As cooperative shareholders and condominium unit owners join boards of directors and boards of managers, they will undertake fiduciary duties toward those entities. (Although this article applies to both coops and condos, for convenience sake, it refers only to coops.) This article is to help new (and longtime) board members avoid breaching their fiduciary duties. The members of a coop’s board of directors have a legal obligation to act in the best interest of the corporation and its shareholders. They can, however,breach that duty by:
• Taking unauthorized actions.
• Ignoring critical issues.
In order to render informative decisions, directors must be knowledgeable about their coops, including:
• The corporation’s financial condition.
• The property’s physical condition.
• The existence of building violations.
• Residents’ complaints.
• Existing or potential litigation.
• New laws, rules and
Directors must review the governing corporate instruments and corporate records to obtain vital information. No director can be prevented from inspecting the books and records....