Coop Board approirating money for personal use

cassady

Hi,
Were an 11 unit brownstone. The sponsor sold the majority of his shares. The new board president is the son, the vice president the son in law, no one is really sure who else is on "the board". Last year the President had a tree removed at the coops expense (our maintainence money) claiming it blocked the view of the other brownstones. He lives in the back. This was a 2000$ expense. There have been various other transgressions. We cant get itemized statements as to where the money has been spent since they came to power. We know this is fundamentally wrong. They also basically harassed some elderly renters who have been in the building for 30 years. Trying to get them to vacate their apartments. But we dont know how to redress all this. Any advice on what to do or where to look for more information would be most appreciated.

Thanks

cassady

Subject: Unelected Coop Board misapprirating Funds

Hi,
Were an 11 unit brownstone. The sponsor sold the majority of his shares. The new board president is the son, the vice president the son in law, no one is really sure who else is on "the board". Last year the President had a tree removed at the coops expense (our maintainence money) claiming it blocked the view of the other brownstones. He lives in the back. This was a 2000$ expense. There have been various other transgressions. We cant get itemized statements as to where the money has been spent since they came to power. We know this is fundamentally wrong. They also basically harassed some elderly renters who have been in the building for 30 years. Trying to get them to vacate their apartments. But we dont know how to redress all this. Any advice on what to do or where to look for more information would be most appreciated.

idlewild

I imagine the apartments still fall under rent stabilization laws if there were eleven apartments before conversion. Call DHCR or whatever it's called about the ederly folks. You probably have to take the board to court for the other stuff.

alafairnadia

who is the treasurer? are you an owner? contact state a.g.'s office. a coop is a corporation and if you suspect them of defrauding you, they're also probably defrauding the state and not paying taxes. you need to deal with this ASAP as your entire building can be foreclosed on by the state if the taxes aren't being paid.

that happened last year to a building on st. johns.

anonymous

Do you have a copy of your by-laws (it shoudl have come with the sale)? Since you are a corporation, can't you just VOTE them out of office and vote somebody else in? We divided the jobs between President, Vice President (handled all internal disputes and fines), treasurer (money obviously), secretary (minutes to the notes). Sounds very sleazy.

sterling2000

If you aren't a shareholder and a renter, you really can't do anything much.

If you are a shareholder, you should be provided with a prospectus for the corporation which contains all the bylaws. Usually a management company will hand these out to shareholders for a small fee.

From there, you need to check on the process for electing board members. This is usually done annually with voting based on the # of shares owned by unit. Now, if there are a bunch of relatives in the building who own a lot of shares, it would be easy to swing an election by consistently voting their shares to themselves -- nothing illegal with that. You also need to see who owns the shares for the rental units. Again, a family with a few owners and a few other rental apartments still owned could easily maintain control of a board. The prospectus should show how many shares are owned by each unit, and from there you can do the math.

If a group effectively controlled the board, a board can pretty much do what it wants with the building's money (i.e. cut down a tree) as long as they can show it is for the corporation. Individual non-board members can complain or vote people out of power, but ultimately the board has say it what gets done.

Now, if there is actual criminal harrassment going on, a call to 311 should be able to point you to the right housing or legal authority with the city. Get specific and document dates, times, witnesses, etc. Get everything in writing and a send all communication by registered mail. I'd write to the board, requesting financial statements. Try a few times and then send a final letter to the board and let them know you're writing the State Attorney General's Office because of the lack of board response. The more shareholders that organize and participate around this, the better.

By way of experience, my building had a rubber-stamp board for years due to control of shares by the sponsor and management company that had a relationship. A bunch of us new folks moved in, met in private, decided who would run for the board and we took over with the full-support of the new residents. From there, we canned the management company and we've been getting things well under control ever since (although we too are still cleaning up some old "no-receipt" issues).

If you are a shareholder, you shouldn't have to put up with a bad board or bad management -- and I keep that in mind as a board president.

brooklynjack

Yes, as kensingtonmom says all you need to know is in the bylaws of the corporation, how to call a special meeting and vote for a new board etc. What percentage of the shares have been sold? The coop corportation is requiered by law to have an audited set of books go to the shareholders anually and to hold and annual meeting to elect the board. If you think something is really hinky call the attourney general's office.

See if this helps:

http://www.oag.state.ny.us/realestate/coop_prob.html


This is why I would never buy a coop or condo in a small building

saintjohnsnear5th

how could you get 11 units out of one brownstone?

cassady

Sterling thanks very much for your response. We have raised awareness at this point among a majority of owners who did not know what is going on. The harassment has been dealt with we believe. Is there anyway to demand a detailed accounting of hte COOPs expenditures during the past tenure and is there anyway to recover the money spent on personal needs of these board members while they had there way.

Thanks

anonymous

Subject: Tracking financial mismanagement

Demand to see the bank statements. It doesn't sound like you have a managing agent, but a management company should provide montly P&Ls. If you're self-managing, and there are no P&Ls and no accountant, demand to see all records of the bank account into which the maintenance was deposited, as well as all evidence of what's happening to the reserve fund.

brooklynjack

Cassady wrote: Is there anyway to demand a detailed accounting of hte COOPs expenditures during the past tenure

Yes, the coop corporation must provide, annually, and audited set books according to New York BCL. If they do not you can complain to the AG's office.

Cassady wrote: and is there anyway to recover the money spent on personal needs of these board members while they had there way.
Thanks

Yes, you can litigate. But depending on what they did the board has pretty wide discretion.

Where was the tree? Was it on common property or on property controlled by an individual shareholder? If for example it was in the back yard and the backyard is part of a shareholder's apt, ini the same way that a terrace on an apt is private to one unit only, then the shareholder, not the building, is probably responsible for its maintenance. This should be explained in the proprietary lease who is responsible for what. If the tree was on ground accessible by all apts then you might have a hard time recovering anything.


Remember that even if the relatives have a large number of shares that voting is usually done cumulatively. That is if you have a 5 person board you can vote 1/5 of your shares for each member or all for 1 member so that if the dissenters control 1/5 ( for a 5 person board) of the shares and pool them together you can at least elect 1 member to the board.

saintjohnsnear5th

How are you getting 11 units out of one brownstone, I ask, again.

anonymous

saintjohnsnear5th wrote: How are you getting 11 units out of one brownstone, I ask, again.

A limestone. I have seen quite a few with 12 units.