As with most questions regarding the functioning of co-op and condo communities, the answer to who can or can’t serve on the board usually lies in the community’s governing documents. To explain that for us today we have Richard Klein, an attorney and partner at the law firm of Dorf Nelson & Zauderer in Rye, New York.  

COOPERATORNEWS: Welcome Richard, and thanks for your time and insight on this. Typically, who is eligible to sit on a co-op or condominium board in New York?  Are the rules different for co-ops and condos?   

RK: “To begin, you need to look at the governing documents such as the bylaws, and in the case of a co-op, also the certificate of incorporation. It should be noted that some bylaws are written so broadly and with so few (if any) requirements that my 93-year-old mother in Manhattan could potentially serve on the board of a Westchester County co-op or condo. Surprisingly, the only statewide restriction is that the person must be over the age of 18, and must also be an individual person—an entity such as an LLC cannot be a board member. The rules are not necessarily different for a condo. In the end, it all depends on the documents.”

CN: So the rules for individual buildings or associations are generally memorialized in the governing documents. Are they always to be found in the bylaws?  

RK: “The rules are dictated in the bylaws, though sometimes there are additional restrictions in a co-op’s certificate of incorporation that must also be observed, but may not be referenced in the bylaws. The issue for most buildings is that these documents were written by the original sponsor of the building, say back in the 1980s or earlier. A lot may have happened in the intervening years that these rules don’t address. Plus, many rules were originally written to keep the power with the sponsor, and that might not still be relevant at this point in time.”

CN: Can board eligibility rules be amended? If so, what’s the process? Are there any state or federal restrictions on amending these rules?  

RK: “Most if not all bylaws provide a process for amendment. Generally speaking, the board can make amendments as they deem necessary. However, one typical restriction is that a co-op board may not amend a bylaw passed by the shareholders. For example, if the shareholders voted to have a five-member board, the board cannot then amend the bylaws to make it seven directors. 

“A further restriction might be that the board cannot amend a provision that affects the sponsor, assuming the sponsor still owns units in the building. For example, the bylaws might have a provision that so long as the sponsor has one unit in the building, the sponsor is entitled to at least one seat on the board. Typically, the language would provide that such a provision cannot be amended. 

“Shareholders also usually have a mechanism by which they can amend the bylaws. The bylaws will dictate the notice that must be given regarding the proposed amendment, what constitutes a quorum, and how much of a percentage of shareholders are needed to pass the resolution to amend any particular provision.”

CN: Why would a co-op or condo vote to change the rules for board eligibility?  How often does that happen, and what are the long-term benefits to making such a change?   

RK: “I see this happen frequently. I have seen boards require that board members must physically reside in the building as their primary residence. I’ve seen bylaws amended to make it so that a director must be an actual shareholder in the co-op, or the actual owner in title of the unit, in the case of a condo. I have seen boards try to restrict—unsuccessfully, it should be noted—certain professions from being on the board because of what is perceived as a potential conflict of interest, such as a residential realtor or somebody in the property management business. That said, the long run benefit of any change is hard to determine.”

CN: Could you give us an example?  

RK: “I had one co-op where the board president was concerned about a rival trying to unseat him. That rival did not live in the building, so the sitting president convinced the board to make residency a requirement for eligibility. However, one year later because of a growing family, he had to move out of the building, and reluctantly had to resign from the board.”

CN: That’s fascinating, Richard. Thanks so much for taking some time out to illuminate this for us and our readers. 

RK: “My pleasure. Thanks for having me.”