The governing documents of a cooperative, condominium, or homeowners association spell out the rules, regulations, and administrative policies that all residents and board members alike are obligated to follow as a condition of their residence. There are three main documents in this category: the bylaws, which contain provisions for directorship, voting, transfers, fees, and so forth; the proprietary lease (or declaration, in the case of a condo or HOA), which describes the rights and responsibilities of shareholders or unit owners, as well as of the corporation or association; and the house rules, which are usually a subsection of the proprietary lease or declaration, and spell out the day-to-day rules for safe and harmonious multifamily habitation.
CooperatorNews spoke to several attorneys specializing in co-op and condo law to get their take on how often these documents should be revisited and revised, what the procedures are for making revisions, and common mistakes for boards to avoid when giving their governing documents an overhaul.
When There’s No Map
Dean M. Roberts, Esq. chairs the Real Estate & Finance Law Practice Group at the Manhattan offices of law firm Norris McLaughlin, P.A. (the firm also practices in New Jersey and Pennsylvania). He reveals that bylaws are sometimes drafted with no amendment provisions whatsoever, leaving boards “in this legal void on what the procedure is for amending [them].”
In such cases, the first step is to come up with language that makes sense for the particular residents and board of the community in question. For co-ops, where a shareholder vote is usually required to make any bylaw changes, says Roberts, “You have to come up with what you think is the right quorum—is it half? Is it a simple majority of the shareholders? Is it two-thirds? Or is it bifurcated,” which means having a different quorum requirement for specific topics, such as changing the flip tax.
Even if your documents have an amendment procedure baked right in, the process can sometimes be challenging to put into practice. “Many proprietary leases have very high quorums, too,” continues Roberts. “Some require 100% of the shareholders [to vote], which can get really ridiculous and make it technically impossible to amend them.”
Such conundrums are more apt to come up in communities with a larger proportion of recent buyers, who may be less engaged than longer-term residents, and who may not know the issues (or show up to meetings to familiarize themselves with them). “People were more involved, frankly, with their co-ops back in the 1960s,” because the wave of rental-to-co-op conversions starting in that era required a lot of hands-on, grassroots resident engagement, says Roberts. Whereas now, he notes that “oftentimes people just don’t feel that there is a need [to get more deeply involved]. They think, ‘The other people will come—so I don’t need to go to the meeting.’”
So how do you override that apathy and get enough people to show up to a meeting to vote on a bylaw change? “Communicate the need for the updates and modifications clearly and over time in order to persuade the shareholders of the importance of these changes,” says Mark Axinn, partner with Manhattan law firm Phillips Nizer LLP. “You won’t be successful if you try to pass comprehensive revisions with little notice and inadequate explanation.” Roberts agrees, adding that paradoxically, it’s when co-ops are functioning smoothly that making quorum can be a real challenge. “The old joke I have is that you can tell when a co-op is well run when it can’t get a quorum at [shareholder] meetings. Because unless there’s an issue that drives people, oftentimes they just don’t care.”
What Works vs. What Doesn’t
Once the problems of inertia and attendance have been overcome, the next step is assessing your governing documents for clauses that could use a little updating. Axinn suggests analyzing them with specific attention to areas that have led to problems or misconceptions, and mentions some particular proprietary lease provisions that are frequently misunderstood or misused: “Two related ones deal with occupancy,” he says. “Section 14 permits family members to occupy an apartment with the shareholder, but not instead of the shareholder. Consequently, shareholders frequently violate Section 15 (which restricts subletting) when they allow grown children or other relatives to reside in their apartments without the named shareholders also present.”
Axinn points to another area that frequently results in misconceptions and acrimony: responsibility for electrical, plumbing, and other repairs in a building or apartment. Because there is a fine line (often made of drywall) between a building’s common elements and the shareholder’s private living space, repair obligations are not always so cut and dried. In condominiums and HOAs, too, the border between an owner’s property and the building’s or association’s common elements can be tricky—sometimes even inconstant, such as when the roots of a tree on common property grow to interfere with a unit owner’s plumbing.
Overall, clarity is key. If problems or misunderstandings have occurred because of a lease or bylaw provision’s ambiguity, then this might be the flashing red arrow signaling where to concentrate on making changes.
One of the most contentious issues in multifamily buildings may be that of pets. Most buildings and associations have a lease or declaration provision that prohibits at least certain types or sizes of animals. People buying into the building may even base their purchasing decision on the presence or absence of such clauses—a severely allergic person, for example, would want assurance that they were not going to be living in the presence of pets; a person with a shy Yorkie might look for a building that allows dogs, but only up to a certain size or weight.
