What do sample co-op bylaws in NYC look like? Just how onerous are the bylaws and how much power does the co-op board have? Is the sublet policy in the co-op bylaws?
Co-op boards have an enormous amount of power over their resident shareholders as you can see from the sample co-op bylaws in NYC we’ve included below. They have the power to change or eliminate the bylaws, House Rules and sublet policies at any time. Please remember that contrary to condo and other real property forms of ownership, co-op apartment owners hold shares of a housing cooperative corporation which typically owns the building. The shareholders elect a board of directors which functions much like the board of a regular business corporation.
When buying a co-op in NYC, an experienced buyer’s agent will advise you to carefully read through the co-op bylaws so you’ll know exactly when and how elections for the board of directors are held, what fines can be levied against shareholders and what the sublet policy is like.
Sample Co-op Bylaws in NYC
ARTICLE I – MEETINGS OF STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of Stockholders of the Corporation shall be held in the month of November of each and every year at a place and on a day and hour to be designated by the Board of Directors, for the election of Directors and the transaction of such other business as may properly come before the meeting. Written notice of the annual meeting shall be mailed or given personally to each Stockholder entitled to vote, at such address as appears on the stock book of the Corporation not less than ten, nor more than forty, days prior to the date of the meeting, but at any meeting at which all Stockholders shall be present, or at which all Stockholders not present have waived notice in writing, notice as above specified shall not be required.
SECTION 2. Special Meetings. Special meetings of the Stockholders, for any purpose or purposes, may be called at any time by the President and shall be called by the President or Secretary at the request in writing of a majority of the entire Board of Directors, or at the request in writing of 25% of the Stockholders who shall require the Secretary or other Officer of the Corporation to give notice of such meeting. The time, date and place of a special meeting called by the Stockholders shall be set by the Board of Directors, such meeting to be held within forty-five days of the request in writing being received by the Secretary. Written notice of such meeting, setting forth the time and place of the holding of such meeting and the object thereof, shall be mailed or given personally to each Stockholder entitled to vote, at such address as appears on the stock book of the Corporation not less than ten nor more than forty days prior to the date of the meeting, but at any meeting at which all Stockholders shall be present, or at which all Stockholders not present have waived notice in writing, notice as above specified shall not be required.
SECTION 3. Quorum. The presence at the meeting of at least one third of the Stockholders of the Corporation entitled to vote shall be necessary to constitute a quorum; but a lesser number may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until the requisite number of Stockholders shall be present.
SECTION 4. Voting. At all meetings of the Stockholders, all questions, the manner of deciding which is not specifically regulated by statute, shall be determined by a vote of the majority of the Stockholders present at the meeting. Every holder of capital stock of the Corporation shall be entitled to one vote regardless of the number of Shares held by such Stockholder. For this purpose, all joint or common holders of the same Shares shall be deemed to be one Stockholder. All voting shall be by secret ballot except as otherwise prescribed by statute, or directed by the Board of Directors.
ARTICLE II – DIRECTORS
SECTION 1. Number and Term of Office. The number of Directors shall be eleven. Directors shall be elected for terms of three years on a staggered basis so that in one year three Directors shall be elected and in two years four Directors shall be elected. Vacancies occurring on the Board that are filled at a meeting of Stockholders shall be filled for the remainder of the three year term(s) for which the Director(s) who left the Board was (were) elected. The candidates receiving the most votes at each annual meeting shall be deemed elected to the full three year term to be filled at the annual meeting and the candidates receiving the next most votes shall be deemed elected, respectively, to any two year and/or one year portion of an unexpired term to be filled. Except as expressly provided elsewhere in these Bylaws, all Directors shall serve until their successors are elected and qualify.
