Read More »" /> Co-op Law for Dummies. Randall Pentiuk; Pentiuk, Couvreur & Kobiljak P.C. | National Cooperative Law Center - Part 4

Co-op Law for Dummies

E. Know how to manage the cooperative’s employees:

1. Best Advice: Don’t have employees
Shift the legal liability to another party – such as Management Agent
Let it be someone else’s headache

2. Second Best Advice: Play defense

a. Have policies
i. In writing
ii. Acknowledged receipt in writing

b. Deal with issues with policies

3. Employment at will

4. Internet & computer policy
Note: Employer may be liable for copyright violations if employee downloads and distributes copyright materials

5. Harassment

6. Get insurance if you can

7. Create a paper trail

8. Conduct performance reviews

9. Equal treatment guideline
Note: You can be mean, but be mean to everyone

10. Learn the “ABC’s” of employment law, or hire lawyers & managers that do:


F. Know How to Hire Professionals

1. Premises to Operate by:

a. Cooperatives are not well understood; Make sure you hire professionals that are experienced in Cooperative law,
accounting & management

b. Wolves in Sheep’s Clothes: Not every professional respects the board and its role, or the rights of members. Some
professionals believe that they know what is best for your Cooperative

2. Applying these Premises

a. Develop list of professionals in your region that are experienced in Cooperatives

i. Ask your other professionals
ii. Network with other boards
iii. Check out the MAHC website

3. Send out “Requests for Proposals” to this list

4. Interview those you are interested in [make sure there is “chemistry”]

5. Check references

6. Make a selection and document the relationship

7. Periodically, evaluate the relationship & communicate concerns & issues

G. How to Get the Most out of Vendors & Protect the Coop

1. Document the Deal

a. Scope of work

b. Time for performance [use of liquidated damages or bonus for early completion]

c. Schedule of payments; clarity of amount & means of computing

d. Assignability of work by vendor

e. Warranties & Representations

f. Force Majeure

2. Protections

a. Injuries to third parties or property

3. Insurance

a. General Liability

b. Automobile

c. Special coverages for high risk work
NB: Make sure the insurance company is a good one [financial; history of claims; location within U.S.;
registered with State]

d. Indemnification – shift the risk

4. Injuries to workers

a. Workers compensation coverage [guess who pays if there is none?]

b. Contractual coverage

5. Avoid paying twice for labor & materials

a. Get sworn statements

b. Post required notices under state construction lien laws

c. Get waivers from subcontractors

6. Use of surety bonds to make sure contractor performs [cf cost]

a. Performance bond

b. Payment bond

H. Know How to Deal with Members

1. Membership Relations

a. Periodic Open Meetings

b. Communicate – newsletter

c. Informational Meetings – example of refinancing [even though not required, it allays concerns & reduces
rumors, criticism]

2. Member Problems

a. Adopt clear rules & standards of conduct [with legal counsel]

b. Strict enforcement; uniform enforcement

Example: some have 3 late payments within year as cause for termination, but do not follow it
Example: some have excessive legal fees for evictions, but do not screen new members carefully

3. Create evidence

a. Have a paper trail if going to court

b. Require written complaints

c. Use camera or video to document visible problems

d. Seek independent sources

i. Nonresident member:
Postal search School records
Maintenance staff testimony re snow – footprints Security firm re parked vehicles
Utility records
Tax returns – where is refund mailed? Employment records
Driver’s license

ii. Disturbances
Police reports 911 tapes

I. Know How to Deal with HUD

1. Is HUD really the Expert?
Reference: Micki Williams’ training of HUD servicers & questions asked
Reference: Erroneous opinion re mortgage refinancing authority

2. Dealing with HUD’s bureaucracy

a. Don’t be antagonistic

b. Do rely on your professionals to interact and advocate on your behalf

c. Do ask for references to HUD’s authority

d. Do not hesitate to go higher up the ladder if necessary

e. Do use appeal rights [& make sure you follow letter of the law exactly]

3. Ultimate solution: get rid of HUD as soon as possible
Rationale: Cost savings associated with end of REAC and other administrative burdens that eat up your staff
and professionals’ time

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