misappropriation of condo maintenance money

As a shareholder, I believe you have the right to see this information.

There should be an external accounting review available yearly. If there has been a significant change in year over year expenses and a dramatic change in cash flow with no visible difference in the building itself, you may have a case for fraud/mismanagement. This documentation should be available to any owner, but is often readily provided to the attorney representing a new buyer as part of due diligence. Any units still for sale?

Shareholders=coops. In a condo, they will fight you to keep those bills, etc. hidden. Contact the A.G. office. The Condominium Act, of the Real Property Law; reqires all of the bills and receipts for payment of expenses be kept on file.

And people are concerned that the coops have problems. Whenever you hear the word "board", you have problems.

a question for OP, is this a new building (past 5 yrs)? if it is, is there some sort of a warranty on fixtures?

And just what do we mean by "fixtures"?

Talk to the board members so you can be reassured and/or vote the board members off.

Also, who is auditing the financials?

This post raises a huge issue, IMO, about both coops and residents of both being entitled to more transparency re: expenses, bills and the like.

Swim, I have a sort of similar issue right now with my coop - HUGE maintenance increases in the past 2 years with generalized pro forma alleged rationalizations, meanwhile I have suspicions that the super has a hand in ensuring his entire family is on the labor payroll. I've been told that all I can do is wait until the yearly accounting comes out in May and/or submit a "note to the board about my concerns." The managing agent is ENTIRELY unhelpful and I believe in cahoots with the super. I realize I sound like a rambling, paranoid pain in the a$$, but after all its my hard earned money at stake!

^^^meant to say "about both coops and condos"

They are all in cahoots: The Board, the managing agent,and the super.

You have other owners, with the same concerns; so contact the A.G.s office.

I can't thank everyone enough for answering my question. What is A.G's office? My condo is in a building that is only 3 years old so I don't understand why so many repairs are needed. Also, another unit member says that they needed a facet to be looked at and that management sent someone who came and then replaced it with a cheaper and worse facet that leaked in 2 places....thus the facet worked worse then the previous one. This unit owner asked that the new one be replaced with the earlier older facet. Of course, management charged for changing it....$300 for replacing the prior facet with a worse facet.

As for me, I asked the managing agency to give me a copy of the financials and they refused saying that I need permission from the board. This made me very angry since as an owner who pays maintenance....why do I need the board's permission to see the financials and receipts for repairs. Also, other unit owners think think that board members may be getting kickbacks to "look the other way" Kickbacks with "free repairs" or better service. I don't know if this is true but certainly want to investigate.

I asked my lawyer to see if I need permission from the board to get finanacials. She said no. However, now the managing agency says that to get copies of the finanicals and receipts I or the board will need to pay for this service. This management company says that I will need to pay $10 per copy....and then added that labor may cost more for photocopying...since.... there are alot of receipts. I certainly don't want to pay $1000 for photocopies. I asked that they scan the receipts and e-mail it to all the owner of the building....they refused.

Some of the other units think that the Board, the managing agent and the super are in cohoots. I at this time do not believe this because I think that repairs in Manhattan are of course more expensive....however, I do think that expenses and receipts should be transparent.

Does anyone have suggestions on how I should proceed?

In a condo or a coop, the management, Board, superintendent and all other building staff should have nothing to do with faucets or any other fixtures within an apartment. To the extent that they do it's outside the concern and budget of the building as a whole.

These are the responsibility of the unit owner. If they were faulty from the time of purchase, the Sponsor should send outside tradespeople to do the work, and pay for materials directly -- not on the building Corporation's dime.

Dear Alanhart, you are 100% correct....I gave the "facet example" only to show that the super is corrupt. The facet unit owner paid the $300 and not the condo building.

However, $15,000 was spent on common areas for ???unecessary repairs(after all the building is only 3 years old and the builder or sponsor sold the units)

Also, another unit member discovered that managing company was falsifying bills...eg: it cost $2000 to fix something according to the receipt..however...they presented a bill for $4000.

Can I make the managing agency scan receipts to e-mail to owners of the condo...after all, the owners are the ones paying the maintenance that pay the salary of the managing agency?

