Co-ops and condos both have a board of directors that oversee matters, but how they get into office is a bit opaque. While a directorship is an elected position, the mechanics behind it are a bit of a mystery to most, even co-op and condo owners. Given the power they wield over large and small matters, including capital improvements and house rules, it behooves potential and current shareholders/owners to understand the process.
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The buildings election of the board membersThe buildings election of the board members
Residents elect the board members. Unlike a for-profit corporation, the candidates are not professional managers but rather fellow shareholders in a co-op or unit owners if it is a condo.
The election is typically held at the annual meeting, but that is not necessarily the case. The bylaws dictate how often the board of director elections occurs. How votes are cast can vary. Some buildings allow residents to vote online, but others use old fashioned paper. The most important thing is that everybody has a chance to vote.
The voting particularsThe voting particulars
In a co-op, those with more shares have a more distinctive voice. This is based on square footage and other factors. For condo owners, voting power is based on the percentage of interest, which the developers initially assign. You own the airspace within your unit with condo ownership and an interest rate in the common elements.
A proxy is the list of directors and other matters you are voting for. The board candidates’ names could be on the proxy. Alternatively, you could receive a blank proxy slate, and the people running are put on the slate at the annual meeting.
Typically, the managing agent oversees the election. An alternative, the managing agent, could bring in an independent company to take on this function. This helps maintain the appearance of independence. If the managing agent has given an outside company oversight responsibility, it must provide the firm with a list of its residents. Following this, the managing agent takes a step back and is not involved in the process.
Overseeing the election involves mundane but essential tasks that make sure the election process is correctly followed. The agent makes sure a quorum is present, which is typically a majority of the voting interest. Ballots are handed out, votes counted, and the winning directors are announced. The managing agent, an outside company, or a voting committee will tally the votes.
Cumulative Voting or Non-Cumulative VotingCumulative Voting or Non-Cumulative Voting
There is also cumulative voting or non-cumulative voting. In the former, you can aggregate your total number of shares based on the number of candidates. For instance, if you own ten shares in the co-op, and there are seven directors, you have a total of 70 votes to disperse on as many candidates as you like. If you choose, you can use the 70 on one candidate. In non-cumulative voting, you vote your ten shares on each candidate. In this case, your favorite seven that you would like to serve on the board.
Anyone can contest an election up to 120 days after it occurs, but, hopefully, the board is transparent about the entire voting process.