Articles

Helpful articles to aid Management Companies, Board Members, and Housing Cooperative Professionals in handling complex legal issues.
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Parking And Accommodations

Parking And Accommodations

We’ve all heard the phrase “Location, location, location.” But did you know it applies to not only where you live but where you park your vehicle? Where a person parks can have a significant impact on the person. In addition to the challenges of managing parking lots for members and their guests,, parking for housing providers can become a major headache if they don’t take the right steps when considering additional parking requirements when faced with disability accommodations requests. This doesn’t mean that every request requires a rubber stamp approval. Yet, each request should receive individual attention and housing providers have some leeway when considering requested accommodation. Knowing the “ins and outs” of the approval or denial process will help housing providers navigate this legally perilous subject.

For example, a resident comes to the office, has a disabled person’s parking permit from the state and asks for a designated parking spot. Can a resident ask for a designated parking spot even though the site may have designated handicapped parking? The short answer is, “yes.” Housing providers should be prepared to respond to this type of request. Failure to respond or disregarding this type of request is an all-too-common failure by housing providers and or management companies. Just because there are publicly accessible spaces on a lot doesn’t mean that a request for accommodation may be denied. If a resident comes to a housing provider with a request that public accessible spaces won’t work---they’re too far from the resident’s dwelling, the spots are always taken, or even if the resident has mobility impairment—housing providers should have a process that accommodates such requests assuming they are reasonable.

 Here is another scenario. A resident who doesn’t use a wheelchair asks for a designated parking space. All reasonable accommodation requests are open to any kind of disability. Vision impairment, cardiovascular conditions, rheumatoid arthritis, or even recurrent illnesses are medical issues that may be considered for reasonable accommodation. As part of the process, the housing provider may ask why the person with a disability needs reasonable accommodation. How is their disability related to the need for a parking space closest to their front door?

Residents who have a disabled persons parking permit still need to show the housing provider verification establishing the need for the accommodation. Remember these two requirements:
  • Verification by a third party professional who can show the person meets the definition of disability and the need for accommodation is related to the disability;
  • In some states, disabled parking persons permits ask enough questions on the form that it usually meets the requirement for verification, especially if signed by a doctor. Other states do not request adequate information to meet the verification standard. In those states, a housing provider can ask for further verification; however, it would be prudent of the housing provider to check with their attorney as to what constitutes a sufficient and reasonable verification.
Michigan and Illinois are two states that have a good disabled persons parking application process. The State of Michigan Vehicle Code (MCL527.19a) declares a “disabled person be determined by a licensed physician, physician’s assistant, chiropractor, nurse practitioner, physical therapist, or optometrist identifying one or more of the following characteristics which affect [the] patient’s ability to walk.” These characteristics on the application include:
  • Vision impairment.
  • “Inability to walk more than 200 feet without having to stop and rest.
  • Patient must use a wheelchair, walker, crutch, brace or other ambulatory aid to walk.
  • Patient has a lung disease from which the forced expiratory volume for one second, when measured by spirometry, is less than one liter, or from which the arterial oxygen tension is less than 60mm/hg of room air at rest.
  • Patient has a cardiovascular condition which measures between 3 and 4 on the New York Heart Classification Scale, or which renders the patient incapable of meeting a minimum standard for cardiovascular health established by the American Heart Association and approved by the Michigan Department of Health and Human Services.
  • Patient has an arthritic, neurological, or orthopedic condition that severely limits ability to walk.
  • Patient has persistent reliance upon an oxygen source other than ordinary air.”
  • The attending healthcare professional must certify whether the disability is permanent or temporary. If temporary, the healthcare professional must estimate the duration of the disability.
The State of Illinois has a similar application process. According to 625 ILCS 5/1-159.1 and 3-616 of the Illinois Vehicle code, a medical professional must execute the application and verify the nature of the applicant’s disability. The criteria for the application include:
  • Patient “is restricted by a lung disease to such a degree that the person’s forced (respiratory) expiratory volume (FEV) for 1 second, when measured by spirometry, is less than 1 liter.
  • Uses a portable oxygen device.
  • Has Class III or Class IV cardiac condition according to the standards set by the American Heart Association.
  • Cannot walk without the use of or assistance from a wheelchair, a walker, a crutch, a brace, a prosthetic device, or another person.
  • Is severely limited in the ability to walk due to an arthritic, a neurological, an oncological, or an orthopedic condition.
  • Cannot walk 200 feet without stopping to rest because of one of the above five conditions.
  • Amputation of extremity(s).
  • Spina Bifida.
  • Multiple Sclerosis.
  • Quadriplegia/Paraplegia.
  • Cerebral Palsy.
  • Arthritis of the ________.
  • Osteoarthritis of the __________.
  • Chronic Pain due to _____________.
  • Legally Blind with limited mobility.
  • Pregnancy (third trimester) 90 days maximum.”
Suppose a resident already has a disabled persons parking permit issued by the state. Will that suffice for documentation verifying the need for an accommodation at the housing site? Keep in mind that a third party professional has already stated that the resident’s disability meets the definition of disability and that the resident has a need for accommodation that is related to that disability.