A.G. = Attorney General's office

>> Also, another unit member discovered that managing company was falsifying bills...eg: it cost $2000 to fix something according to the receipt..however...they presented a bill for $4000.

what did your board members say to this?

I just did a quick google search and found this:
http://www.habitatmag.com/publication_content/2010_february/featured_articles_from_our_print_magazine/co_op_condo_fraud_is_back

Contact the Attorney General, N.Y.C. office is on lower Broadway. Gather up your co-owners, copy all documentation, etc.; and send it in to the A.G.

You will get nowhere, trying to deal with the managing agent. DO NOT PAY for copies of ANYTHING.

In a town where a bagel and coffee can cost $177 what do you expect?

You can go online and print out a copy of The Condominium Act of The Real Property Law.
Swim over there.

Audited financial statements should be mailed to you at the end of the year. As an owner you have a right to view board minutes. You have the right to seethe buildings financial records. I take issue with the calls to call the A.G.

Some good first steps, would be
1) Speaking to the resident manager
2) Speaking to a board member
3) speaking to the managing agent

You could be responding to false rumours and/or there could be a very legitimate reason. The sponsor just sold out a building(if I read your statement correctly). I assume they made a nice profit. Hard to see they are engaging in petty theft and needlessly replacing fixtures.

is your management company Cooper Square by any chance??? they've been thrown out a few places that i know of for doing what you described and much worse.

if i were in your place, i would gather all of the unhappy owners, pay for the copies and then redistribute. with 20 owners at $1000, it will only be $50 a piece. of out those owners there have to be some who know how much things cost and can make a big stink before the next elections to have a whole new board selected.

my old coop was installing windows from the management company for $500 a piece while i had mine installed, better ones, for $250. the money had to go somewhere.

I really, really can't thank everyone enough for all their helpful responses especially aifamm and truth.

It is interesting that truth made the comment (as per above)that "They are all in cahoots: The Board, the managing agent,and the super." I hope that this is not the case for the building that my condo is in...however, some of the unit owners certainly are making this conclusion since BOTH the management agency and the board members are so covert.....(also, the super charges so much for any work)

By the way, the management company is not Cooper Square. However I do appreciate ab11218's suggestion.

First of all, I find all of the above info most helpful. Second of all, I have already spoken to a lawyer and am willing to spend money to investigate exactly what is going on...after all, I have a vested interest in my property/investment.

I do agree that everything in Manhattan is super expensive. I too feel that accusing people is not a good thing and I will definitely "not" do this without proof. However, there is a fine line between paying a little too much, paying exceedingly too much, and falsifying receipts/statements(stealing.) I will investigate further and if there truly are "irregularities", I do appreciate the advice about reporting this to the NYC attorney general.

I expect board members to be loyal to the owners of the buildings. I expect board members to try to keep the building both "in good shape" and "nice" since we live there and our homes are probably our most expensive lifetime investment. Board members should try to do due diligence in trying to get the best deal for our money so that our maintenance money is spent wisely.

I am not a board member and asked to attend their meetings but was told by a board member that this was not allowed. This board member told me that I can't attend unless I am "specifically" invited by a board member.

I am currently in the process of requesting that the management agency provide me financial data for the building...and certainly am willing to pay "reasonable" fee for photocopying...however, I was pretty upset when they said that the charge for this service "can be a lot of money"

I do NOT want to make board members unhappy, nor do I want to make the management agency upset ...however, as an owner, I feel that I need to protect my investment. Any suggestions?

Be careful if you proceed down this path. You still have to live here and you won't be making any friends. If you don't agree with the way the board does things, you can either run for the board or move.

Dear aifamm, you are absolutely right about maybe selling.

However, please note that I have been living in this building for the past 3 years and get along very well with my neighbors. Unfortunately, the building is very large and while some unit owners just "give up"...others complain about dwindling reserves.

Like myself, other unit owners are also asking for more transparency with the expenses but also encounter the same roadblocks as do I. I am seriously thinking about selling since I am too busy to become a board member. Also, why do I have to become a board member to be entitled to see expenses anyway?