SECTION 2. Qualifications. (a) Directors must be Stockholders. Only one of two or more co-holders of the same Shares of Stock of the Corporation may serve on the Board of Directors at any given time. No employee of the Corporation or a relative of an employee, as defined in subsection (b) of Section 2, may be a Director. No Stockholder who is in arrears in an amount equivalent to base maintenance charges for two or more months as shown on the books and records of the Corporation at the time of the annual Stockholders’ meeting shall be eligible to run for or serve on the Board of Directors. No commercial or professional tenant of the Corporation who is a Stockholder of the Corporation, no person living in such Stockholder’s apartment and no Stockholder who has an interest of any kind whatsoever in any entity that is a commercial or professional tenant of the Corporation or is living in such Stockholder’s apartment shall be eligible to run for or serve on the Board of Directors. Every person elected as a Director of the Corporation, in order to qualify and serve as a Director, must have been a resident Stockholder of the Corporation, as shown on the books and records of the Corporation, for at least two years immediately preceding the date of his or her election as a Director.
(b) As used in this Section of the Bylaws, the term “relative” or “relatives” shall mean spouse, parents, stepparents, parents-in-law, children, including adopted children, stepchildren, sisters, brothers, sisters-in-law, brothers-in-law, grandparents, spouse’s grandparents, aunts and uncles by blood or marriage, nephews and nieces by blood or marriage and first cousins by blood or marriage.
SECTION 3. Election Procedures. The President, with the concurrence of the Board, shall appoint an Election Committee consisting of members of the Board of Directors not seeking election or reelection to the Board at the Stockholders meeting for which the Election Committee was appointed. The Election Committee shall establish election procedures and shall notify the Stockholders of the procedures at least forty five (45) days before the Stockholders’ meeting. A Stockholder who wishes to run for the Board of Directors shall have thirty (30) days from the date of the foregoing notice to declare his or her candidacy. Such declaration shall be in writing and shall accord with the Election Committee’s procedures. If the number of candidates who have declared their candidacy in the foregoing manner and who have not withdrawn as of the date of the Stockholders’ meeting is at least one more than the number of positions on the Board of Directors to be filled at the Stockholders’ meeting, further nominations shall not be permitted after the expiration of said thirty (30) day period or at the meeting.
SECTION 4. Vacancies. Any vacancy occurring on the Board of Directors by reason of death, resignation, removal, increase in the number of members constituting the full Board of Directors, or otherwise, may be filled by a majority vote of the remaining Directors, provided that notice of the proposal to fill the vacancy is set forth in the notice of meeting, unless such remaining Directors are not sufficient to constitute a quorum, in which case a special meeting of the Stockholders shall be called, and such number of Directors shall be elected as may be necessary to constitute the full membership of the Board. A Director elected by the Board of Directors to fill a vacancy shall hold office until the next meeting of the Stockholders at which the election of Directors is in the regular course of business, and until his or her successor has been elected and qualified.
SECTION 5. Meetings. Meetings of the Board of Directors may be held at any time upon call of the President, the Vice-President, or any two members of the Board. Such meetings shall be held in the City of New York, except as otherwise determined and fixed from time to time by the Board of Directors.
SECTION 6. Notice of Meetings and Waiver of Notice. Notice of each meeting, stating the time, place and objects thereof, shall be given to each Director by mailing a copy of such notice addressed to each Director at the Director’s last known post office address at least forty-eight (48) hours before such meeting, or by telecopier, electronic mail or delivery under the apartment door, or in person, to each Director at least twenty-four (24) hours before such meeting. Notice may be waived in writing by any Director. Any meeting may be validly held without notice, at which every Director shall be present, or if those Directors who are absent shall waive notice.
SECTION 7. Quorum. A majority of the members of the Board of Directors shall constitute a quorum, and a majority of the members in attendance at any meeting of the Board shall, in the presence of a quorum, decide its action. In the absence of a quorum, those Directors present at any meeting may adjourn to a later date but may not transact any other business.
