Attorneys representing co-op, condo, and HOA communities comprise an interesting subset of the legal profession. While ultimately serving as the legal backstop for these communities, that’s not the full measure of what they do; they often act as educators, referees, and therapists as well. In addition to the law, they must also be experts on navigating the complicated interpersonal and administrative landscape that is reality for a lot of multifamily communities, getting disparate groups of people to set aside their own agendas and work together for the common good.
In an effort to learn more about how co-op, condo, and HOA attorneys do their work—and even more importantly, find out how boards can optimize their relationship with their community’s legal counsel—we polled several professionals across several markets, asking them one simple (if not exactly easy) question: What’s one thing you wish more boards knew? Here’s what they had to say:
Sima Kirsch is a community law attorney based in Chicago. “The one thing I want boards to know is that a healthy board is an educated board,” she says. “More than anything else, education is the one factor that can make or break an association’s development. Nothing ever stays the same when it comes to the operation of an association, and an educated board is best able to handle the endless changes. Keeping up with changing times, laws, and trends is crucial, and allows a board to meet these changes head-on.
“Education also encourages open participation, better decision making, and a shared platform of community and understanding. Education helps a board address the varying needs of the association, and to understand and handle changing demographics. It also helps them understand the need for reserve studies, and design ways to meet reserve demands. It enables them to tackle ongoing technology needs, and to modernize their volunteer structure, as committees and volunteers are more important than ever.
“Education helps a board better understand the basic concepts of federal, state, local, and case laws,” Kirsch continues, “and the application of their own operating documents when it comes to general association administration, best practices, fiduciary duty, and the business judgment rule. It teaches them about their investments and how to manage finances, resolve conflict, understand owner rights and their own statutory responsibilities. An educated board knows the differences in the varying insurance requirements, and can determine who and what needs to be covered. All kinds of issues may be lurking around the corner, including FHA claims, claims by employees, owners raising election issues, and vendor contracts, to name a few. Furthermore, education promotes the selection of professionals that meet an association’s particular needs and help it uphold its obligations.”
When everyone feels a part of the process, Kirsch explains, they become more invested in the work of the association, allowing for more diverse and creative solutions and a satisfied membership. Whether you do in-house programs, take advantage of resources made available to you through your management company or a professional organization, or simply take it upon yourself to become better informed about your role as a member of your board, education is one of the best tools to help new boards get up to speed, and help good boards get even better.
Ellen Shapiro is a community law attorney with Marcus, Errico, Emmer & Brooks, located in Braintree, Massachusetts. Along the same lines as Kirsch’s response, she stresses the importance of transparency in conducting association or corporation business, and says that board members must remember that first and foremost, they are representatives of the owners. As such, they have a fiduciary responsibility to provide those owners with information about what’s happening in their community, as well as how and why it’s being done.
“I think the one thing I wish boards knew—or rather, the most important thing for boards to be aware of and practice—is transparency,” Shapiro says. “Transparency allows owners to see how decisions were made, and demonstrates that decisions are made after the board performed its due diligence based on knowledge of the governing documents, thorough discussion of the issue, appropriate review of contracts and bids. Administrative transparency generally demonstrates that the board is not just exercising its discretion in the performance of its duties, but is exercising it in the best interest of the association. This is typically referred to as the board’s fiduciary duty.”
Julie Schechter is a partner with New York City-based firm Armstrong Teasdale, and agrees that transparency is key, but cautions boards that prudence must also factor into communication with residents, particularly when it comes to sensitive subjects that affect the community.
“My best advice to boards of directors and boards of managers in cooperatives and condominiums, respectively, is to limit email communications,” she says. “While email has made board communications faster and more convenient, it has also brought greater levels of exposure to board members. Email is not an appropriate forum for lengthy discussions, opinions, or debates amongst board members, especially about sensitive matters. Those conversations should be reserved for conference calls or in-person board meetings.”
Schechter elaborates; “Emails are problematic,” she says. “Written text can easily be misconstrued.” Simply put, it lacks the context and nuance of conversation—and even beyond that, “Emails are also discoverable, and can be used as evidence in a litigation. For example, even emails that would otherwise have been confidential [and] protected by attorney-client privilege may not actually be protected if they were sent from a third-party server, such as a person’s work email address. Board members who use their work or personal email accounts for board communications risk not only the security of the cooperative or condominium’s private information, but also their own privacy, since those accounts may be subject to search in the event of a litigation. Therefore, I always recommend that board members create email addresses which they use solely for building governance. This will make recovery of necessary emails easier, as well as protect confidentiality.”
“As an attorney representing homeowners’ associations,” says Sheila Van Duyne, a community law attorney located in Reno, Nevada, “I think the most important thing for us all to remember when dealing with association problems is that we are all dependent not just on ourselves and our beliefs, but on majority decision making [as well]. Though being a board member comes with a certain amount of prestige—people in your community think you’re a great person and voted you in to represent their interests—a board member really only has the power of their one vote on the board.
“Realizing this inherent limitation from the start will relieve a lot of the overwhelming stress that can be associated with serving on a board,” Van Duyne continues. “Oftentimes, a board member sees a problem in the community and wants to effect change. Though they can take steps towards change on their own, they can’t actually succeed unless they get the majority of the board to vote to support that change. Sometimes, no matter how much something means to you personally, you have to let it go and rely upon the decision of the majority. Majority decision making is one of the basic tenets of Robert’s Rules of Order. Having to abide by the majority—and maybe even support a decision you do not believe in personally—can be very difficult for many minority-opinion board members.”
Van Duyne suggests we all need to fall back on Niebuhr’s ‘serenity prayer’: “Grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.” Working together on a board requires us all to have faith in the intelligence and reasonableness of our fellow members—even those with whom we really disagree.
Phil Simpson, an attorney with the New York City firm Robinson Brog, points out what might be the best advice of all to boards and those who serve on them. “As an attorney who advises co-op boards and co-op shareholders,” he says, “the one thing I want boards to know is that their discretion is not without limit, and that to lose sight of the limits of [that] discretion can turn out to be very costly for the corporation.
“Personalities, hard-headed positions, and irrational fears can result in a shareholder winning a court battle that in turn results in the corporation paying the shareholder’s lawyer,” he continues. “Refusal to compromise can result in an outside agency coming in and dictating to the corporation how things are to be run—where the Americans with Disabilities Act (ADA) or Fair Housing Act (FHA) confront the corporation’s pet policy, for example. So take a breath, remember that your obligation as a director is to the entire corporation, and keep your eye on the big picture.”
Perhaps the single unifying message common to all the experts who contributed their insight to this article is that volunteering for a board is a serious commitment. To be at your most effective, get—and stay—educated, recognize your own biases, and work hard to separate them from your role on the board. Above all else, strive to be both prudent and fair. Your diligence and dedication will not just be self-satisfying, but will be beneficial to your community as well.
A J Sidransky is a staff writer/reporter for New England Condominium, and a published novelist.