Personally, if I did become a board member, I would vote to scan expenses so that it can be e-mailed to all condo unit owners to see ......since e-mails are non-intrusive and can be ignored/deleted easily. Transparency of finances is important because shouldn't every condo owner be interested in how their maintenance money is being spent.

"technologic" stated above that he/she also has a similar problem as do I....therefore, I assume that many others have the same problem as do I.(please refer to his/her above comment)

Making records open and available will make people less upset, and "paranoid" It also portrays the management agency as being diligent and honest.

I certainly will not accuse anyone of stealing or being in cahoots unless I have proof. For all I know, the management agency may just be incompetent about receipts not matching (I still need to verify whether this is true)....however, if no one spends time checking, this certainly can't be good for the building's finances/reserves.

swim,

This might be obvious, but don't necessarily trust even the building's "audited" financials as there is a good chance that such numbers were played with from the start.

Charging you for copies of the financials sounds like they are trying to dissuade any investigation, which is a red flag in my book.

Yet the bigger problem here is that the law and its actual execution is rarely swift or "just". As several have posted, be very careful with how you proceed because in the short- and medium-term you might find yourself taking a LOT more heat than you will be able to apply.

Unfortunately many see real estate - both the sale and management - as a license to commit outright fraud, embezzelment and theft. And frankly, unless a case gets particularly strong media coverage, most of the criminals involved get away with it 99% of the time.

Remember, they hold all of the cards and you are simply asking to see them. Unless you have hard evidence of price changes and misallocated funds, it is going to be difficult to prove it with the "financials" they are going to provide you with.

Good luck.

The problem with looking "at the books" is you have to understand what the numbers mean.

Correct that "audited" doesn't mean that the auditor (an accounting firm swamped with this year-end stuff) looks at every bill and check.

To prevent any fiddling by the people who approve bills and write checks, the treasurer goes through the monthly management report looking at every bill and deciding what checks to cut, and then looking at the previous month's checks, reconciling them to the bank statement, and checking them against the previous month's bills. It's really keeping a second set of books. Fortunately the big losses are easy to spot, but if you're going to sweat the small stuff then be prepared for lots of hours of work.

It's all analogous to a bank. Hundreds of years of learning how to prevent fraud, myriad systems in place, and human inqenuity will still come up a way to steal.

They probably just look at one or two transactions. The good thing is that the books are relatively uncomplicated with the building on simple cash accounting. Swim, you may want to take a step back in this. $15,000 on fixtures seems non-material. If they purchased them, it's hardly stealing. And if your concerned that reserve fund is going down, keep in mind that the building may not be raising your common charges. It's also possible they will be going back to the sponsor to recoup charges.

I think the main issue is an apparent lack of transparency.

Excessive "copying" costs...
Closed board meetings...

I am assuming that Swim had to go through a vigorous personal financial exam and a board interview to be able to purchase his/her apartment, but now the very same board that demanded such excessive personal exposure is withholding access and information.

While this might be the "norm" with coops, it sounds like the perfect environment for embezzelment and theft. Not to mention the pschyologic tactic of taming shareholders by showing them "who's in charge" from the entry process to unstated negative consequences for those that happen to complain. I but I guess this is the standard operating procedure for the real estate business where the consequences are minimal to nonexistent.

The OP is in a condo, so no rigorous pensonal financial exam or board interview. All this does apply to both co-ops and condos, though.

The point with the copying is that somebody's got to pay for it. The managing agent isn't going to copy thousands of extra pages per month, for free, for whoever wants them.

If the managing agent has some kind of scan-it-once document-management system, then no big deal. I don't know how many have invested in that, though.

Any board will let shareholders and owners attend meetings, and go into closed session for anything sensitive. Just ask.

Management could suggest that OP examine monthly expenditures by category, which presumably are tracked in any monthly reporting system that RE management companies used. In the condo I used to live in and was on the Board of, we Board managers received those routinely each month ... from all three of the bad management companies that we went through.

