Skip to main content
Fulltext search
FILTER RESULTS BY:
RECOMMENDED IN RENT
Moving to NYC after college? Here's how to find a rental apartment
RECOMMENDED IN BUY
How buying real estate in NYC is unlike anywhere else
RECOMMENDED IN SELL
A guide to using a no-fee renovation loan from a NYC real estate firm
RECOMMENDED IN IMPROVE
How to make your NYC renovation more pet-friendly
BEST REAL ESTATE WEBSITE!
National Association of Real Estate Editors
BEST REAL ESTATE WEBSITE! National Association of Real Estate Editors
Brick Underground
Social Links
follow:
  • Facebook
  • Twitter
  • Instagram
  • Flipboard
  • search
Brick Underground
☰ Brick Underground
Brick Underground
Brick Underground
☰
Brick Underground
  • Buy
    • Buy
    • The Market
    • Investing
    • New Construction + Condos
    • Affordable Housing
    • Co-ops
    • Negotiating + Financing
    • How to Buy in NYC Guide
    A rendering of the roofdeck at 55 Broad Street.
    Rent
    Housing lottery launches for 143 apartments in the Financial District
    Aerial panoramic view of Red Hook, Staten Island, Brooklyn, and Verrazano-Narrows Bridge
    Sales Market
    24 NYC neighborhoods where median prices more than doubled in the past decade
    431 West 54th Street is a co-op building that allows subletting.
    Investing
    Want to buy an investment apartment to rent out? Here's what you need to know
  • Rent
    • Rent
    • Affordable Housing
    • Roommates + Landlords
    • The Market
    • The Search
    • How to Rent in NYC Guide
    Young woman using laptop at new apartment, with moving boxes around.
    Roommates + Landlords
    Didn't get your security deposit returned in NYC? A new chatbot can help
    A rendering of the six-story building in Park Slope.
    Affordable Housing
    Housing lottery launches for 45 rent-stabilized units in Park Slope
    Laura and her dog Jack
    Rent
    Why I moved to NYC from Brazil: I relocated for work and reunited with friends I made 15 years ago
  • Sell
    • Sell
    • Staging + Open Houses
    • Negotiations + Closings
    • Getting Ready
    • How to Sell in NYC Guide
    Aerial view of downtown Brooklyn
    Sell
    Median sales price in Brooklyn climbs to $995,000 in the second quarter
    Downtown New York City
    Sell
    Manhattan deals rose to highest level in nearly two years, defying national trends
    new condo building and older co-op buildings in Prospect Heights, Brooklyn
    Sell
    Brooklyn median price nears $1 million but the spring market is a question mark
  • Live
    • Live
    • Neighbors
    • Kids + Pets
    • Neighborhood Intel
    • Products + Test-drives
    • Troubleshooting
    FlatRate moving brick underground
    Live
    How to troubleshoot your move in advance
    Sponsored By flatrate
    Distressed woman sitting in her apartment
    Troubleshooting
    Ask Altagracia: My live-in partner is abusive. How can I get out of my lease?
    Sponsored By Outerbridge Law P.C.
    NYC apartment buildings with fire escapes
    Neighborhood Intel
    Can you sit on a fire escape in NYC? 5 things to know
  • Improve
    • Improve
    • Small Spaces
    • Small Projects + DIY
    • Renovations
    • Design + Architecture
    • Products + Services
    • How to Renovate in NYC Guide
    mini splits apartments new york city
    Products + Services
    Yes, you can install central AC in your co-op or condo unit. Here's how
    image
    Products + Services
    Take back your deck! How to win the war with mosquitoes and enjoy outdoor living again
    NYC apartment building with AC units
    Products + Services
    My neighbor's dripping AC is driving me crazy. What can I do?
  • Boards & Buildings
    • Boards & Buildings
    • Boards
    • Finance
    • Insurance
    • Legal
    • Property Management
    • Structure & Systems
    • Sustainability
    Burned and Boarded Up Windows
    When should your board hire a public adjuster?
    Manhattan GM
    What should we consider when renewing insurance for our building?
    Facade of NYC buildings
    How much is insurance on a NYC co-op or condo building?
  • Advertise
    • Advertise with us
    • Sponsored Content
    • Experts
    FlatRate moving brick underground
    Live
    How to troubleshoot your move in advance
    Sponsored By flatrate
    Distressed woman sitting in her apartment
    Troubleshooting
    Ask Altagracia: My live-in partner is abusive. How can I get out of my lease?
    Sponsored By Outerbridge Law P.C.
    Building facades in New York in winter
    Roommates + Landlords
    Ask Altagracia: I withheld rent due to inadequate heat and I'm being hassled to pay it back. What should I do?
    Sponsored By Outerbridge Law P.C.
  • Brick Report
  • About Us
  • About Us
The subscription service is currently unavailable. Please check again later.
Fulltext search
FILTER RESULTS BY:
New Main menu
  • Buy
    • Buy
    • The Market
    • Investing
    • New Construction + Condos
    • Affordable Housing
    • Co-ops
    • Negotiating + Financing
    • How to Buy in NYC Guide
  • Rent
    • Rent
    • Affordable Housing
    • Roommates + Landlords
    • The Market
    • The Search
    • How to Rent in NYC Guide
  • Sell
    • Sell
    • Staging + Open Houses
    • Negotiations + Closings
    • Getting Ready
    • How to Sell in NYC Guide
  • Live
    • Live
    • Neighbors
    • Kids + Pets
    • Neighborhood Intel
    • Products + Test-drives
    • Troubleshooting
  • Improve
    • Improve
    • Small Spaces
    • Small Projects + DIY
    • Renovations
    • Design + Architecture
    • Products + Services
    • How to Renovate in NYC Guide
  • Boards & Buildings
    • Boards & Buildings
    • Boards
    • Finance
    • Insurance
    • Legal
    • Property Management
    • Structure & Systems
    • Sustainability
  • Advertise
    • Advertise with us
    • Sponsored Content
    • Experts
  • Brick Report
  • About Us
    • About Us
    • Advertise
  • About Us
SUBSCRIBE TO OUR NEWSLETTER →
Social Links Footer
  • Facebook
  • Twitter
  • Instagram
  • Search
Ask a Co-op & Condo Lawyer [ SPONSORED ]

