Are there any limits on how much board members can be muzzled?

Our New York development (Condominium) is about 90% complete (there will be over 700 residences when all is said and done).

The developer, when he created the Offering Plan (prospectus, by-laws etc.), included the fact that he would have a 4 to 3 majority on the board until the very last unit was sold. He even added that if he decided to rent units he could, and even if he rented a single unit in perpetuity, he would hold the majority of votes.

The 3 voting resident board members are constantly reminded to not say anything to anyone about anything. There are also non-voting resident board members who are read the same riot act.

Consequently, we rarely find out anything that the developer does not want us to know even if we have invested a substantial amount of money in the community and all own a piece of the action, so to speak.

Is there not a set number of issues which are universally accepted as confidential? And, if so, what are they?\

Lots of things have gone on in our community that need answers, but we cannot get an "official" word out of anyone.

Thanks, as usual, for your help.
Steve

I believe our situation is very similar to what you are describing. A previous Board member told several of us that after he was elected at the first Board meeting one of the two developers (both were on the Board) solicited verbally from all other Board members to confirm to him that anything the Board talked about was private and not to be discussed with others. This Board member was the only one of 5 refusing to agree with such ridiculousness and asked why not share information..."are we protecting the launch codes or something?".

He resigned shortly after with one of the reasons he told us is that he felt he was left out of discussions that took place without his knowledge. Some of us have tried to make sure they understand what Matthew stated above. It is a tough road, good luck!

Thanks Matthew, Dave, and Frank...

All our board meetings are closed sessions with the exception of one open board meeting a year. The minutes of closed meetings are sanitized so as to tell us nothing of any consequence.

There must be an accepted list of topics which are truly considered confidential. I would imagine that a homeowner not paying fees would be off limits and perhaps pending legal issues, but even though the developer's people talk about how the resident board members cannot go against the "Confidentiality Policy", none of them have ever seen it. It does not seem to exist at all.

What should legitimately be off limits for board members to discuss?

Steve

Steve,

I would ask for a copy of the confidentiality report, or ask to be pointed in the direction that you agreed to such Board conduct when purchasing there.

Your board meetings are closed sessions? Does it state such in your bylaws that the only meeting that members are allowed to attend, and the only meeting for which minutes are to be made available is the annual meeting? I highly doubt it.

Just because members are not invited to, or informed of the meeting does NOT mean it's a closed meeting. Any member should be able to ask "When is the next board meeting? I would like to attend"

Minutes often are sanitized for any board. The only thing that really needs to be in minutes is action taken. If there's a vote, then it needs to go in the minutes. If there's discussion, it should go in the minutes as "The board discussed XYZ" and noted if the discussion was tabled, a vote taken, or whatever the outcome of the discussion was. Minutes don't need to include other info like chit-chat that may well occur.

If you have a situation where the minutes state that a Confidentiality Policy was approved, and there was no vote taken, and no such policy was distributed or reviewed, you have far more serious issues and I would recommend consulting a real estate attorney for advice.

Dave,
There are minutes of every closed meeting. They are usually available two months after the meeting and a homeowner must go to the clubhouse to read them. No photocopies are allowed because I was once told, "they will get into the wrong hands".... whatever that means.

I have read the by-laws and I see nothing about allowing or not allowing other people at the meetings. I know in the past the sponsor has 4 appointed members at each meeting and generally an attorney from his staff who actually ran the meetings even though she was not on the board.
Steve

Why in the world would you buy something where you will always be in the minority? My only suggestion would be to read the NY non-profit statutes (assuming your COA is registered as such) there might be something in them that could help. The three homeowner members of the Board are they elected or appointed?

Here's something very basic. You can't be held to an agreement that hasn't been made. If the confidentiality agreement is being "refined" then it does not exist. It did not exist prior to the election and thus the board members cannot be held to an agreement they haven't read and is going to be made after the fact of their election or service.

Second, see what is covered by executive sessions at state level and in your CC&R. You should ask that the executive session minutes be as detailed as possible. I understand they are supposed to be confidential, however, they should give references to the issues and the voting pattern. This is a legal protection. For instance, if the matter refers to state law, the code should be listed and who voted for what. The same for the CC&R. This is how an executive session would be handled by a community college school board or your city board.

Third, if the CC&R and by-laws do not prohibit something then there are no rules against it. To then prohibit it without a citation is a violation of the by-laws. Attend all meetings.

The board members fiduciary duty is to enforce the CC&R and by-laws as they exist not as they possibly could exist or be amended.

I'm not a lawyer. I'm a journalist who has studied sunshine laws. I'd ask a journalist about the sunshine laws in your state. In my program, I was required to study them in different forms as pertains to different fields of journalism.

When the developer is in control you have a choice. You can serve on the board and abide by his restrictions or risk being dismissed from the board by violating them. Or you can work from outside the board with the information that is available and try to force the developer to be more transparent. There are various ways that can be tried: organize the association members, get the local government officials involved, cultivate contacts with the local press, etc. In my experience those don't work all that well but you may be able to force some openness.