OP could then ask for breakdowns and/or receipts for particular categories that seemed suspect, and it wouldn't be very expensive to pull and copy that specific info (rather than ALL receipts), regardless of who paid in the end. Management and/or Board are stonewalling OP, rather than educating or appeasing him in any appropriate sense.

closed door condo meetings as opposed to what? Conducting every meeting and discussion with 100 unit owners in the background?

As opposed to maybe recording or taping them, maybe?

It is 2010... recording meetings and putting them online is super easy and would solve the transparency issues for those that couldn't attend in person.

These are meetings regarding the management of a BUILDING - not planning the invasion of another country.

Again, too many people in real estate tend to think that they have the right to hide information or keep secrets ("buyer beware" - before and after the purchase, evidently). Whether they are doing this because they just don't care or that they are trying to actually hide something, it is suspicious and completely unnecessary.

Boards do not work that way, anywhere(public or private). Swim does the board conduct any town halls or send out any news letters?

And that is part of the reason that shareholders have been getting the shaft from many public companies...

Again, this isn't a Microsoft board meeting, but if anything an even more significant board meeting for its shareholders given that most recent NYC owners have had to spend at least $1M (if not far more than that) to own a "share" of the building.

I am not denying that "boards do not work that way", but simply stating that given the amount of money involved and the various shady activity that takes place in the real estate business in general, it is shocking that more shareholders don't demand (and receive) greater transparency.

There should be NOTHING going on in Swim's board meeting that can't be openly shared with it shareholders and acting as if there is makes me even more suspecious of what really is going on behind closed doors.

How about discussing your neighbors line for non payment of common charges which will result in your building getting sued, raises for staff, disputes between owners and building. You have no idea what you are talking about.

There's going to be a fine line between "having more visibility" and "attending board meetings". One of my old buildings had committees, but this again goes back to:
1) running for the board and changing things
2) accepting things the way they are
3) moving
Your own private investigation could get expensive, but if you feel it is the right thing to do, then go for it. I think running for the board is a cheaper option for you.

Good point regarding privacy issues, but those sorts of situations don't dismiss the need for greater transparency from building boards.

The question is what rights does a coop shareholder have to information regarding his investment. Potential liability issues aside, you are implying that the shareholder doesn't have a right to such information until the board deems it so. Also, that the board / management company has the right to put up roadblocks (fees and restrictions) to access information that should be openly available.

Meanwhile who is watching what the board and management company are doing? The easily tricked and careless auditors?

We live in a society of very passive and sheep-like stock shareholders whose apathy has been taken advatage by pro-management, pro-CEO and pro-board interests. It has become such a norm that businesses love to claim that "they wouldn't be able to operate" if shareholders "meddled" with management - or even just knew what was REALLY going on.

And I guess given the RE boom that it is a norm here in NYC to spend over $1M and not receive full disclosure on what is going on with your investment. I suppose there is so much money floating around out there that people could really care less if a certain percentage of their maintenance is being wasted or stolen. And to think that people (read: boards / management companies / supers) DO NOT take advantage of this lack of transparency is naive.

It is one thing if coop shareholders agree to limit their access to building information but another to claim that such restricted access "is the norm" and put up obstacles to information if such access is permitted.

I am simply arguing that increased transparency protects the shareholders' interests far more than it damages their investment.

Transparency is obviously good, but change is difficult.

committees to involve interested building members is good. Opening up board meetings to the entire building is bad. Novices always think this is a good idea, reality is quite different. Wonder how many of the critics actually look a their building's financials and attend annual meetings to ask questions.

wonder how many have actually sat through a town hall where no numbers were given. :)

http://cooperator.com/articles/2042/1/Board-Members-and-Privacy/Page1.html

Asking the managing agent, requesting to view documents etc.: Look, either you have good reason to believe that there is a problem, or you are not sure. Your rights will not be a given, by the board or managing agent. Keep written records, and stop with the "asking" and "speaking to". Get it all on paper.

Then, instead of allowing yourself to be forced to flee your home, you can instead join together with your co-owners to get things corrected.