SECTION 8. Removal of Director by Board. A two-thirds vote of the entire Board of Directors, at a special meeting held for that purpose, may remove a Director who (a) has committed a material violation of his or her Proprietary Lease (not cured after notice), (b) is in arrears in an amount equivalent to base maintenance charges for two or more months as shown on the books and records of the Corporation, (c) has failed to attend three consecutive Board of Directors’ meetings or any four (4) such meetings between two consecutive annual meetings of the Corporation, except for good cause, or (d) is in violation of these Bylaws, which violation has not been cured after notice, after giving the Director an opportunity to show cause at the meeting as to why he or she should not be removed as a Director of the Corporation. Notice of the proposed removal must be set forth in the notice of the meeting.
SECTION 9. Executive Committee. The Board may appoint from among its members an Executive Committee, consisting of not less than three Directors at any time. Any vacancy occurring in the Executive Committee shall be filled by the Board of Directors. The Executive Committee shall exercise such powers and perform such duties as the Board of Directors from time to time shall prescribe and as shall be permitted by law. The Executive Committee may fix its own rules of procedure, but in every case the presence of a majority shall be necessary to constitute a quorum, and a majority of the members in attendance at any meeting of the Executive Committee shall, in the presence of a quorum, decide its action. In the absence of a quorum, those members of the Executive Committee present at any meeting may adjourn the meeting to a later date but may not transact any other business. The Executive Committee shall keep a record of all its proceedings and shall report the same to the Board of Directors, at the next ensuing meeting of the Board of Directors.
SECTION 10. Other Board Committees. The President, with the concurrence of the Board, may, from time to time, appoint from among the Board’s members other committees with such powers and duties as the President shall determine.
SECTION 11. Other Committees. In addition, the Board may, from time to time, appoint other committees composed of Stockholders of the Corporation or establish election procedures for other committees, all of which shall have such powers and duties as the Board shall, from time to time, determine.
SECTION 12. Duties and Powers. The Board of Directors shall have entire charge of the property, interests, business and transactions of the Corporation, and may adopt such rules and regulations for the conduct of its meetings and management of the Corporation as it may deem proper, not inconsistent with law, the Corporation’s Certificate of Incorporation or these Bylaws.
SECTION 13. Compensation. No Director may at any time be paid or receive funds or any other thing of value of or through the Corporation for any services rendered to the Corporation as a Director, or in any other capacity, except for legally reimbursable out-of-pocket expenses incurred in performance of the duties of Director, and except as provided in Article VIII, Section 1 of these Bylaws.
ARTICLE III – OFFICERS
SECTION 1. Election. The Board of Directors, at its first meeting after the election of Directors in each year, shall elect from its number a President, and shall also elect a Vice-President, a Secretary and a Treasurer. It may elect an Assistant Secretary and an Assistant Treasurer, and such other Officers as in its discretion the needs of the Corporation may from time to time require.
SECTION 2. Term of Office. All Officers of the Corporation shall hold their respective offices during the pleasure of the Board of Directors, and any vacancy occurring in the office of the President, Vice-President, Treasurer or Secretary or any other office shall be filled by the Board of Directors.
SECTION 3. President. The President shall preside at all meetings of the Board of Directors, and shall act as Chairman at, and call to order, all meetings of the Stockholders. Subject to the supervision and direction of the Board of Directors and the Executive Committee, the President shall have the general management of the affairs of the Corporation and perform all the duties incidental to the President’s office.
SECTION 4. Vice-President. The Vice-President shall in the absence, disability or incapacity of the President, have the powers and perform the duties of the President, and shall have, as well, those powers and duties which the Board of Directors may assign to the VicePresident from time to time.
SECTION 5. Secretary. The Secretary shall keep the minutes of the meetings of the Directors and Stockholders, shall attend to the serving of notices of the meetings of the Directors and Stockholders, shall affix the seal of the Corporation to such certificates, documents and papers as may require it, except that from time to time the Board of Directors may direct such seal to be affixed by any other Officer or Officers, shall have charge of the stock certificate book and of such other books and papers as the Board of Directors may direct, shall attend to such correspondence as may be assigned to the Secretary, and shall perform all the other duties incidental to the office and those which the Board of Directors may from time to time designate.
