Page 6 - New England Condominium July 2022

6 NEW ENGLAND CONDOMINIUM -JULY 2022 NEWENGLANDCONDO.COM BOARD OPERATIONS One of the unique aspects of life in an HOA, condo, or co-op is that in many care, “Board members and trustees must ciations, they are, at their core, somewhat management, and/or other shareholders ways, a building or association is a mi- crocosm of the larger world outside it. It terms of the building,” Davidson says, its,” he says, “because the board members management. In the world of condomini- can suffer from the same factionalism and adding that their primary responsibility is are investors or owners in the nonprofit, um associations, a derivative action can be partisan bickering as any political entity, to make sure the property is well and ef- only on a much smaller, more intimate— and therefore potentially more damag- ing—scale. Conflict and divisions in “Requires adherence to conflict of inter- HOAs and other multifamily communi- ties can and often do bleed into the com- munity’s administration: the manager and HOA, condo, or co-op’s welfare before the building. Both have vested interests, of directors doesn’t want to undertake board of directors. Even a seemingly mi- nor conflict can upend a residential com- munity if it’s not dealt with diplomati- cally—so trustees and managers must be company, you shouldn’t recommend him members—the duty of obedience—is of action would force the board to acquiesce prepared to step up, step in, and do their for roof repairs to the building—or at the the most importance for co-op and HOA to the community members, despite their part to defuse such issues before they turn very least, if your brother’s firm bids on board members. It calls upon them to un- into something worse. Board Obligations Michael Davidson is the president of BoardCoach.com, a New York City-based this duty is less clearly defined in an HOA “The members of the board owe a duty to company that specializes in nonprofit or condo context than it may be in other keep within the powers of the corporation board development and management not-for-profit organizations, because in a and within those of the board of direc- support, including coaching. Davidson residential setting, every board member tors,” explains Davidson, adding that “The explains that board members of non- profit entities (including HOAs and co- ops) have three main duties to which they decisions based on what may benefit that everyone on the board has a personal must adhere: “The duty of care, the duty them, but not necessarily their neighbor. of loyalty, and the duty of obedience.” With regard to the first, the duty of resent nonprofit corporations and asso- basically understand what’s going on in different from non-residential nonprof- fectively managed. The second duty, the duty of loyalty, be voting to permit Airbnb rentals. Do- est obligations.” In simple terms, that member with additional income, but their means that a board member must put the neighbor(s) might not want strangers in approach is used would be when a board their own interests or agenda. A good ex- ample would be that if your brother (or seamlessly. any other family member) owns a roofing the job, recuse yourself from voting on derstand, fairly enforce, and personally which roofer is ultimately hired. Davidson points out that adherence to cies, and protocols of their community. presumably owns a unit—or shares, if the problem is that co-op boards are very community is a co-op—and may make different from other nonprofit boards in “While co-op and condo boards rep- and their board positions carry a heavy fi- duciary responsibility.” An example might dents to force the board to perform their ing so might provide a particular board community’s governing documents. but those interests may not always align a large or expensive project—extensive The third duty incumbent upon board owners want the work done. A derivative abide by the governing documents, poli- interest in every issue. This makes them inherently more conflict-prone.” When it comes to upholding these three administrative pillars, “Successful, functional boards need persons who work in tandem, work well as a team, are well organized, and have different areas of ex- pertise to offer,” says Robert Silversmith of the New York City-based Silversmith & Associates Law Firm, PLLC. “Boards should openly and amicably communi- cate with all board members as a collec- tive group.” The Reality of Conflict Howard Goldman is a partner with Goldman & Pease, a law firm located in Needham, Massachusetts that represents numerous condominium associations. “Yes,” he says, factionalism definitely hap- pens. And when it does, typically “There is a controlling group on the board, and those not in agreement feel out of control and frustrated. Often, those in these roles feel disenfranchised and that no one is lis- tening to them.” Goldman says there are two potential approaches to getting controlling board members to listen: One is to take a deriva- tive action; the other is to remove and re- place the board. A derivative action is es- sentially a lawsuit brought by a corporation shareholder against the directors/trustees, of the corporation, usually for a failure by brought by an individual or group of resi- fiduciary responsibility as outlined in the A good example of how and why this roof repairs, say—but the majority of unit own preferences. Odd Numbers, Staggered Terms, & the Limits of Power According to Goldman, Massachusetts condominium owners who are displeased with their board can call a meeting of the association and demand to hold new elec- tions. They can air their grievances and hold a vote. If a majority of owners vote to remove the board a new election is held, and a new board is elected. Hopefully, the new board will be more amenable to lis- tening to what the unit owners want. Managing Conflict When Boards & Residents Take Sides BY A J SIDRANSKY continued on page 13