Point is there are a lot of naive opinions on what goes on at board meetings.
Most of it is boring, but of a nature that can't be made open for liability reasons. I'm also hearing speculation re bogus billing on items totaling $15K which just boggles the mind. Get a grip! , most unit owners want nothing to do with being on a board or attending an annual meeting. The idea that personnel working for the managing agent are looking to engage in petty theft is a little far fetched

The town hall is horrible enough (but still important). Have you ever sat there watching dozens of people bickering over the stupidest things? Can you just imagine 100 of those same people scrutinizing expenses? Yikes.

Actually, things seem to be looking up because two of the board members are looking into complaints about expenses. They found that one of the expenses recorded by managing agency was more then $3000 over the actual cost/receipt. Thus, either the managing agency is "sloppy"/incompetent or (let's not say ...stealing....) but overcharging the condo building's reserve. However, I agree with the above comments that falsifying receipts and that.... making up expenses isn't difficult especially if no one is checking.

However, apparently new fixtures like pipes, fans and etc are being replaced...and some owners including myself wonder why??? (the building is only 3 years old.) Also, somehow during one such "job" the a gas pipe broke and the condo reserves had to pay over $10,000 for another repair to fix the gas leak. My neighbor and other condo owners wanted to know why the initial licensed company who broke the pipe did not pay or use their insurance to pay for the accidental gas leak(our condo requires all work to be done by licensed companies with insurance)

Anyway, I agree that I shouldn't sweat the small stuff...certainly not...a few hundred dollars but with charges of thousands here and there....before long the reserves will be depleted and maintenance will go up or there will be a special assessment to be paid by every owner.

Due to the large number of comments, I can see that my problem is quite common. Thus, Transparency is a necessary deterant to incompetency and embezzlement.

Memito is correct in saying that I am upset because of:

1) Excessive "copying" costs that I interpret as management's way to avoid/delay disclosing info
2) closed board meetings which makes me and other owners paranoid.

I do not agree with Riversider that privacy is sacrificed. Board meetings are not FBI or top secret meetings. Financials should be made readily available to all the owners because I and every owner must pay. I do not need to hear about gossip or about fights between neighbors. However, discussions about staff raises and expenses all need to be open....because this affects my wallet.

So what ...someone is not paying their maintenance...do you really believe that no one should find out? We all may miss one or two payments due to vacation, loss of job, medical illness etc. I don't think anyone will ask if someone misses a few payments however, if this last for a long time or is not eventually paid..then the condo reserve suffers..thus...every owner suffers/pays.

Riverside...also..when you state: "The problem with looking "at the books" is you have to understand what the numbers mean." I feel that: If the numbers/figures are that hard to understand, then the management agency must be disorganized or trying to hide something.

This whole "thing" started because:

1) the management agency refused to give me the financials (by law, I am entitled to get them)
2) my neighbors claim that there are unecessary repairs in the common areas (building is brand new)
3) that one or two of the board members are in cahoots with the management company
4) I was refused permission to attend board meetings (my lawyer said that I was legally allowed to attend)

Fortunately, 2 other board members are looking into the bookeeping and ....apparently...interesting info are surfacing!!

Swim sounds what will make your building happy is a forensic audit? But this may cost more than it uncovers.

Dear Riversider, you are correct in saying that forensic audits are costly, however, the building is only 3 years old..so.. a forensic audit should not be so costly. Anyway, we can only move forward with expenses. If future expenses are transparent then there will be no need for a future forensic audit.

Moreover, future expenses should be made open and transparent for the owners since it is they who are responsible for "footing the bills"

If board members are honest and open about expenses..and...if management agencies do a good job of documenting expenses (afterall, this is what they are paid to do) then transparency is not a problem. Also, by law, as owners who end up paying for expenses..we are by law entitled to see expense documentation.

You are right about people generally being to busy to attend board meetings and you are right that some owners don't care to review the financials. That is their prerogative. However, I for one would like to know where and how my money is spent ....and by law, ....I am entitled to do so.

I do not want to spend money wastefully nor unecessarily...however, I will do so to prevent/deter embezzlement of my investment which in this case my home. A person's home is probably a person's most expensive/valuable lifetime investment. Moreover, many of us have mortagages for this investment.

