Page 10 - New England Condominium March 2020

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We thank you and value the opportunity to be your laundry ser- vices provider. 781.894.6600 | 1345 Main Street, Waltham, MA 02451 sales@americanlaundryequipment.com | www.americanlaundryequipment.com For a complimentary laundry room survey, please contact us ties where multiple families live—served by the boards of directors and boards of trustees in condos, HOAs, and co-ops—often follows bloodlines. But on a residential board, close family relationships between members can lead to a concentration of power that does not serve the common interests of the member- ship. Additionally, existing family dynamics and inherent conflicts can also become prob- lematic on an association board of directors. Because of the broad decision-making powers bestowed upon residential boards, state statutes provide very little in the way of board oversight or regulation, including whether family members or spouses can serve together on a board. Most only include the basic condition that there be a board, and that it be elected by the membership. In most states, residential boards are governed by cor- porate law that leaves board candidacy and directorship qualifications up to individual building communities. However, says Mark Axinn, partner in Brill & Meisel, a New York City law firm specializing in co-op and condo represen- tation, “Many bylaws require only that the RELATIONSHIPS... continued from page 1 individual be a resident of the State of New York and over 18 to qualify for board mem- bership.” That means that unless a building’s or association’s governing documents specify otherwise, spouses and other family mem- bers are free to run for and serve on the board together. That doesn’t mean it’s advisable, though. Attorney Bruce Cholst, shareholder at Man- hattan-based law firm Anderson Kill, thinks such a situation would be “a terrible idea…. I have seen on many occasions an attempt to use the leverage \\\[spouses\\\] have from two votes on the board to spearhead their own private agendas. The opportunity and the inclination are both rampant, and often it’s too hard to resist the temptation.” He goes on to say that even though blood-relative board members may have the purest of intentions, “It’s still insidious and invidious and it’s just not a good idea.” Whether by appearance or in actuality, even the most well-intentioned couple will be a voting block. Axinn therefore recommends “that co-ops amend their bylaws to prohibit more than one board member from any one apartment.” Such a prohibition would only prevent spouses and other family members from serving on a board together if they own one unit in the building or association. In most states, if members of the same family own more than one unit, they can all serve simultaneously (with no more than one rep- resentative from each unit owned) even with Axinn’s recommended bylaw change. Attorney Alessandra Stivelman, Esq., partner at Eisinger, Brown, Lewis, Frankel & Chaiet, P.A. in Hollywood, Florida, gives the example of her own family. She and several of her relatives own five homes within the same homeowners association. Since there are more than 10 units in the association, state law provides that co-owners of the same unit couldn’t simultaneously serve on the board (a provision that does not apply to buildings and associations with fewer than 10 units), but hypothetically, the board could include up to five members of her extended family. Size Matters While related owners could technically serve on the board together, it could get tricky in the boardroom (not to mention at family get-togethers). “It depends how many direc- tors there are, right?” Stivelman theorizes. “Because whenever you have a majority of the directors discussing association business in person, then it’s considered a quorum. So if you have a three-member board and two of them are talking \\\[about\\\] anything related to the association, it should be at an open board meeting”—not at Aunt Edna’s dinner table. Because as soon as someone starts talk- ing about the association’s assessment while hanging out watching the NCAA Champi- onship, it could constitute a de facto board meeting (albeit an inappropriately noticed one). Cholst points out that “it’s the small build- ing … where this kind of a situation is espe- cially rampant, because small buildings have small boards, and two people can very often devices. To illustrate his point, Halper re- lates a real-life crisis from a former client community. “We had a situation where a board employed a non-union super at a very low wage,” he says. “Eventually they fired him, but it wasn’t done properly, and he filed a wage claim against them. \\\[The board\\\] refused to listen to any of our ad- vice, and we left shortly thereafter because the situation became untenable. We didn’t want to face possible liability with them.” Halper says that while management firms carry errors and omission insurance, there’s still liability, and most firms will part company with a truly dysfunctional board before they become liable for the board’s mismanagement. Both Ruccolo and Halper also point out that the management business can be stressful enough as it is—managing even one chronically distressed property can add to that stress and can take time away from other properties in one’s portfolio. “You don’t find firms that only handle dis- tressed properties,” says Ruccolo. Partly for the reasons already mentioned, but furthermore, Halper continues, it’s a mat- ter of reputation. Nobody wants to be known as the company whose portfolio of properties is riddled with problems, lurching from one crisis to the next. “It’s a small business, and everyone knows each other,” he says. “You have to be careful of your reputation.” n Cooper Smith is a staff writer/reporter for New England Condominium. THE CHALLENGES... continued from page 8