How to Stage a Takeover of Your Coop or Condo Board

coup.jpgBoard members of cooperative and condominium buildings are hard working volunteers who are subject to what may be undeserved criticism. In other cases, a board may be treating a particular unit owner unfairly or there may be a general sense among neighbors that the board is doing a poor job. Our firm receives inquiries from such unit owners, either on their own behalf or as representatives of a group of unit owners that are “out of power,” as to our recommendations.

If efforts to influence existing board members continue to be unsuccessful, our attorneys will discuss the consideration of a “takeover” of the board. This strategy works best when more than one unit owner is interested in this project. It is prudent for our attorneys to review your building’s governing documents, such as the By-Laws and Proprietary Lease in a cooperative, in order to determine the rules for conducting annual shareholders meetings in your building. It should be noted that, in some cases, the existing board has even failed to call annual meetings for several years, leaving the existing board in power. In such a situation, we will review the governing documents for the procedure for the calling of an annual meeting to determine and follow the procedure required.

Once the existing board has legally noticed the annual meeting or the insurgent group has legally demanded an annual meeting, campaigning can begin. Although feelings can be hurt, it is not improper to approach unit owners in person or in writing to represent the position of the person running for office and to request attendance at the meeting or the delivery of a proxy to the soliciting person containing the vote requested. Our attorneys also advise on the particulars of proxies being solicited. For instance, the incumbent board may only list their suggested candidates, as is legally permitted. However, unit owners may be advised that other candidates may be indicated on the proxy and information may be provided as to whether all votes can be allocated for only one candidate if desired, depending upon the specific wording of your building’s By-Laws. It is a matter of style as to whether names are to be included on written materials, as we are prepared to advise our clients of this issue for their particular circumstances. Those campaigning should be wary about potential libel and slander claims, which could give rise to a lawsuit if written or verbal statements are inaccurate.

Keep in mind that an unexpected ally while campaigning may be the building’s sponsor or the holder to unsold shares. Perhaps such an investor entity dislikes the existing board just as much as you do. Since they own multiple units and have many more votes than most unit owners as a result, swaying their votes in your direction will be very helpful in your takeover project.

As a shareholder in a cooperative looking for information to support your campaign, you have the legal right to access to minutes of shareholder meetings maintained at your managing agent’s office. Depending upon the language in your governing documents, you may also have access to the board minutes.

In a prior blog post , we described the procedure for the proper conduct of an annual meeting. This post covers the legal requirements for the meeting notice, the determination of a quorum, the tabulation of votes made in person or by proxy and the procedure for conducting the inspector of election process if the election is contested. The results need to be respected, even if they are not desired by all, if the process was proper. Our attorneys not only run annual meetings but also represent cooperative and condominium boards after the staging of your successful coup.

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