In my opinion, anyone who does NOT spend time to pay attention to their investments is foolish.

Because of the above problems, I am currently considering becoming a board member and also about maybe selling. I know that one of my neighbors is so "disgusted" about the mis-management of funds that they are planning to sell.

However, if everyone just "abandons ship" by selling...this does not make the problem go away, nor does it help with maintaining "healthy" finances for my building .....and this building is..... where I and the one's left behind are still living.

My building is NOT only my investment,...it is my home.

What neighborhood is this in?

The building is in Manhattan. Anyway, why should what neighborhood matter? I seriously think that when it comes to money...eg: expenses...everything should be transparent for whoever is paying.

If I being the owner am responsible for the cost....then I need to see, and understand where is my money being spent. Of course, being in a condo, I may be "out-voted" for where and how much is spent, but this information should be transparent for every owner to see.

People can understand about being "out-voted" on different issues since majority rules for what should be done in a condo. However, people should NOT be expected to blindly pay and to "blindly" trust. This is foolish when it comes to your investment/money.

There should not be any covert board meetings about expenses and the management agency should be able to provide financials upon request to owners. Financial records should be in order and easy to understand...otherwise, that is a poor reflection of the management company's bookeeping and competency.

As for charging rediculous monies for photocopying,..receipts can easily be scanned and then e-mailed. Owners can read their e-mail or delete it if "they don't care" about looking at finances. (I guess these people never check their stock/ira/401K reports nor check their bank statements either.)

If the management company continues to give me a hard time about getting finanicals on my investment property/home, I will have no venue but to proceed legally as per my lawyer. Truth's comment about contacting the Attorney General seems harsh to me but is definitely a good suggestion.

However, I think that we should all move forward and try to make things work out for the betterment of our building/our home.

I am going to suggest that our condo pay for a scanner so that our management company can use it for distributing our financials in a timely manner. Scanner's can be bought for $99.99. It's quick, cheap (no stamps), efficient and paperless. (definitely "go green" and save trees)

I also think that board members have a hard time making everyone happy and should be respected for all the hard work and time they devote to the building's well being...however, their meetings should be announced and open to prevent mistrust, like technolgic's comment "paranoia." Also, I bet that if people have everything e-mailed...and if people knew that the meetings are "open" then most people probably would not even attend..(cause most people are lazy or busy) but the option to attend should exist and minutes should be distributed to all the owners....afterall, it is their investment/home and their money at stake.

As a shareholder, you would have better access to the Regular meeting of the board minutes. As a condo unit owner, the Office of the Attorney General is where you need to file a complaint. It's not harsh; it's what needs to be done if you can not get the information re: payments to contractors; that the Condo board and managing agent are required to keep on file.

a.g. would be useless. you'll have to take the condo to court and be prepared to spend your own money.

You can file a complaint, without filing a legal action.

Dear Truth and Riversider, thank you so much for your input. I really do not want to spend money but am prepared to do so if I must. I will be meeting with my lawyer in regards to my condo.

Fortunately, two board members are looking into expenses because of all the inquires. Also...right now, other owners are asking for copies of the annual report for 2009.

Do you know when should annual financial reports from 2009 have to be distributed?

Is there a deadline? After all, the later we get it, the less we can investigate bad work or questionable expenses.....eg: what if something was done Jan or Feb 2009...and then....we get copies of the annual report in Sept or Nov of 2010 which is one and a half years later?

Also what does everyone think about my idea to scan expenses and the report? After all, scanning expenses to owners is not the same as deciding what and where to fix. The board members were voted in to "look after" our condo building and is entrusted with making decisions to maintain and "improve" things. However, once the decision is made, and money is spent...then....I think all the owners should be aware of what is left in the reserves, and also be made aware of the finances of the building (since we all are responsible for paying.)

I think that scanning everything makes records/bookeeping easy...it would be like maintaining a checkbook.