If it’s been established that there is a need for an assigned space, the housing provider needs to go about making designating a specific parking space for that resident as close to the entrance of their unit or building as is reasonably necessary among current parking spaces. The provider also needs to know if the resident has a disability related need for a standard assigned parking space or an accessible assigned space, which is a wider space. Just because a resident has a disabled persons placard doesn’t automatically mean they get a wider space. Accessibility is determined by need. If the resident is in a wheelchair they would need a wider space so the door to the vehicle can stay open and the person in the wheelchair can get out of the vehicle. If the housing provider is going to provide a wider space, they do not necessarily have to follow the same guidelines as public spaces (blue lines, van accessibility lines, marked for handicapped parking). A better practice would be to line the space and mark it “Reserved.” Management would need to enforce the designation.

Parking shouldn’t cause headaches for housing providers. By following some simple guidelines and enforcing those guidelines, residents and management can come to a mutual consensus on a person’s need for a reasonable parking accommodation.

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    Quick Tips: The Legal Defense of Accord & Satisfaction, and how it can be used to thwart equity disputes with former members.

    Quick Tips: The Legal Defense of Accord & Satisfaction, and how it can be used to thwart equity disputes with former members.

    Membership Equity in a cooperative housing corporation is one of most fundamental characteristics, and benefits recognized in this unique form of housing and stock ownership. For housing cooperatives where members gain equity in their membership or stock certificate, whether or not based on increased value of the dwelling unit, improvements, or general trends in real estate markets, in instances where a member sells their membership, the return equity amounts frequently become issues of legal dispute. These disputes, if unresolved, can easily reach a point where a former member files a lawsuit against the Cooperative seeking money damages.

    Depending on the cooperative’s bylaws, legal disputes over the return of a former member’s equity (or sale price) may arise due to disagreements over many factors. These disputes can involve questions over unit rehab and restoration costs, legal fees when a membership is terminated, or whether the former member owed any outstanding financial obligations to the cooperative.

    a. What is the Doctrine of Accord & Satisfaction?

    In its legal sense, accord and satisfaction is an affirmative defense to certain causes of actions, or lawsuits. The defense is common over claims involving contracts. To analogize, imagine the following scenario:

    “Person A owes $1,000 to Person B. However, Person A believes that they owe much less than $1,000 to Person B.

    Accord and satisfaction is a legal method of resolving these types of disputes. The doctrine substitutes the original amount (take the $1,000 from the above scenario) and replaces it with an “agreed upon” alternative. Taking the above example, say Person A believed they only owed $500 to Person B. In some instances, the original contract, if for the above $1,000, may be amended. Consider the “accord” to be the substituted amount (i.e., payment of $500 instead of $1,000), and the “satisfaction” to be the payment of the substituted amount.

    The “accord” also serves as an agreement between the parties, “to give and accept, in settlement of a claim or previous agreement, something other than that which is claimed to be due.” Nationwide Mut Ins Co v Quality Builders, Inc, 192 Mich App 643, 646; 482 NW2d 474, 476 (1992) (internal citation omitted). The “satisfaction” on the other hand, is the act of performance, or the execution of the new agreement between the parties to resolve the claim or dispute. Id. When looking at the defense of “accord and satisfaction” a court will look to whether the creditor (or party who is owed performance) accepted the condition that accompanied the tender, rather than whether the creditor accepted the new agreement (i.e., the “accord”). Id. As stated by the Michigan Supreme Court:

    The applicable rule of law is, if the tender is in full satisfaction of an unliquidated claim, the amount of which is in good faith disputed by the debtor, and the creditor is fully informed of the condition accompanying acceptance, an accord and satisfaction is accomplished if the money tendered is retained; for there can be no severance of the condition from acceptance and it avails the creditor nothing to protest and notify the debtor that the amount tendered is credited on the claim and not accepted in full satisfaction. Shaw v United Motors Products Co, 239 Mich 194, 196; 214 NW 100 (1927).

