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Transparency & Community Governance Are Co-ops & Condos Really Democracies?

Is a condominium -- or any type of common interest community -- a democracy? Do the shareholders in a co-op have the right to access the documents and information their boards use to make decisions? Can they demand to see those documents? The answer is not a simple yes or no.


What Does the Law Say?

“‘Democracy’ is an interesting term -- particularly when it is applied to condominiums and cooperatives,” says attorney Dennis Greenstein, a partner at the New York law office of Seyfarth Shaw and the co-chair of the firm’s Condominium and Cooperative Practice Group. “Many unit owners and shareholders who have never served on the board may view some of the actions (or rumored actions) of the board with suspicion, or worse.” That’s unfortunately a reality of life in shared communities, and can make a board’s job more difficult.  

Greenstein explains that “Section 339-w of the New York State Condominium Act states in part that the board of managers ‘shall keep detailed, accurate records, in chronological order, of the receipts and expenditures arising from the operation of the property. Such records, and the vouchers authorizing the payments, shall be available for examination by the unit owners at convenient hours on weekdays. A written report summarizing such receipts and expenditures shall be rendered by the board of managers to all unit owners at least once annually.’  Accordingly, all condominium bylaws must contain language complying with the requirements of Section 339-w above.” 

Greenstein adds that “While Section 339-w is very limited in its requirements, some bylaws provide for additional specific types of documents which are available for examination by the unit owners. The bylaws also provide for unit owners to receive audited financial statements each year, which will satisfy the last sentence in Section 339-w above. Generally, unit owners or prospective purchasers of units may review those books and records of the condominium which the board permits to be reviewed.” In simple terms, documents easily obtainable by non-board association members include such things as a list of members of the association and minutes of meetings.

But what about other kinds of documents, like vendor bids for major capital projects or, for argument's sake, commitment letters for financing common area improvements in a condominium, or an underlying permanent mortgage for a co-op property? Are unit owners and shareholders entitled to examine those? 

Read More...

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