Management agency should be able to do this otherwise they are incompetent and/or hiding something ....and to dissuade me from looking..... as Memito says in the above comment "a red flag"

What do you think about me suggesting giving a scanner to the management company? I personally can't see the liability about scanning receipts for repairs....after all, it is my maintenance/money that is paying for both management and the expenses incurred by the building. Scanning would save money for labor, paper, stamps as well as provide excellent access to bookeeping (no need for a forensic audit then)

swim. I think it is admirable you want to serve on your board, and you should. But the idea that the building sits in on every board member strikes me as a subtle desire to second guess them. What does your board member say is the reason for the expense errors? There should be receipts for everything and the numbers seem to small for theft. Are you not getting the correct facts or is their poor bookkeeping?

Dear Riversider, first of all, the numbers are not small...but even so, should we allow/tolerate mismanagement, misappropriation, or embezzelment of "small" amounts of money. Although the amounts of monies may not be as large as those Bernie Madoff managed, ......if you had to "personally" pay for unaccountable monies....(even small amounts)....would you??

Small amounts of unaccountable bookeeping over months and then years is what causes the depletion of a building's reserve and then the collapse of a building's desirability as an investment. Would you buy a condo in such a building? Would a bank lend a buyer for such a building? Would you want to stay and "pay" for a building that is losing it's value...and is difficult to sell or mantain?

Also, small thefts become big thefts if left unchecked.
And.... if management is incompetent with small numbers, they will be incompetent with big numbers as well.

I agree with your comment that I doubt everyone in the building would want to "sit in on" board meetings (however).... by law, it is their right. I personally don't consider sitting in and listening to board meetings as "second guessing" what is going on. I consider sitting in these board meetings, as showing that you care about the building. It also ensures that board members discuss what is important for those that voted them in....and to vote out....those who fail to give the time and attention to the building as promised....when they volunteered to be elected.

I think that board members should be respected and appreciated for their hard work. However, covert meetings about staff raises, expenses, and arrears....is dishonest and makes owners paranoid. By law, this is not permitted so should not be tolerated by the condo owners who must foot the bill.

I am not happy about spending money to seek legal counsel, but I will do so to protect my investment. After all, one's home is usually one's biggest lifetime investment.

your condo should have an insurance policy called a "Fidelity Policy" which would insure against employees or the agent stealing from the condo. Look into it.

Just get everything in writing. The good thing is that your Condo is fairly new, so you won't have to deal with sorting through years or decades' worth of documents.

The board won't let you sit in on their regular meetings, so don't expect an invitation. You can form a committee, of unit owners to oversee large expenses for repairs/renos.

Convince as many unit owners as possible, to attend the annual unit owners' meeting each year. It should be held, in the Spring after the audit reports have been sent to the owners( usually in March.)

Ask any unit owners who can't attend to designate your name on their proxy.
Don't allow the board to impose a B.S. "Five-minute speaking limitation" on owners who want to address an issue. Questions should be answered. Take notes.

Good luck.

swim, what you are proposing is fine and reasonable. I really think it's a platform for you to run for the board.

I've seen the transparency of information in the form of committees rather than the actual board meetings. It's disruptive for a random owner to randomly show up to an important board meeting and take up a lot of time to review something completely unrelated to the topic at hand. Have you been present to a town hall meeting? Those things last FOREVER and the more people that are involved, the worse it gets. And things get ugly.

Your scanner idea is fine, but someone has to scan all the receipts and file them. Have you tried this yourself? Buy the $100 scanner and start scanning all your personal receipts and you'll see how much work it is. The management company will probably argue that they will have to hire someone new just to handle this request.

Can we get a legal analysis from aboutready?

She didn't go to law school or do much beyond a BA in psychology, but, unlike most of you, a managing partner of a major NYC law firm turns to her for legal advice. (Makes you wonder about those $800 per hour bills you get from big law firms). Anyway, aboutready, what would you advise here? And if the OP has to go to court, which judges would you stay away from?