    In order to use accord and satisfaction, a party to a lawsuit must be able to show a contract (either express, written, or implied) to make a payment to discharge a disputed claim to an amount due and owing to another. As stated by the Michigan Supreme Court, “to have [an] accord and satisfaction, the claim must be disputed and then a substituted performance agreed upon and accomplished.” Gitre v Kessler Prods Co, 387 Mich 613, 623–624; 198 NW 2d 405 (1972). The doctrine of accord and satisfaction, at least in Michigan cases, applies to all types of disputes, ranging from contractual disputes and claims, to torts or personal injuries.

    In a typical claim involving a debt owed to another, the “accord and satisfaction” defense, if involving a negotiable instrument, such as a check, is governed by the Uniform Commercial Code (“UCC”). Michigan, for example, codifies this in MCL § 440.3311. The Michigan statute states in pertinent part:

    “(1) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.

    (2) Unless subsection (3) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.” MCL 440.3311(1)-(2) (emphasis added).

    Therefore, the three important elements of the defense to be proven are (1) a good faith tender; (2) for full satisfaction of an unliquidated claim or bonafide dispute; and (3) payment was accepted and payment contained a conspicuous statement that the instrument was tendered as full satisfaction, or that the instrument so tendered was accompanied by a written communication stating so.

    b. How Accord & Satisfaction can help Cooperatives in equity disputes.

    A common legal dispute between Cooperatives and former members typically arise after the sale, transfer or termination of membership, and the cooperative withholds certain amounts from the former member. These amounts withheld, which are typically permissible and set forth in the Cooperative’s Bylaws or Occupancy Agreement, can be for things such as unit restoration and rehab costs, any unpaid carrying or occupancy charges, and attorneys fees and legal costs in the event a membership was terminated for cause that required a lawsuit.

    To avoid, are at least strengthen the Cooperative’s affirmative defenses to a dispute or subsequent lawsuit by a former member over return equity amounts (whether in small claims court, or otherwise), there are some things that Cooperatives can do to give them the “accord and satisfaction” defense. First, when returning any equity to the former member, the Cooperative can include language, either on the check itself, or preferably in an accompanying written correspondence, that this check is for full and final satisfaction of the return membership equity. Such written statement must be conspicuous, and readily visible to the reader. Highlighting this language or writing it in bold font, can help prove this element.

    The “accord and satisfaction” defense must also be based in “good faith.” This would suggest that a Cooperative should not use this defense as a sword to justify withholdings from the return of former members’ equity, or sales price. Any withholdings should be both authorized under the Cooperative’s governing documents and documented. Records of any expenses for unit rehab and restoration costs, labor, invoices, or unpaid carrying charges or any other amounts due to the Cooperative, should be preserved.

    While taking these additional steps will not necessarily prevent a former member from challenging the amount of return equity or sale price, or prevent the former member from filing a lawsuit against the Cooperative, they will strengthen an affirmative defense that the Cooperative can use to quickly dispose of, or have the lawsuit dismissed.

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      Roberts Rules of Order MAHC

      Roberts Rules of Order MAHC

      Closed Sessions: What, Why and How?

      Closed sessions are for the discussion of matters that should not be disclosed to non-directors because of privilege or confidentiality. Closed sessions are an invaluable tool for Boards to conduct business for the Cooperative but only if the tool is used properly. In many states, closed sessions can only be carried out if there is a statutory provision applicable to the reason for the closed session. Such reasons include pending or potential litigation, employee matters, confidential matters involving members or sometimes, matters that are of such a sensitive nature that discussion during the open portion of the session is impractical.

      Closed sessions cannot happen because a single Director requests it; generally, it must be made upon adoption of a motion by a majority vote. The exception is if the procedure your Board adopted requires certain topics, such as personnel or disciplinary issues, to always be discussed in secret. Non-members can attend if invited by the Board. So, if you want your cooperative attorney present or, say a mold specialist present to discuss findings in his or her report, you can discuss it in closed session and that person falls under the cloak of privacy. This is ideal because it allows your professionals, such as your cooperative attorney, to discuss matters which are privileged and if disclosed during an open session, would violate the Cooperative’s attorney-client privilege.

