Page 14 - Nevada Cooperator February 2019

14 THE NEVADA COOPERATOR
—FEBRUARY 2019
NEVADACOOPERATOR.COM
cerning how information can be distrib-
uted to condo or co-op residents; some
allow for electronic communications, and
some require actual hard copies to be sent
via registered mail or to be hand delivered.
Regardless of the rules where you live, it’s
important to note that impersonal meth-
ods of outreach – like email – should not
be a substitute for actually interacting with
constituents in person.
“Email should not be used to eliminate
or avoid discussion at board meetings,”
warns Allison L. Hertz, a senior associate
with Kaye Bender Rembaum, a law firm
that has offices in Pompano Beach and
Palm Beach Gardens, Florida. “In most cir-
cumstances, board meetings are required
to be open to members [so] the members
of the association are able to hear how the
board makes its decisions.
“That said,” she continues, “meeting
minutes should be minutes. They should
not be a transcription of the entire meeting.
Such a document could be used against the
association and could result in association
liability.”
Even when withholding some informa-
tion from unit owners seems like the pru-
dent thing to do, a board should still con-
sider how owners may react to the basic
idea of being left out of the loop. Moriarty
recalls one instance in the middle of a con-
struction defect litigation: “A group of unit
owners were demanding the release of the
board’s expert engineering report. On ad-
vice of counsel, and to preserve privilege,
the report – which had been prepared in
anticipation of litigation with the developer
– was not disclosed. The board didn’t with-
hold the report to keep it from the owners;
it was withheld to keep it from the develop-
er and other defendants in the lawsuit. This
was a perfectly reasonable decision, and it
could have been easily communicated to
unit owners, but it was not. Because of this,
a group of unit owners actually started to
act against the interests of the association
with regard to the report, simply because
they did not understand the reason why the
board was withholding it. This resulted in
months of conflict, acrimony, and cost.”
“Even fairly minor changes, like alter-
ing the hours of the laundry room, can
create issues for some residents,” adds Ax-
inn. “Any change in policy should first be
fully disclosed in a memorandum to all the
shareholders at least 30 days before it goes
into effect.”
The Perils of Oversharing
Of course, there is a point at which re-
vealing too much information to residents
can be detrimental (or just overwhelming),
and as such it needs to be withheld for the
greater good. A board must know how to
walk this delicate line.
“In addition to instances where infor-
mation cannot be disclosed because of
BOARD OPTICS
continued from page 6
privilege or legal prohibition, there are
times when specific information cannot be
conveyed,” says Moriarty. “For instance, if
the board were in the middle of negotiating
a landscaping contract, the board could not
divulge to the unit owners its bottom-line
contract price because of the risk that the
other party to the negotiation would learn
that information, and all leverage would
be lost. Similarly, if the board were suing
the developer for construction defects, the
board could not communicate every detail
of its settlement strategy to the unit own-
ers for fear that it would undermine its bar-
gaining position in the case.”
“Many owners think that they are en-
titled to documentation and information
that they are not, and that the law actually
prohibits the board from disclosing,” adds
John E. Leach, a partner with Leach Kern
Gruchow Anderson Song, a law firm with
offices in Las Vegas and Reno. “I think that
the owners need as much education on this
issue as boards do. The fact that confiden-
tial and privileged records are occasion-
ally produced is further evidence that even
community managers and association offi-
cers and directors may also misunderstand
what records must be provided.”
“How much to disclose and when may,
in those instances, be more of an art than
a science,” Moriarty concludes, “but the
default position for the board should be
to disclose as much as it safely can and ex-
plain why it cannot disclose additional in-
formation. A board that explains where it
is in negotiations with another party, how
it got there, and what its goals are will then
be able to say with some credibility to the
unit owners that certain information must
be withheld, if only so their position is not
compromised. Owners will get it, and will
likely be more appreciative and more confi-
dent in the board as a result.”
n
Mike Odenthal is a staff writer/reporter
with The Nevada Cooperator.
Schwartz Sladkus Reich Greenberg Atlas,
LLP, a law firm in New York City. “Also, the
members are free of hardline or absolutist
positions when it comes to the building and
building-related issues. For example, instead
of insisting that maintenance or common
charges must never be increased, or that the
lobby must be renovated before any other
project is undertaken, they are willing to ad-
just if necessary to best address the conditions
and situations with which they are presented.
This does not necessarily mean abandoning
wholesale the positions they espoused when
running for the board, or their deeply-held
views about how best to manage the building.
But it does mean being open to consider a va-
riety of possible options.
“Finally,” Fleiss continues, “effective board
members respect the views of experts regard-
MANAGING...
continued from page 7
ing matters within those experts’ fields. Few
board members – even long-serving ones –
can master all of the details of the many sub-
jects with which they must deal. That’s why
boards retain architects, accountants, lawyers
and managing agents, and why successful
boards have different members with con-
struction, financial and legal backgrounds.