Dear aboutready, I would love to get your legal analysis/advice on our above discussion. I also want to thank everyone for helping me with my problem.

aboutready, can we please get your legal analysis?

http://www.habitatmag.com/publication_content/2010_february/featured_articles_from_our_print_magazine/co_op_condo_fraud_is_back

http://www.youtube.com/watch?v=GgD28MfMAY0&feature=player_embedded

http://www.youtube.com/watch?v=GgD28MfMAY0&feature=player_embedded

http://www.habitatmag.com/publication_content/2010_february/featured_articles_from_our_print_magazine/co_op_condo_fraud_is_back

Dear Riversider, You are amazing!! I REALLY, REALLY can't thank you enough...in fact, I think that joining streeteasy was the best money I have ever spent in regards to real estate/ property.

This thread is a great example of Streeteasy talk feature at its best. I feel for anyone who finds themselves in a situation such as the one OP describes above.

I don't know about that NYCNovice. The biggest red flag I see here is that there was some "Truth" posts that have been deleted? Exactly why is the truth being hidden in a discussion about potential dishonest dealings? And what is with Moroccan Chicken?

I own in a building in San Francisco that came online in 2007. One of the other owners is trying to get a coalition together to sue the sponsor because the sponsor still owns a considerable percentage of the building with no intention to sell. I have declined to participate in the proposed lawsuit because I feel that all of the risks that have materialized in that building were disclosed in the offering plan. I also have no issue with the way the condo board is running the building because the level of transparency is high and it all makes perfect sense to me. We are also pleased with the way the board of the building into which we bought in New York runs the building. As with the SF purchase, we did extensive due diligence prior to buying. I do not know the identity of the building into which this OP bought, but I am curious as to how this situation turned out. In our SF building, I know some owners have sold at a significant loss. It sounds like some owners in the building above decided to simply sell, and I would be curious to know if they sold at a profit or at a loss. One of the things that continues to fascinate me about New York real estate is/are the high price points at which new condo developments are selling. Most if not all of the people that I know in New York (small sample size) lives in coops; who is buying into all of these new condo developments?

FC - What I was able to gather from previous years of SE postings by and about Truth before her account was deleted is that she actually sued either the board or the sponsor of a building in which she lived. I actually have always wondered about the identity of that building as well because I wanted to learn more about that particular lawsuit and how it turned out.

There was a scandal with several managing agent firms about 15 to 20 years ago about condo AND co-op funds being misappropriated. This was published in several newspapers and the firms were deemed guilty in the courts. My condo changed firms and thought they were free and clear. Apparently, a long term president of the condo moved and everything started up again. The new president started to receive notices from Con Ed and other vendors about service being turned off or suspended due to non-payments for over 6 months. At the same time, the account balances showed ample funds to pay bills. What happened?

The managing agent was playing games and getting kick backs. The money was being used to cover bills for OTHER condos/coops where the sponsor gave the managing agent kick backs. They were crediting the sponsor's apartments in the other buildings with maintenance payments not made while the sponsor collected rents. The managing agent received a cut of the extra profit the sponsor made. At the same time, double ledgers were being kept to cover the issue with affected buildings. Fortunately, there was a show down with the owner of the management company; our sponsor supported the condo with his lawyers since he was not involved with the kickbacks. The firm had to provide more frequent updates on the payments and balances in the accounts.

I subsequently met someone who worked for that management firm and quit over this practice. That person confirmed that this was being done on a regular basis.

http://www.nytimes.com/1994/06/16/nyregion/charges-extended-to-top-managers-in-co-op-bribery.html

NWT posted a URL to the original scandal in 1994. One of the firms mentioned in the article was back to their old tricks again in the early 2000's in the building I mentioned. It was the firm from which my acquaintance resigned.

I live in a condo named Shorehaven Condos in the Bronx, the bills for the water and other services have not been paid to the tune of over $3 million dollars. We believe the money has been stolen by whoever has the signature cards and accounts in the bank, the authority. We have been told the board members along with the property agents have stolen the money for their own use. The prosecutorial agencies have subpoena power to obtain bank information and have audits conducted to investigate and find the money. Everything leaves a trail! The condo residents are now in a bind regarding the bills which is not fair. We have sent letters to the news media and prosecutorial office, nothing has been done. ADVICE!

I really can't believe this type of stuff happens. Do people just expect to get away?

It really shocks me what people will resort to.