      Discussion that occurs in a closed session should always be kept secret, but the actions that are taken as a result of that closed session discussion, should be taking place outside of the closed session so the actions can become a part of the corporate record (minutes). There are times when disclosure of some of the actions can be discussed outside of the meeting but you really should talk with your cooperative attorney before doing that as it could impair pending litigation or cause unnecessary disruption amongst your members. Which brings us to the final discussion point about closed sessions which is the minutes. NO PORTION OF CLOSED SESSION DISCUSSION GOES IN MINUTES, EVER!

      Violation of the privacy of a closed session by disclosing it in the general meeting minutes is grounds for disciplinary action. Secretaries must stop recording; recorders must stop rolling and no one should be using his or her phone to record closed sessions. In the case where the action of the Board is the result of discussion during the closed session, that should be disclosed in the meeting minutes. For example, approval of the cooperative attorney’s recommendation to proceed with litigation against unit # _____. Again, if ever in doubt, ask your cooperative attorney, or better yet, have your cooperative attorney assist you in developing a meeting procedure that meets any statutory legal requirements for your state.

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        Accommodating the Disabled Member

        Accommodating the Disabled Member

        By Kerry L. Morgan

        What are the legal obligations a cooperative housing association owes to disabled members who seek changes in the policies or rules of the Cooperative because of the member’s medical condition?

        In answering this question, management and members should be aware that the Fair Housing Act (FHA) imposes liability on the cooperative if it refuses:

        [§3604(B)] to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may necessary to afford such person equal opportunity to use and enjoy a dwelling.

        The cooperative may not refuse to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford a member equal opportunity to use and enjoy his or her dwelling, provided he or she is disabled or handicapped. The law does not require changes in rules in order to provide special privileges for disabled persons. It only requires changes when they are reasonable and afford equal opportunity to enjoy the cooperative as do non-disabled members.

        Section 3602(h) of the Act defines “Handicap” to mean “(1) a physical or mental impairment which substantially limits one or more of such person’s major life activities, (2) a record of having such an impairment, or (3) being regarded as having such an impairment.” Such term does not include current, illegal use of or addiction to a controlled substance. A physical or mental impairment is broadly defined. It also includes any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities.

        Many States also impose similar obligations. Check your state laws for particular details. Michigan, for example, provides in MCL 37.1102 for a general prohibition on discrimination against persons with a handicap in housing. The law also makes accommodation mandatory as does the FHA. Likewise, MCL 37.1103(e) further provides that “handicap” means 1 or more of the following:

        1. A determinable physical or mental characteristic of an individual, which may result from disease, injury, congenital condition of birth, or functional disorder, if the characteristic . . . substantially limits 1 or more of that individual’s major life activities and is unrelated to the individual’s ability to acquire, rent, or maintain property.

        2. A history of a determinable physical or mental characteristic described in subparagraph (I).

        3. Being regarded as having a determinable physical or mental characteristic described in subparagraph (I).

        If a member has a handicap or is disabled as defined by law, then the Cooperative is under a legal obligation to make reasonable accommodations in its rules, policies, practices, or services, when such accommodations may be necessary to afford the disabled member equal opportunity to use and enjoy his or her dwelling unit.

        For more details please feel free to contact an attorney familiar with cooperative housing and non-discrimination law.


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          Dear Co-op Counselor