Harmonious boards give appropriate weight
to the expert opinions of their members and
of the professionals they hire.”
Fighting Toward Consensus
While some minor conflict can be allowed
to simply blow over, some intra-board squab-
bles are not likely to fix themselves without
some kind of intervention. In these instances,
members who find themselves outside the
conflict–or even third parties–may need to
insert themselves into the melee in order to
guide it to a reasonable solution.
It’s important to handle matters internally
before they spill out and create issues among
the broader association. “Generally, there are
an odd number of members on a board so
that when a vote needs to be taken, the board
can move forward” without being stuck with
a tied vote, notes Robin B. Steiner, President
of RMR Residential Realty, LLC, in Elms-
ford, New York. “But, while it shouldn’t hap-
pen, sometimes the losing side of a vote will
express their disdain for the decision to the
community at large, and, all of a sudden, gos-
sip is circulating at breakneck speed.”
“Occasionally, board members can’t see
the big picture due to their perception of
certain people, and will be unable to make
rational decisions,” adds Edie Davis, Senior
Property Manager with Maine Properties in
Scarborough, Maine. “In the rare occasion
that a vote reaches a stalemate, I have had
mediators come in to resolve conflicts.”
Sometimes, an individual owner runs
for a vacant position on a board specifically
because they have a problem with how the
current board is doing things. Even before
running, this person may have made inflam-
matory statements toward the board, which
can lead to tensions, should that person get
elected.
“Often, this is the type of person who is
quite active on social media, and fancies
themselves the lone messiah, on the board,”
says Barbara Holland, a regional manager
with FirstService Residential in Las Vegas.
“Managers need to be proactive in recogniz-
ing personalities in order to deal with these
scenarios. We have so many responsibilities
—you immediately think about the law and
finance and maintenance and insurance—
but juggling personalities is also a big one.
When you have that first meeting, one of the
things you need to discuss with everyone is
relationships, and how the board should go
about doing business with one another. You
need to help them create goals, an objective,
and a mission statement that they can ad-
vance as a cohesive unit. It’s okay to disagree,
but you want to ensure that they do so in a
professional manner. Many associations have
a code of ethics, and part of that code dictates
these relationships.”
“Serving on a dysfunctional board is ex-
hausting for the members who may well opt
to resign rather than continue to ‘fight the
fight,’” says Davis. “That level of dysfunction
also typically leads to increased expenses for
the association, as board members may have
more cause for requesting legal opinions to
support or offset arguments among them-
selves. Occasionally, when there is a bad actor
on a board who is causing so much difficulty
that it interferes with the function of the asso-
ciation, there may be a political effort waged
to have that member recalled by membership
through a statutory process. If the board is
split by faction, it will be up to the political
savvy of willing directors to form coalitions
of support in order to get things done by ma-
jority.”
Key to communication is listening. And
if board members are not listening to each
other, bringing in a neutral party may help to
open their ears. “When board members are
diametrically opposed, it may be time to call
in a professional from a field related to the
argument at hand,” advises Straits. “Even if
that professional is saying the same thing as a
particular board member, the others may be
more open to hearing the message if articu-
lated by an experienced outsider.
“And,” Straits continues, “many arguments
come down to the individual communica-
tion styles of specific board members. It can
be helpful for each member to reiterate what
they ‘heard’ another member say, as it can
be surprising to hear members repeat what
they thought they had just heard. If differing
members can realize their differences in com-
munication styles, it can help push through
and resolve issues. But, at certain times, there
is no resolution that is satisfactory to every-
one. When that happens, the board members
need to understand that it is their fiduciary
responsibility to support the decision of the
majority.”
While mediation can occasionally be
helpful in placating feuding residents, it’s
rarely useful in the board context, according
to Fleiss. “Formal mediation by an indepen-
dent third-party facilitator may even result
in agreement purely for the sake of agreeing;
that is, an agreement that is not necessarily
in the best interests of the building and its
residents. Plus, formal mediation typically
involves financial costs – including to com-
pensate the mediator – which boards may
be hesitant to incur. But informal ‘mediation’
by fellow board members, relevant profes-
sionals – architects, accountants, attorneys,
for example – or managing agent can assist
in arriving at a bipartisan solution to an is-
sue on which certain board members are in
disagreement.
“In some circumstances,” Fleiss continues,
“such ‘mediation’ may involve little more than
other board members discussing an issue
with two diametrically-opposed colleagues
at a meeting of the board, using the available
information – including expert recommen-
dations – to try and bring the views of those
disagreeing members closer together.
“In other circumstances, the relevant pro-