What Happens When Nobody Shows Up to Approve Your Building Loan?

Who will show up for your co-op or condo’s annual meeting and will you have enough shareholders or unit-owners to conduct the necessary business at hand? That’s the pressing question as thousands of New York’s co-op and condo boards begin the annual meeting season this spring. Greg Finger, vice president and director of property management at Finger Management, recounts the tale of one condo his firm manages that didn’t achieve a quorum — the first time —  and in this episode he explains the simple strategy that worked the second time.  Whether you're  dealing with apathetic residents or critical financial decisions, you'll learn exactly how to craft notices that motivate attendance and protect your building's financial future. Habitat's Carol Ott conducts the interview.

How To Run Your Building: For Co-ops and Condos

Transcript

[00:00:00] Carol Ott: Welcome to Inside Track, a conversation with New York's leading property management executives. I'm Carol Ott with Habitat Magazine, and my guest today is Greg Finger, Vice President and Director of Property Management at Finger Management. Every co-op and condo holds an annual meeting to elect new officers, inform residents how things are going and vote on other important business.

But if there isn't a quorum, voting can't happen. Greg, you manage a 90 unit condo that held an annual meeting where two things needed to happen. Board elections and unit owner approval to take out a loan. And normally when you tell residents you want more money, everybody shows up. Not here, though. Can you share what happened?

[00:00:48] Greg Finger: So with the initial notice that went out of the meeting, we did notify that we would be voting on a loan approval for the condominium, as well as electing a new board of managers. But unfortunately that wasn't enough information to entice everybody to come out.

So unfortunately we did not have a quorum and we had to reschedule this annual meeting. 

[00:01:07] Carol Ott: Do you think when you said voting on a loan, it didn't occur to the unit owners that meant they were gonna have to pay more money for this loan? 

[00:01:18] Greg Finger: I think that may have been the case which obviously did not light the fire, so to speak, to get everybody to show up and give this approval.

Because if this loan did not get approved by the unit owners of the condominium, they would have a significant common charge increase. 

[00:01:32] Carol Ott: Let me just ask, was this a virtual meeting or an in-person meeting? 

[00:01:35] Greg Finger: This was in person. 

[00:01:37] Carol Ott: So they didn't get quorum. 

Was the board surprised?

[00:01:41] Greg Finger: Somewhat. 

[00:01:42] Carol Ott: What were the next steps? What happened then? 

[00:01:44] Greg Finger: So at that point we did open up the meeting for just a Q&A for the unit owners who did show up so that we didn't waste anybody's time completely. But we did go back to the drawing board and we drew up a new notice of meeting to advise everybody again of the purpose of the meeting, but give a little bit more information on how extensive the increase would be if we weren't able to get this loan approved.

And then just a little bit more detail on the reasoning for the loan and what it was gonna fund. 

[00:02:10] Carol Ott: And what was the outcome of that? A

[00:02:13] Greg Finger: much better turnout. Not a hundred percent, which is a very rare case, but enough that we were able to have the majority of the unit owners there and be able to vote on the matter of the approval of the loan.

[00:02:23] Carol Ott: Talk to me a little bit about, in general with your clients, when there's an annual meeting and there's other business that needs to be decided. Do many boards give real detail about what needs to happen or do they sort of assume, I'm gonna give you the notice of the meeting, just tell you we're gonna do business stuff.

What is typical among your client base? 

[00:02:46] Greg Finger: So it really is dependent on what the topics of discussion are going to be. In this case, a topic of discussion for a loan approval obviously is a very specific discussion that we have to have. And most of the requirements for condos and co-ops are that in order to discuss and vote on something at a meeting, you have to outline it in the notice of meeting that goes out to the unit owners or the shareholders. Otherwise it can typically be an open-ended " other matters that may come about before said meeting" and now you have an open discussion. But if there's something specific that needs to be voted on, you do need to outline that in that notice of meeting.

[00:03:21] Carol Ott: Is there any risk to the board, and is it possible that the board was thinking, the more information that they gave to the residents about the details of the loan, that would give residents an opportunity to organize and come to the meeting, protesting what was happening?

[00:03:38] Greg Finger: I'd say there's always a possibility of that happening. And sometimes that may drive a board to be a little reluctant to give too much information, but I think if that's gonna happen, it's gonna happen anyway. And if you need a majority of the shareholders or unit owners to vote to approve it, you need to have them there anyway.

So if it's disapproved by the unit owners or shareholders, it's almost the same outcome as if you don't have enough people show up. So you might as well give all the information, let everybody know what's on the table, and have everybody there to make that vote anyway, just to make that happen. 

[00:04:11] Carol Ott: I'm wondering, would it make sense for other boards?

I mean, this board went back a second time and gave more content, but they could have also held an informational meeting to explain everything so that at the annual meeting it was just a vote. Is that a strategy that you would recommend or you have had experience with? I. 

[00:04:30] Greg Finger: I have not experienced that, but it is definitely not a negative thing. Have this information session, explain the reasoning for this, and, possibly have that by Zoom. Zoom is a good platform to get a good outcome. And also if it's a discussion platform where you're really just providing information and not necessarily voting or needing questions from the other unit owners or shareholders.

That might be a good way to do that and go about it, to have an information session, two, three weeks before the meeting, and then have your meeting in person or by Zoom, where you're gonna actually vote on the decision. 

[00:05:01] Carol Ott: And I'm curious, in this particular condo, did the same board members run? Were there additional board members?

How did that shake out? 

[00:05:09] Greg Finger: The majority of them were the same. We did get a couple new ones, which I always think is a good thing because it helps with the transition for the new board members because you have people who have been working on the projects that you've been working on for the last year that will remain and be able to transition that information smoothly.

[00:05:25] Carol Ott: I'm curious: I understand this may happen more with condominiums where people rent out their homes or perhaps are living other places part of the year. In your experience, do most buildings hold annual meetings today virtually or in person? 

[00:05:43] Greg Finger: It is a mix right now. I encourage the in-person meeting for an annual meeting because I think there's a lot more interaction, especially when you talk about a building like this size, 90 units. If you put 90 unit owners onto a Zoom meeting, even with the hand raising function, it still can be a little hysteric. So I think it's a good place to have an in-person meeting.

And then the board meetings can be by Zoom throughout the year. 

[00:06:08] Carol Ott: And as a final takeaway, what would you recommend to boards really in terms of content for their annual meeting notices? 

[00:06:18] Greg Finger: Be detailed. If you are making a decision that affects every one of your unit owners of shareholders, explain why. Explain what the benefit of them being there is and explain the importance of what you need them there for. 

[00:06:30] Carol Ott: Okay. Sounds like very good advice to me. Thank you very much, Greg Finger. 

[00:06:36] Greg Finger: Thank you.