Everybody sometimes disagrees with the decisions of their condo or co-op board. Maybe the choice to rearrange the garbage receptacles out front seems ridiculous, or the ongoing clattering of machinery on the roof is driving the top-floor residents nuts, and the board seems determined to let it fix itself. These are the kinds of inevitable complaints that every board has to deal with sooner or later, and most manage to handle such issues with prudence and aplomb.
But what if the board does things that seem to be beyond the pale—perhaps even illegal? Where do boards’ powers end? The board is the governing body of the association, and there are certain boundaries and limitations that they should operate within.
The Law Says...
How are boards' powers spelled out? How do boards know what they can and can't do under law? Fortunately in New Jersey, there are several laws that serve as guideposts. “The powers are always going to be enumerated in the bylaws,” says attorney A. Christopher Florio of Stark & Stark in Princeton. “What is also helpful here in New Jersey is the Condo Statute that aids us from a statutory standpoint—what additional powers there may be for the condo if they are not set forth in the bylaws.”
“With all of these associations, co-operatives included, the boards are essentially running a business. They are established most of the time as some sort of corporation. Mostly here in New Jersey, non-profit is what we run into with them,” explains attorney Judith A. Fallat of Denville.
The legal term known as the Business Judgment Rule provides boards with some legal protection. Essentially, courts won't second-guess a decision made by a board of directors, so long as it's authorized to act for the condo or co-op, and the decision was made in good faith with the best interests of the corporation in mind.