          Dear Co-op Counselor

          Dear Co-op Counselor:
          Our coop did not have its 2020 annual meeting and election of Directors. We were supposed to have voted to fill two seats last year but instead, those Directors continued to serve for an additional year even though all of our Director seats are three-year terms per our Bylaws. Now it is time for our annual election in 2021 and there will be another seat open for election this year. Can we just skip the 2020 annual meeting and election and just run all three seats in 2021 for three-year terms and just skip the 2020 annual meeting since we are already in 2021?
          Sincerely,
          Concerned Board Member
          Dear Concerned Board Member:
          No. All states require cooperatives to hold their annual meeting on the date set forth in the Articles of Incorporation or Bylaws or as soon as thereafter possible. Some states permit specific time leniency for scheduling but no states simply permit a corporation to “skip” an annual meeting or election. The Members have a right to have their annual meeting and annual election, even if it is tardy. Failure to hold the annual meeting within permitted times or even finding an alternative means for holding the annual meeting could result in a lawsuit against not only the cooperative, but individual Directors as well for failing to fulfill their fiduciary obligations. 
          Knowing that there is a risk to the Cooperative, the Board must look to correct as soon as possible. Understandably, the Cooperative chose to adjourn the meeting because of continuing group meeting restrictions, however, the obligation to exercise due diligence to explore alternatives is a continuing fiduciary obligation of each Board member as well. This could result in not only a court interfering with the Board’s business judgment but could result in a finding that the Board acted in bad faith, neglected its duty, breached its trust and acted contrary to the corporation’s purposes.
          Your Bylaws indicate that all terms are for three-years however you have incumbents who sat an additional year because their seat was not put up for election due to COVID. The absence of the meeting does not also translate to a reset of the term because essentially what has happened is an appointment was made to the position that would have been vacant but for COVID. Appointments only sit until the next annual meeting and then that seat term will only be for the balance of the remaining term, i.e., two years. 
          The Board at this point can either combine the 2020 annual meeting and election with the 2021 annual meeting and election, or, hold 2020 first and then hold 2021 perhaps later in the summer. Either way, your membership will be voting to fill two seats for a two-year term and one seat for a three-year term. Should the Board wish to explore meeting options, they really need to consult with the cooperative attorney for legal options and to show due diligence in their decision making process. 
          Very truly yours,
          Co-op Counselor

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          Cooperative Expenditures

          Cooperative Expenditures

          You may be curious as to how a Cooperative Board of Directors determines how to expend its cooperative finances. As Cooperatives are formed as non-profit corporations, any monies derived from carrying charges from members go straight to the operation and management of the Cooperative. However, the expenditure of financials can vary from Cooperative to Cooperative depending on how a Cooperative is organized.

          For example, if a Cooperative is subject to HUD, then the Cooperative must abide by HUD’s guidelines with respect to expenditures. In addition to the terms and conditions found within a Cooperative’s written agreement with HUD, such as a Use Agreement or Regulatory Agreement, with respect to expenditures, a Cooperative is also bound by HUD’s housing handbooks when it comes to expenditures and budgets. Expenditures and budget line items are detailed in HUD’s housing handbooks.

          Examples of HUD housing handbooks detailing financial mandates are found in “Reviewing Annual and Monthly Financial Reports” and “Financial Operations and Accounting Procedures for Insured”. Other pertinent information can also be found in “The Management Agent” HUD Handbook. Essentially, these HUD housing handbooks ensure that Cooperatives subject to HUD expend their finances in compliance with HUD regulations.

          However, it is pertinent to note that HUD itself is not an absolute governing force in the determination of and control over a Cooperative’s expenditures. Often times, HUD may attempt to interject in Cooperative expenditures that either fall outside of the written agreement between the parties or fall within the written agreement but are so prejudicial to the Cooperative’s organization and operation that it warrants the Cooperative Attorney to intervene on the Cooperative’s behalf with HUD. An example of HUD overreach in this sense is HUD denying expenditures relating to Cooperative training and education and prohibiting Board Members from participating in said training and education programs without any authority to do so.

          HUD’s overreach in this example is not only unfair, but warrants the Cooperative’s attorney to intervene. The Cooperative’s attorney intervention in this example would be absolutely warranted so that HUD is prohibited from asserting such governing force over the Cooperative’s expenditures as it has no legal authority to do so. In these cases, it is important for a Cooperative to stand its ground and push back against HUD due to the unfairness and lack of authority of HUD to make such decision. Again, the written agreement between the Cooperative and HUD will detail the terms and conditions with respect to expenditures. However, having your Cooperative Attorney involved to help push back when these scenarios present further protects the Cooperative.

          If a Cooperative no longer falls under HUD, then the above noted HUD housing handbooks are inapplicable. However, this does not mean that a Cooperative not subject to HUD can do whatever it wishes with cooperative funds. Expenditures are subject to the confines of Board approved budgets.

          Essentially, expenditures of Cooperative funds are tied to line items in a Cooperative’s budget. For example, expenditures relating to seasonal lawn and snow are tied to grounds line items in the budget. Another example would be expenditures relating to Board of Directors education and training courses, which may be tied to miscellaneous Board of Director expenses line items or be a specific line item relating to Board of Directors education and training courses.

