Q: My luxury condo building in Manhattan is in disrepair and the board is thwarting efforts to improve it. For the past decade, we have been unable to achieve a quorum for the annual meeting, resulting in no new candidates joining the board or voting for real change. The board notes that there is no quorum, but attendance is not accepted. The president has been there since the board was founded more than 35 years ago. Mandatory work is subcontracted to questionable contractors and there have been rumors of impropriety. For example, the board distributed a memo announcing a $100 fine for any correspondence distributed within the building, such as leaflets in common areas or under doors. The owners' efforts to organize were rebuffed. What can we do?
A: The board has a fiduciary duty to all owners, and there are several ways to achieve better governance. Whatever step you take, make sure you follow your condominium bylaws and state law to ensure an outcome that will stand up to legal scrutiny.
Your bylaws must contain a provision under the New York Condominium Act that allows condominium owners to remove a board member and the criteria for doing so. This is typically done through a special meeting, which may be called by the chairman of the board, or through a petition signed by a certain percentage of shareholders.
Condominium association decisions are almost always protected by the business judgment rule, making it “extremely difficult” for an apartment owner to challenge the board in court, said Ronald H.rid, a real estate attorney in Manhattan. For that reason, he said, calling a special meeting to remove a board member for violating the governing documents is probably the best option.
Board members are not protected by this regulation if they act with gross negligence or bad faith. “This could apply to the fines imposed for disseminating messages about board conduct to other residents,” said Ruta Behrend, partner at Tane Waterman & Wurtzel PC
You can request a contact list of condo owners and communicate with them the same way the board does. (Remember that the boards do not want owners to misuse the list.)
You can also file a lawsuit against the board, alleging that they breached their fiduciary duty. However, this would be a more expensive and lengthy process. For a potentially quicker result, you could ask a court to appoint a liquidator to oversee the construction work and costs.
“It's a good move to preserve everyone's investment in the building,” said Steven D. Sladkus, a partner at Schwartz Sladkus Reich Greenberg Atlas LLP in Manhattan.
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