Read More »" /> Knowing Your Governing Documents. Randal A. Pentiuk; Pentiuk, Couvreur & Kobiljak | National Cooperative Law Center - Part 4

Knowing Your Governing Documents

        First, although many cooperatives have boilerplate clauses, this is misleading and every cooperative must be viewed within its own environment, taking into account the entire universe of applicable governing documents. Do not assume that your cooperative is governed in the same manner as others.

        Next, remember that the universe of governing documents consists of the visible – articles; bylaws; and HUD regulatory agreement – as well as the invisible – the state corporate statute; federal, state and local law; and Roberts Rules, etc.

        Make sure you keep your governing documents protected; one of the worse things that can happen is to not have certainty in this area. Follow the procedures of safeguarding and keeping them in order.

        To be effective, you must recognize the interaction of the various governing documents we have identified. Qualified legal assistance is required for more sophisticated issues, as it can become quite complex. There is a hierarchy that must be considered. For example, if state law prohibits some act, then it preempts bylaws that allow that act.

        Finally, bear in mind that HUD plays a dominant role while the original mortgage is still in effect; once it is gone, so goes the Regulatory Agreement. This provides you with an opportunity to address problems of the past, eliminate confusing language that will then be obsolete, and consider other options such as moving from limited equity to market rate – if it makes sense for your cooperative [this is a rather involved decision that is discussed in another article and, and requires an analysis of your members’ economics as well as the market conditions of the surrounding area].

 

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

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