          However, this does not mean that expenditures outside of HUD are not subject to scrutiny. Expenditures outside of HUD are subject to Cooperative Board of Directors’ discretion under the Cooperative’s state law governing business judgement. The crux of the Business Judgment Rules works to insulate a director or officer of a corporation when discharging his or her duties in good faith. Each state’s Business Judgment Rule varies, but generally speaking, a court will not intervene in corporate decisions so long as said decisions are conducted within the confines of the law.

          Using the above examples relating to seasonal lawn and snow expenses and Board of Directors education and training courses, a Cooperative under HUD, would detail these expenses in its budget. So long as the Cooperative complies with all HUD regulations, and if HUD requires approval of the Budget and said budget is approved by HUD, the seasonal lawn and snow expenses and Board of Directors education and training courses would not be subject to scrutiny. For Cooperatives who are not subject to HUD, the Board of Directors would rely upon the Business Judgment Rule for expenditures relating to seasonal lawn and snow expenses and Board of Directors education and training courses and so long as the Board of Directors discharged these decisions in good faith, said decisions would not be subject to scrutiny.

          Notwithstanding the foregoing, misappropriation of Cooperative funds is always subject to scrutiny. This holds true regardless if a Cooperative is subject to HUD or not. A Board of Directors(s) use of cooperative funds for personal use is not only a misuse of Cooperative funds, but it is illegal. Most importantly, misappropriation of cooperative funds opens the Cooperative up to liability.

          In sum, a Cooperative Board of Directors does not have the freedom to simply expend cooperative funds as it sees fit. If a Cooperative is subject to HUD, then expenditures are controlled and scrutinized by HUD. For Cooperatives not subject to HUD, a Board can use its discretion and rely upon the Business Judgment Rule without being subject to judicial review. Regardless of how a Cooperative is organized, it is always vital to get your cooperative attorney involved to ensure that expenditures are not subject to scrutiny, whether from the membership, HUD or a judge.

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            Eligibility of Members to Vote and Run for Election at Annual Meetings

            Eligibility of Members to Vote and Run for Election at Annual Meetings

            Now that annual meetings have been scheduled and are being held safely, a Board of Directors may be faced with questions pertaining to members being eligible to vote at annual meetings who are delinquent in their monthly carrying charges or operating payments or any other sum due under his/her occupancy agreement. This scenario may be more prevalent in today’s world as a result of the financial impact that the COVID-19 pandemic has caused. While a Board of Directors might be sympathetic to payment delinquencies, a vast majority of cooperative Bylaws provide for a prohibition of a delinquent member to vote at an annual meeting.

            Generally, the Bylaws will provide for a provision that prohibits a member from being eligible to vote who is shown on the books of the cooperative to be delinquent in any payments due to the cooperative under his/her occupancy agreement. The typical time frame of a delinquency is thirty days past due. However, Bylaws vary from cooperative to cooperative, so it is vital that a Board of Directors be aware of the specific timeframe in their respective Bylaws when this situation arises. In most cases, this situation remedies itself as members will cure their payment delinquency prior to the annual meeting as a vast majority of members want to participate in annual meetings as voting is a tenet of self-governance.

            However, a situation may arise where a member is prohibited from voting at the annual meeting due to their delinquency as a result of the cooperative’s Bylaws. It is not lost on a Board of Directors, especially now with the financial impacts of COVID-19, that members may have difficulty curing their payment delinquency. However, it is imperative that the Board of Directors enforce the cooperative’s Bylaws and prohibit the member from voting as a result of the delinquency. Board of Directors who are faced with this situation must contact their cooperative attorney for legal assistance.

            This situation may also arise for a member who is desirous to run for election but is delinquent in his/her carrying charges or operating payments or any other sum due under the occupancy agreement Generally speaking, most Bylaws will also provide for provision that prohibits a member from being elected to the Board of Directors as a result of being delinquent in any payments due to the cooperative under his/her occupancy agreement. In this scenario, the member would not only be prohibited from voting at the annual meeting, but would also be prohibited from seeking election. Just as with the above scenario, a member who is desirous to run for election and participate in self-governance will usually remedy the delinquency prior to seeking nomination. However, if the situation arises where the member refuses to cure the payment delinquency, then the Board of Directors must turn to its cooperative attorney for legal guidance.

