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Legal News You Can Use

3) Since it is likely that the membership will take a vote on the matter, the Board is well advised to prepare amendments to the bylaws. There are certain issues that should be addressed at such a time:

i) As noted above, you can clean up the bylaws to eliminate clauses that are now invalid – such as the marital discrimination in proxy voting.

ii) To avoid future confusion and possible litigation, eliminate references to HUD and the Regulatory Agreement.

iii) Fix problems: such a quorum problems – lower it if you have difficulty making quorum for membership meetings; provide for different voting procedures – you may want to “legitimize” the practice of many co-ops that require candidates to declare prior to the actual annual meeting and bar nominations from the floor; or require any motions that will be made at the annual meeting to be submitted in writing prior to that date. You may also want to allow for absentee voting ballots, or day long voting.

*It is advisable to make sure you have a clean title to all of the properties owned by the cooperative. This can be done through the co-op attorney with the services of a title company. By doing so, you avoid the embarrassment of making decisions on the corporate assets which may be encumbered by some cloud. Some issues we have uncovered by doing this research include:

  • a street in the co-op that never was properly conveyed by the original developer.
  • a cloud created by a stray deed from a member’s attempt to put his shares into a trust.
  • an old lien placed by a contractor that did work for a member and did not get paid.

If you need help on any of these matters, please call an experienced cooperative attorney.

* Rethink the membership selection process. Since 9/11, there has been heightened scrutiny to make sure there is no ethnic or national origin discrimination. Check your forms and checklists to ensure that you do not require information that violates the federal laws on this. What may be legitimate and indeed required of employers may not be a valid area of inquiry for housing cooperatives. EEOC and the Michigan Department of Civil Rights is actively examining some cooperatives for possible violations. Beyond the forms and checklists, of course, are the interpersonal contacts that occur with applicants. Consider ways to reduce your exposure by making the process occur on paper as much as possible, rather than through interviews. The more objective and uniform the criteria, the better.

 

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

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