a lot of paperwork that's involved in running a co-op or condo building - everything from financial records to legal documents, shareholder correspondence and management statements from board meetings - and it's important that the documents are available to the board and shareholders when needed. While it's up to the managing agent to keep this material organized and secure, sometimes copies of the paperwork can also be found in the co-op office itself.
Because co-op and condo boards mostly have good relationships with their managing agents, information usually flows easily between them, and getting the proper paperwork to anyone who needs it isn't a big deal. Since board members and shareholders are both entitled to view certain documents, it's up to the management company to get the proper information to them in a timely and organized manner. Because the system works so well most of the time, most co-ops and condos don't feel the need to keep copies of the records on their premises.
"I feel that copies of sales packages, leases on any income producing space, and of course financial records should always be kept at the management office," says Sam Irlander, president of Parker Madison Partners, Inc., a management company based in Manhattan. "But I've also always recommended that our properties keep hard copies in a room somewhere on their premises. That's to protect against disorder should the building change agents."
But since there isn't always an assigned space for such documentation at a co-op or condo office, and people don't usually want to be bothered with keeping such paperwork in order, having documents and paperwork on the premises isn't that important.
"It depends on how sophisticated the people are - but then you are assuming there even is an office on the premises," says Abbey F. Goldstein of Goldstein & Greenlaw LLP, a law firm in Kew Gardens, Queens. "People who are businessmen and used to dealing with records are much more likely to want to have their own set of records kept [at the building]. I would have to say that the vast majority - other than minutes, maybe some significant invoices, or most of the key records - are not duplicated and are kept [at the management office]."
The Eyes of Information
When you're a member of a co-op or condo board, you are entitled to unfettered access when it comes to the records and documents that have to do with the building. This is a key component of the agent/board relationship.
"As a board member, each person is considered an officer of the firm, and as an officer of the corporation each one has the ability to request information from a managing agent," says Irlander. "Whether it's the president, vice president, secretary, treasurer . . . these are my bosses, so to speak. They should all have access because of what I like to call checks and balances."
"A board member has the right to all information relative to the operation of the building," adds Jeff Dupletzky of Pride Property Management in Manhattan. "They have a fiduciary obligation, and are elected to act in the best interest of the co-op - and there's no way that can occur without having full access to the documentation."
The only instance when this doesn't qualify is when there is some conflict of interest that the board member has with a particular piece of paperwork. It's also essential that board members not leak important information or talk about sensitive issues they may be privy to in the course of their tenure.
"I'm sure the board of directors would sanction to some degree a member who talked about board business outside of a boardroom or certainly would look to excuse that member from the board," says Dupletzky.
Shareholders are also entitled to see most of this same material, although they don't have 100 percent access like a board member. Just like they can view the minutes at a board meeting, they can inspect certain documents at the office of the managing agent. But it must be inspected there and not taken out. Anything that's sensitive that's required to be retained by the board would not be available to shareholders. According to Irlander, there is a difference.
"The distinction is that the managing agent is required to make available to all shareholders, at all times, information necessary for them to acquire or transfer their interest and so forth," says Irlander. "By the same token, if there are issues - friendly or non-friendly - between shareholders, all of that information can be made available to an individual who is a shareholder. All of that is available to the individual, who has the right to inspect it to some degree as it applies to their unit."
According to Goldstein, if a board member wants some information for their own personal use that has nothing to do with their role on the building's board, they would have to make an appointment the same as any other shareholder, and wouldn't get preferential treatment.
"Occasionally you'll get in a situation where somebody is divulging things that some people think should remain confidential and the board will not give out some information," says Goldstein. "That's a sticky wicket, because personally, even though it would be nice to protect someone, this is public information - unless the board is aware they are going to use the information for something detrimental, such as litigation or a conflict. I would say not to disseminate the information if there's some reason to believe it would prejudice the position of the co-op."
Usually each month managing agents will distribute a management statement containing financial records, a recapitulation of any checks that were issued, and other important information that will be available to everyone at the board meetings. These are documents that you usually can find on the premises or with a board member.
"The normal, healthy approach is to get the management statement, review it, go over it at the monthly meetings, and that fundamental information will usually be kept by the treasurer in their apartment," says Goldstein. "Keeping it on the premises is fine and in most offices you will find the basic information, but it's not under lock and key."
Of course, the information isn't always easy to understand and a good managing agent will take on the responsibility of explaining any complicated material and intricacies to the board or the shareholder.
"I certainly feel I have the responsibility to do so," says Irlander. "To be a managing agent is not a manager - to be a managing agent is to be a problem solver. Most of the board members are in the working public and have no background in real estate. Therefore, they may need to have certain things explained to them if they have not been involved in them before."
"People may not want to know," adds Goldstein, "but a well-conducted board meeting will include the managing agent going over the managing statement and explaining what expenses were paid, what they anticipate for the next month and this sort of stuff. We explain everything. Whatever details the board member wants, the better."
One case for keeping copies of important documents in the building as well as at the management office is that it eases the transition from one management company to another, should the building decide to switch. Although most agents will comply with turning over all the documentation to a new agent, distributing that paperwork in a timely and organized manner isn't always as simple as it sounds.
"Let's assume the management [company's contract] runs out December 31st, and the new agent is going to start managing the building January 1st. They'd have to get the rent rolls in advance," says Dupletzky. "With professional companies there's not too much bitterness, and they generally will give the information over promptly, and it all runs pretty smoothly. But they're usually in no rush and will often take their time, which can create a lot of difficulty, especially when it comes to financial statements."
Having copies of all the pertinent documents on-site at the building isn't always a sure-fire guarantee against chaos, however; other problems can arise as well, and if the building changes agents, all the accumulated information shouldn't go by the wayside. A member of a board has a responsibility to stay informed and it's up to them how much information they want to get and retain in their private records.
"One of the problems you most always have is that they will give you boxes of stuff with a receipt for everything but it's rare that a new managing agent will go through the boxes to make sure things are there," Goldstein explains. "Four months later, they go through them and things are missing. It's always a nuisance, but it doesn't have to be a crisis."