            Turning to other eligibility requirements for members seeking to be elected to the Board of Directors, some cooperative Bylaws will also provide for a provision in the Bylaws that place other restrictions for the eligibility of Directors. Examples of restrictions may include prohibitions of a member to be eligible for election if that member is related by blood, marriage or operation of law to a current Board Member or employee of the cooperative or if that member has been convicted of a felony crime or if the member is delinquent in his/her payments. In addition to eligibility requirements, a cooperative’s Bylaws, absent the allowance of nominations from the floor in the Bylaws, may also provide for nomination eligibility such as members announcing their candidacy along with submitting resumes and/or campaign messages within a set amount of days prior to the annual meeting so that the membership can be advised with the names of all candidates seeking election and their resumes and/or campaign messages prior to the annual meeting. As each cooperative’s Bylaws are different, nomination eligibility may be more or less restrictive than the above listed examples.

            Members seeking to run for the Board of Directors must be mindful of the requirements as provided by their cooperative Bylaws with respect to submitting their resume and/or campaign message on time. Some cooperative Bylaws may provide for a specific time deadline to turn in resumes and/or campaign messages or may even provide for a more detailed process for the submission of said required documentation (i.e., how to submit the resume and/or campaign message, who to submit the resume and/or campaign message to, etc.). A member who fails to adhere to the Bylaws with respect to his/her submission of resumes and/or campaign messages will be prohibited from seeking election, of course, absent a cooperative’s Bylaws from allowing nominations from the floor.

            Again, when a situation arises with respect to the eligibility of a member voting at the annual meeting and/or running for the Board of Directors, it is vital that that Board of Directors contact its cooperative attorney for guidance. An experienced cooperative attorney will be able to analyze the cooperative’s Bylaws and provide guidance to the Board of Directors in order to resolve the dispute.

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              Fall is here! Remember to abide by your Cooperative’s House Rules and Regulations.

              Fall is here! Remember to abide by your Cooperative’s House Rules and Regulations.

              As Fall is now upon us, Board of Directors may be scheduling their fall inspections of the cooperative premises and dwelling units to ensure that all members are in compliance with their House Rules and Regulations. As more of us are spending more time at home these days, you may have purchased a few new items to store outside for your own personal use, such as a patio set, canopy, grill, wading pool, etc. Each cooperative has its own unique House Rules and Regulations for not only what is permitted or prohibited but how such items can be used and stored.

              It is always important to refer to your cooperative’s House Rules and Regulations prior to purchasing outdoor items so that you can be aware of what is permitted and what is prohibited and how such items can be used. Moreover, it is equally important to abide by your House Rules and Regulations when it comes to storing outdoor items in preparation for the fall and winter months. These specific provisions not only protect the cooperative but also protect the membership and the dwelling units.

              You will see that as each cooperative is different in its day-to-day operations, each cooperative’s House Rules and Regulations will vary from other cooperatives. For example, some cooperatives’ House Rules and Regulations may provide that by a specific date patio tables must be neatly stored, pushed back and secured and that patio chairs must be neatly stacked and covered. Alternatively, some cooperatives’ House Rules and Regulations may even strictly prohibit any outdoor personal items to be stored outside in the winter months.

              Another example that you may see is that some cooperative’s House Rules and Regulations may even provide that the member is responsible for turning off his/her outdoor water supply by a specific date to prevent pipes from freezing in addition to neatly storing a member’s hose. Again, in the alternative, a cooperative may prohibit a member from turning off his/her outdoor water supply and request that the member allow for maintenance or management staff to safely perform such work. This is a great example of the importance of a member fully understanding his/her House Rules and Regulations in order to keep his/her dwelling unit safe and secure.

              It is important to review your cooperative’s House Rules and Regulations regularly to familiarize yourself with provisions regarding your patio area to avoid violation notices and potential fines, if your governing documents provide for such measures. Seasonal inspections ought to be done by a Board of Directors and/or the cooperative’s management agent to ensure compliance with the cooperative’s Governing Documents, including the House Rules and Regulations. Ensuring full compliance with a cooperative’s House Rules and Regulations not only protects the cooperative premises, but it also protects the member’s dwelling unit as well. The goal of these specific provisions within the House Rules and Regulations is to ensure that a member’s personal outside patio area is maintained in an attractive and clean condition.

              With the changing of the seasons, this would also be a great time for Boards of Directors to review their House Rules and Regulations to see if any amendments need to be made. A Board of Directors must always contact its cooperative attorney to review the House Rules and Regulations as an experienced cooperative attorney will be able to guide the Board of Directors with any changes that the Board of Directors is desirous to make. An experienced cooperative attorney will also be able to provide for additional amendments to further protect the cooperative and the membership.