I think our co-op board election results are fraudulent. What can I do? 

By Wagner, Berkow, and Brandt  | May 28, 2019 - 1:00PM
image

Fair and accurate board elections are important.

iStock

SHARE:
Share to Facebook
Share to Twitter
Print
More...

In our recent co-op board election, there was a much higher number of proxy votes than normal. I am not alone in suspecting that the election results could be fraudulent. How can we find out? And if they are, is there anything we can do?

As most condos and co-ops permit voting by proxy, which enables owners and shareholders to appoint another building resident to vote on their behalf in quorums and elections, the concerns you and your neighbors have could be valid. 

“The most common fraud seen in co-op and condo board elections is forged proxies,” says Steve Wagner, a NYC real estate lawyer and partner at the firm Wagner Berkow & Brandt. “I don’t even know if there is a case that we’ve handled that hasn’t involved some aspect of forged proxies.” 

New York’s Business Corporation Law authorizes election challenges and provides the procedure by which an aggrieved party may challenge an election. To do so, you should write a letter setting out the grounds for the challenge and requesting the election results not be certified until the ballots and proxies are reviewed, and requesting a review of the ballots, proxies, sign-in sheets, and corporate records to check the validity of proxies and ballots.

This can sometimes result in a resolution of challenges quickly and without much expense, but if the co-op refuses the request, the person challenging the election may have to go to court to force access and to have a judge decide the outcome. 

If it turns out that there are just a handful of questionable proxies, however, “the court will not likely review an election challenge if the number of proxies at issue is small and the outcome of the election would not change,” Wagner says. “A challenge that involves only a few proxies and does not change the election outcome would be a waste of everyone’s time.”

Cases that do reach that point, though, are usually settled if it’s likely there has been proxy fraud or tainted board election results, and a new election typically follows. While there could be criminal liability, "I have never seen a criminal proceeding result from a co-op or condo election," Wagner says. "There are procedures to ban bad actors from serving on the board, but it is different from an election challenge."

Examples of proxy fraud

Wagner recently had a case similar to yours that involved a large co-op building that had, for the first time ever, more than 90 percent of shareholders turning out for a board election. 

“The co-op never had more than 65 or 70 percent before that, and if you looked at the proxies, which we did, there were many signatures on certain proxies clearly written by the same people,” he says. “It was remarkable how blatant the fraud was. The handwriting was not even disguised.” 

Another example of proxy fraud could be a tampered-with proxy statement or verbal misrepresentations, which misleads the person giving the proxy about how or for whom the proxy will be used. If the person requesting the proxy says he/she will use the proxy to vote for a particular candidate in favor or against a proposed resolution and then does not, this could result in a challenge.

Having a slew of proxies all dated the day of the election could be a red flag, too, because if a shareholder or unit owner gave a signed proxy to more than one person, the one with the later date is the one that will be counted. Grossly unexpected election results may also indicate fraud is afoot, Wagner adds. 

Proxy fraud: What’s the worst that can happen?