But even with established pets clauses, co-ops, condos, and HOAs must make concessions for residents who use service or support animals. The Americans with Disabilities Act (ADA) of 1990, the Fair Housing Act (FHA) of 1988, and Section 504 of the Rehabilitation Act of 1973 protect the right of people with disabilities to keep such animals in their dwelling as long as that animal performs a specifically trained task, or provides assistance or aid that allows the disabled person the use and enjoyment of their home equivalent to that of a non-disabled person. Boards must make ‘reasonable accommodations’ for any disabled resident who requests it—provided the accommodation neither causes an undue financial or administrative burden on the housing provider, nor requires a fundamental alteration to the development’s premises or function. In the case of animals, a reasonable accommodation might consist of making an exception to a ‘no pets’ rule, or waiving pet registration fees.
Pet-related rules are a branch of regulation routinely affected by changing attitudes within a community. Increasing cultural acceptance of animals that provide either physical service or emotional support makes it much harder for a board to ban pets outright, since exceptions will almost certainly need to be made—and that can cause headaches for a board attempting to juggle the conflicting demands of individual owners.
Beatrice Lesser, a law partner with Gallet Dreyer & Berkey, LLP, in Manhattan, has dealt with this issue time and again. “I have urged co-op and condo clients who bring dog cases to me to change their policies regarding prohibition,” she says. “In every case, the pet owner presents a distressing picture of personal problems that were turned around by their dog ownership and gave them a reason to go on. Or that their doctor told them to get this dog, and their health improved measurably.”
Studies have shown that even people without any sort of pre-existing ailment report better quality of life from having a pet in their home. In light of all that, it may be well worth it for boards to consider lifting outdated pet bans—not just for improved board-resident relations, but in the interest of making a real, positive impact on their neighbors’ lives.
Even if a building welcomes pets, says Roberts, it’s best to establish rules to ensure that residents and their companion or service animals are safe and comfortable in their shared environment. There should be designated places on the property where dogs or other animals are allowed and not allowed; requirements for keeping pets leashed in common areas; clear language about behavior or conditions that are unacceptable (e.g., aggression, excessive barking, odor, flea or other infestation); and spelled-out responsibilities for any damage, mess, or other nuisance an animal might cause. That way, if a legal question does arise, the building or complex has the policies in place to support its case.
Considering that many co-ops and condos incorporated decades ago—and that so many buildings haven’t revisited their governing documents since—it’s definitely about time for boards to reexamine those documents for provisions that have become outdated or obsolete.
For example, as co-ops’ proprietary lease expiration dates approach, it is a good time for those buildings to examine the finer points of their leases for areas that could use an update. “One simple amendment,” says Axinn, “is to extend the lease’s expiration date, which many co-op corporations need to do, as their 50-year leases from the 1980s will expire soon without an extension.”
And while state statutes around meeting requirements for cooperative corporations shifted to allow for board and community business to be conducted virtually during the pandemic, Axinn notes that “it would be nice if proprietary leases and corporate bylaws took note of the 21st century and provided for notice and meeting participation by email or other electronic means.” Many residents may just assume that their building’s bylaws already had such inclusions, and simply moved online during the worst of the COVID crisis out of necessity, but the fact is that many governing documents still contain language that refers to written or in-person communication only, without mentioning phone, email, SMS, or web-enabled conferencing. Putting more expansive language around technology and communication doesn’t mean fundamentally altering corporate and community norms; it just means making minor updates to certain governing clauses to allow for a wider array of options.
Rules of the House
According to the legal pros we spoke with, most of the technological or social changes impacting how a community is governed day to day are reflected in the community’s house rules. Even though house rules directly affect residents—in fact, because they directly affect them—the process of amending those rules shouldn’t be encumbered by the time and effort it would take to involve the entire shareholder population each time a change is needed. Co-op and condo boards need to be able to respond nimbly to changing regulations (smoking laws, for example) and technology (like e-cigarettes and vaping). For that reason, says Roberts, “it needs to be clear that the bylaws allow the board to amend the house rules without calling for the shareholders to vote.”
And if your house rules include where to park your velocipede or requirements for your water closet, quips Axinn, it’s high time for the board to address those visible signs of aging, so to speak.
Darcey Gerstein is Associate Editor of CooperatorNews.