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                2021 Opening of Outdoor Recreational Facilities During COVID-19

                2021 Opening of Outdoor Recreational Facilities During COVID-19

                With summer around the corner, your cooperative may be getting ready to start planning for the opening of swimming pools and other recreational facilities, such as basketball courts, tennis courts, playgrounds, and parks. However, due to COVID-19, extra attention and careful consideration must be given to ensure that the cooperative is in compliance with any and all local and state COVID-19 restrictions as well as adhering to all CDC guidelines for these types of recreational facilities. As we all know, COVID-19 restrictions vary from state to state with respect to face mask orders, gathering size restrictions, capacity limitations and social distancing requirements, and COVID-19 restrictions are continuing to change. Therefore, it is pertinent for Board of Directors to review and monitor your state’s COVID-19 restrictions to ensure that your cooperative remains in compliance.

                The opening of these recreational facilities do not come without issues, such as enforcement and implementation of COVID-19 restrictions that must be addressed by the Board of Directors prior to the opening of these recreational facilities. First and foremost and prior to the opening of any cooperative swimming pool, basketball courts, tennis courts, playgrounds and parks, it is imperative that the cooperative and/or its management agent contact the cooperative’s insurance agent to determine if there are any ramifications that may be associated from the Board of Director’s decision to open these types of facilities. An example of a potential ramification could be the loss and/or denial of coverage if the cooperative’s insurance policy prohibits the opening of these facilities due to COVID-19 risks. If the Board of Directors is given the approval from its insurance agent, then the Board of Directors must consult with and seek assistance from its cooperative attorney to begin the planning process for opening the cooperative swimming pool, basketball courts, tennis courts, playgrounds and parks.

                With outdoor swimming pools, we are seeing that many states are restricting capacity size to a specific number of persons or reducing bathing capacity to a specific capacity in addition to ensuring that social distancing is maintained and proper cleaning and sanitization is conducted. Restrictions are also being implemented on the number of persons allowed on the pool deck at one time. In this context, a foreseeable issue arises with COVID-19 restrictions as with most outdoor swimming pools; more people may be able to be on the pool deck than in the pool itself. Board of Directors will have to develop a written policy to ensure that members are not disenfranchised if this situation arises.

                Another foreseeable issue that comes with the opening of an outdoor swimming pool is the enforcement of local and state restrictions put in place as a result of COVID-19 as well as the implementation of CDC guidelines for pool use. The Board of Directors will have to determine how it will enforce the local and state restrictions in addition to determining who (Board of Directors, cooperative employees and/or management agent) will enforce local and state restrictions. This will require very careful planning to ensure proper policies and procedures are in place. The Board of Directors must also determine whether pool rules will need to be amended to comply with the local and state restrictions put in place as a result of COVID-19 in addition to complying with all CDC guidelines for pool use (i.e., cleaning and sanitization).

                With outdoor basketball courts, tennis courts, playgrounds and parks, we are seeing that most states are allowing these types of outdoor facilities to remain open as long as social distancing and any face mask mandates/orders are being followed and enforced. Of course, proper cleaning and sanitization in accordance with the CDC guidelines is also to be implemented for these types of outdoor facilities.

                Of course, in the alternative, it could be foreseen that a Board of Directors using its due diligence and business judgment could decide to keep these types of recreational facilities closed due to COVID-19 restrictions. A Board of Directors may determine that the financial costs of enforcement measures and the implementation of local and state COVID-19 restrictions including adherence to the CDC guidelines is a greater risk to the cooperative than keeping these recreational facilities open during the spring and summer months as a result of COVID-19.

                Absent a denial from a cooperative’s insurance agent and any local and/or state prohibition of outdoor use of recreational facilities put in place as a result of COVID-19, a Board of Directors could begin to plan for the opening of these types of recreational facilities. However, the Board of Directors must use its due diligence and business judgment to determine whether it can promulgate enforcement measures and ensure compliance in its implementation of local and state COVID-19 restrictions including adherence to the CDC guidelines. It is vital that your cooperative attorney be involved at the onset to not only conduct a full review of all COVID-19 restrictions and CDC guidelines, but also to assist the Board of Directors in developing a written plan that addresses all enforcement issues and ensures complete compliance with any and all local and state COVID-19 restrictions and CDC guidelines.