"It’s important that co-op or condo board election results be fair and proxies submitted for them be accurate because these buildings are essentially multi-million dollar businesses," says Leisl Kerechek, associate attorney at Wagner Berkow Brandt. "They’re run by a board that is elected by unit owners and shareholders to oversee what is likely the largest investment they have: their apartment."  

A deceptive proxy holder could swing an election to vote in favor or against a resolution to amend the bylaws or proprietary lease of your building. And since the board manages the building’s reserve funds, maintenance, bill payment, vendor selection, etc., this could be critical. 

“If you get somebody who is bad enough to submit false proxies, what else are they going to be doing fraudulently?” Wagner asks. 

How to prevent proxy fraud in board elections  

Unless special rules in your building’s bylaws require a proxy be signed in the presence of a witness or notary, a proxy that’s valid on its face will be counted, Wagner says. 

It’s the duty of the inspector of election to, among other things, tabulate and certify election results; make sure that residents signing in are who they say they are; and ensure that proxies are valid. There are limits on what the inspectors of election may do, but they may confirm the validity of the proxy by comparing signatures on it to what is on the building’s corporate records. 

The building’s managing agent is often tasked with serving as inspector of election, but your board could also hire a third-party company. While they can be costly, especially in large complexes, it may be worth it considering the amount of risk involved. Ensuring fair and fraud-free elections is well worth the cost both in terms of the comfort it will give to shareholders that the elections were run properly and in avoiding the election of bad actors, who may waste or steal a reserve fund or who could sign a contract with a vendor who either may have an undisclosed affiliation with a board member, not charge a fair price, or who may be paying kickbacks.

“The cost of having an election service or managing agent check proxies is a small price to pay to ensure those things aren’t happening,” Wagner says.

Other ways he’s seen buildings do their due diligence to prevent board election fraud is by keeping records of sign-ins and proxies, marking proxies and ballots with stamps or signature to ensure they’re not tampered with or copied, and opening and counting ballots in front of everyone (a level of transparency that is “pretty unusual,” Wagner says).

New York City real estate attorney Steven Wagner is a founding partner of Wagner, Berkow, & Brandt, with more than 30 years of experience representing co-ops, condos, as well as individual owners and shareholders. To submit a question for this column, click here. To arrange a free 15-minute telephone consultation, send Steve an email or call 646-780-7272. 

Brick Underground articles occasionally include the expertise of, or information about, advertising partners when relevant to the story. We will never promote an advertiser's product without making the relationship clear to our readers.

topics:

Ask a Co-op & Condo Lawyer co-op board Co-ops condos lawsuits lawyers
SHARE
TWEET
BRICK’S PICKS
NYC apartment building with AC units
My neighbor's dripping AC is driving me crazy. What can I do?
Historic brick facades of NYC apartment buildings
Getting overcharged by a landlord? Here’s how the Tenant Protection Unit helps rent-stabilized tenants
Apartment buildings in Soho
New Rent Guidelines Board report justifies a rent freeze, tenant advocates claim
Brooklyn apartment buildings
Understanding net effective rent: Here's how to calculate your real monthly rent
image
How much should you renovate your NYC apartment or house before selling?
Council Member Shahana Hanif hold press conference before the City Council vote on Arrow Linen spot rezoning.
City Council signs off on 10-story towers for Arrow Linen site
Follow Brick on Instagram
@brickunderground | #brickunderground
Brick UndergroundBRICK UNDERGROUNDREAL LIFE. REAL ESTATE. REAL NEW YORK.
Social Links Footer
  • Facebook
  • Twitter
  • Instagram
  • Search
Main menu footer
  • Buy
    • The Market
    • Investing
    • New Construction + Condos
    • Affordable Housing
    • Co-ops
    • Negotiating + Financing
    • How to Buy in NYC Guide
  • Rent
    • Affordable Housing
    • Roommates + Landlords
    • The Market
    • The Search
    • How to Rent in NYC Guide
  • Sell
    • Staging + Open Houses
    • Negotiations + Closings
    • Getting Ready
    • How to Sell in NYC Guide
  • Live
    • Neighbors
    • Kids + Pets
    • Neighborhood Intel
    • Products + Test-drives
    • Troubleshooting
  • Improve
    • Small Spaces
    • Small Projects + DIY
    • Renovations
    • Design + Architecture
    • Products + Services
    • How to Renovate in NYC Guide

Get more news you can actually use...

Email Address

Delivered to your inbox weekly - for free.

*By signing up you agree to receive occasional emails on behalf of our sponsors

Footer Menu
  • About Us
  • Advertise

Copyright 2009-2024 by BND Ventures Inc | Privacy Policy | Terms of Service | Ad Choices | Login