And what happens if they don’t?

Q: I live in a large Lower Manhattan cooperative with nine board members. One board member has sold their apartment and moved to another state. A second member is living in a foreign country with his family and subletting his apartment, saying he will eventually return to the complex. Both are still serving on the board of directors. I think their ability to work for the best interests of the cooperative could well be compromised. Is this legitimate? What can we do?

A: The law does not dictate that co-op directors must be residents of the building, or even shareholders, but your cooperative’s governing documents could contain such qualifications and requirements.

Start with the bylaws. Do they allow people who don’t live in the building to serve on the board of directors? Do they require shareholders who have sold their shares to relinquish their board seats?



It’s possible the bylaws are silent on these issues. But if residency is required, shareholders could compel the resignation of the nonresident directors, said Leni Morrison Cummins, chair of the condominiums and cooperatives practice at the law firm Cozen O’Connor.

Your question raises a larger issue facing some co-ops: Is the board serving the interests of the residents, or of investors? Over time, cooperatives have allowed shareholders not just to have their primary residence elsewhere or rent to a subletter, but to buy shares as investors. “This has led to many cooperatives having split populations: one of residential shareholders and one of investor shareholders,” Ms. Cummins said.

Typically, she said, resident shareholders want to invest to make their daily lives better and to maintain restrictions on occupancy and sublets. Investor shareholders often prefer to keep costs down and to loosen restrictions on occupancy and sublets.

Shareholders can vote to create a residency requirement, but if your building has many investors, this could be difficult. “If the shareholders don’t amend the bylaws to restrict board membership, try to develop a meaningful relationship with the nonresident board members and share your concerns,” said Andrew I. Bart, senior counsel at Kagan Lubic Lepper Finkelstein & Gold, LLP.

And remember that your co-op is a democracy, so you can participate in the next election. “Campaigning and collecting proxies can take some effort,” said William J. Geller, a lawyer with the firm Braverman Greenspun. “But if the reader wants to change the direction of the building, that can be a very effective way to get things done.”

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