Q&A: Shady Election

Q&A: Shady Election
Q I live in a condominium and we just had our annual election. Each year, new people run for the board, but the existing board members solicit proxies in order to remain on the board. As a result, five “old-timers” seem to make all the decisions on our nine-member board.

This year, the election seemed a little shady, because one of the owners received a call from our managing agent the day before the meeting to say, “if you are not coming to the meeting, send me your proxy.” During the election, board members handed in over twenty proxies, and I wonder how many of them were obtained by the managing agent.

Our proxies are not absentee ballots, but the right to vote for whatever business comes before the board. I can not understand why it is so important for these “old-timers” to be board members. It is such a thankless job. And I can not understand why our managing agent is so committed to helping them remain on the board. Do you have anysuggestions?

—Upper West Side Owner

A “Most condominium buildings follow the same procedures for holding annual meetings and elections,” says David L. Berkey, Esq. of the law firm of Gallet Dreyer & Berkey, LLP in Manhattan. “The existing board of managers either through a nominating committee or as a board usually recommends a slate of officers to run for the new board. In the absence of ‘term limits’ in the condominium bylaws, existing members of the board of managers are not prohibited from running for office in successive years. It is quite common for board members to serve on the board for many consecutive terms. That is because they believe they are doing a good job for the building, may work well together as a group, and may even enjoy the fact that they are in a position of authority, despite the hours of work required and the thankless nature of some of the work to be done.

“It is often beneficial for a condominium or a cooperative to have new ideas presented to the board for consideration by newly elected board members. If your building does not have term limits and you want to get ‘new blood’ on the board, you have to

use the political process of encouraging ‘new’ unit owners to run for the board, convincing other unit owners to vote for the new candidates and collecting proxies from those that can not attend the meeting so their votes can be cast for the new members.

“Some boards and nominating committees will send a mailing to the unit owners asking unit owners to nominate candidates for the board. If a bylaw (or voting procedure adopted by the full board) provides that nominations are to be received by a particular date and that no floor nominations will be considered at the annual meeting, then only candidates nominated by the stated date may run for office. If your building uses this procedure, be sure to nominate the ‘new’ unit owners to run as candidates for the board by the cut-off date. In the absence of a cut-off date for nominations, the unit owners should be permitted to nominate candidates for the board of managers at the annual meeting.

“The usual practice of almost all condominiums (and cooperatives) is to send a form of proxy to unit owners (or shareholders) with the notice of annual meeting. The annual meeting materials usually request that the unit owner returns the proxy to the managing agent before the meeting date so that a quorum of unit owners can be obtained for the annual meeting. Usually, at least 50 percent of the unit owners or holders of at least 50 percent of the common interest are required to be present at a meeting in person or by proxy for a quorum to be present. Unless a quorum exists, no business including elections may be conducted at the meeting and it will have to be adjourned. Therefore, it is common for a board or the managing agent to try to collect enough proxies to assure a quorum will exist at the annual meeting.

“There are two types of proxies that are usually used. One is a general proxy, where the person named as proxy may take any action that the proxy giver could have taken were he or she at the meeting in person. That gives full discretion to the holder of a general proxy to vote for whomever he or she wishes. The second type of proxy is a directed proxy. A directed proxy indicates which of the candidates running for the board should receive the proxy grantor’s vote. The holder of a directed proxy should vote for the individuals indicated by the proxy grantor. If there are other items to be acted upon at the annual meeting, such as an amendment of the bylaws, the directed proxy indicated how

the proxy holder should vote on those issues as well. Use of a directed proxy usually eliminates the concern that management is collecting proxies to assure continuation in power of the board members that pay management’s bills.

“There can be problems with directed proxies. One problem is that the proxy grantor does not know who may be nominated from the floor on the meeting date, if such nominations are allowed. The direction given to the proxy holder to vote for particular people can not include the names of people who are not nominated at the time the proxy is granted. There is also the potential for the grantor of a directed proxy to direct the holder to vote for a candidate who decides between the time the proxy is given and the time of the meeting not to run for the board. A directed proxy may not give discretion to the proxy holder to vote on new matters that arise at the meeting. So a directed proxy solves the problem of allowing the proxy holder to vote for whomever he or she pleases but may lead to other problems.

“My advice is to make your concerns known to the board and management, learn who is running for your board in advance of the annual meeting and take steps to assure yourself that your interests are being properly represented on the board. If you need a change, use the political process outlined above.”

New Management, No Minutes

In years past, unit owners were given copies of the minutes of the annual meeting. A new management company was engaged and this practice stopped. Now, when I have requested the minutes of the annual meeting, I have been told that these minutes are not given out to unit owners anymore. Additionally, I was told that I could go to the management office and “view” them. I believe that, I, a unit owner, am entitled to a copy of the minutes of the annual meeting. Every owner, I believe, should have copies of these minutes, as before. Is there a law governing this?

—Uninformed Condo Owner

“While condominiums are not specifically subject to New York’s Business Corporation Law (BCL), the BCL is often cited as a model for condominium governance,” says Andrew B. Freedland, Esq. of the Manhattan-based law firm of Rosen & Livingston. “Unlike cooperatives which are corporations specifically governed by the

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