What can I do if our co-op board never follows the building's bylaws?

By Virginia K. Smith | July 25, 2016 - 9:59AM

I'm a shareholder in a large co-op building that's poorly managed. The board regularly holds annual meetings past the date required in the bylaws and fails to give proper notice; meetings are often held when most of the residents are away for the summer; the board won't let non-shareholders run for office even though the bylaws explicitly allow it; and while three of the nine seats are up for election every year, they don't let shareholders run unless a board member decides to step down or move. What are the remedies available to the shareholders of the building when the board openly violates the building's bylaws?

Your board is definitely out of line, and you've got a few options available to remedy the situation, say our experts.

"First, look at the bylaws of the building to confirm what the requirements are for the annual meeting," says Dean Roberts, a co-op and condo attorney with Norris, McLaughlin, & Marcus, who has some insight into the reasons why some boards don't toe the line. "Some boards will hold theirs in the summer when shareholders are out of town, so they don't get a quorum," he explains. "And if you don't get a quorum, you can't elect people. I've seen co-op buildings who have done that for 10 years straight."

If this is what your board has been up to, you and your fellow shareholders can petition the board to call a special meeting for the specific purpose of electing directors. (Check the building's bylaws to find out what percentage of residents you'll need to back you on this.) Ahead of the meeting, you'll need to make sure that you and your neighbors have candidates lined up to run against the sitting board members, as is standard protocol if you're trying to overhaul the board's leadership. Then, you'll want to get proxies securing votes from other shareholders to ensure that you'll win the vote. (We've got a guide on that process here.)

If that doesn't work, you can bring a lawsuit against the board for breach of duty, says Roberts. "You're suing them to perform an act they're required to perform, so in 99 percent of these cases it ends up being stipulated that they have to hold a meeting."

The issue with this approach, notes Roberts, is the expense involved on both sides with hiring an attorney. So before you start filing suits—which could create even more tension than trying to change the status quo via the building's elections process—it's worth trying to come together with your fellow fed-up neighbors to overhaul the board the old-fashioned way. You're likely not the only one who's been frustrated by your board's wayward ways.

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