SECTION 6. Treasurer. The Treasurer shall be the Chief Financial Officer of the Corporation and shall have the care and custody of all the funds and securities and other tangible assets of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks as the Directors may designate. The Treasurer shall perform any and all duties incidental to the office of Treasurer, and such other duties as shall from time to time be assigned by the Board of Directors or by the President. The Treasurer may at the same time hold the office of Secretary or Assistant Secretary, but may hold no other office in the Corporation.
SECTION 7. Assistant Secretary and Assistant Treasurer. The Assistant Secretary and Assistant Treasurer shall, respectively, in the absence, disability or incapacity of the Officer to whom such Officer is an assistant, have the powers and perform the duties of such Officer, and shall perform such other duties as may be assigned to them from time to time by the Board of Directors.
SECTION 8. Other Officers. Other Officers shall perform such duties and have such powers as may be assigned to them from time to time by the Board of Directors.
ARTICLE IV – OPERATION AS A COOPERATIVE
The Corporation shall operate as a cooperative and, in accordance therewith, if, after payment of all obligations, expenses, taxes and assessments, or after making suitable provision therefor, there shall be excess revenues, then the Corporation’s Board of Directors shall pay or allow, in such manner or in such form as is from time to time determined by the Board of Directors, a rebate or rebates of rent to each Lessee, in proportion to the rental payments made by such Lessee during the period in respect of which such rent rebate or rebates are allowed or paid. The manner or form of such rebates may include rebates in the form of a reduction of or credit against the Lessee’s future rent obligations. The monthly rentals paid by the Lessees shall be deemed to be payment on account of their annual rental obligation, which shall be finally determined by the Board of Directors in the light of each year’s operating experience.
ARTICLE V – SIGNATURE OF INSTRUMENTS
Checks, notes, drafts and orders for the payment of the money and obligations of the Corporation, and all contracts, mortgages, deeds, and other instruments, except as otherwise in these Bylaws provided, shall be signed by such Officer, Officers, individual or individuals as the Board of Directors may from time to time designate.
ARTICLE VI – CAPITAL STOCK
SECTION 1. Certificates. Certificates of stock shall be numbered and issued in consecutive order, shall be signed by the President or the Vice-President, and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation and the name of the person or persons owning the Shares represented by each certificate, the number of such Shares and the date of issue shall be entered in the appropriate books of record of the Corporation. All certificates exchanged and returned to the Corporation shall be marked “Cancelled,” with the date of cancellation, by the President, a Vice-President, the Secretary or the Treasurer, and shall be filed among the corporate records of the Corporation.
SECTION 2. Legend on Certificates The Certificates of stock of the Corporation shall bear the following legend:
“The rights of any holder hereof are subject to the provisions of the Bylaws of the Corporation as amended from time to time, and to all the terms, covenants, conditions, and provisions of a certain Proprietary Lease made between the person(s) in whose name(s) this certificate is issued, as Lessee, and the Corporation, as Lessor, for an apartment in the premises owned by the Corporation in New York, New York, which Bylaws and Proprietary Lease limit and restrict the title and rights of any transferee hereof. The shares represented by this certificate are transferable only as an entirety and only to an assignee of the Proprietary Lease approved by the Board of Directors of the Corporation. Copies of the Bylaws of the Corporation and of the Proprietary Lease are on file and available for inspection at the offices of the Corporation.
In the event that any Stockholder shall elect to sell, transfer, or assign his or her Shares of Stock in the Corporation, said Stockholder shall comply with the requirements of the Proprietary Lease and the Bylaws as amended from time to time. The Corporation, by the terms of said Bylaws and Proprietary Lease, has at all times a first lien on the Shares represented by this certificate, for all sums due and to become due to the Corporation from the owner or joint owners of said certificate under said Bylaws and said Proprietary Lease, or otherwise. The Board of Directors of the Corporation may refuse to consent to the transfer of the Shares represented by this certificate until any indebtedness or obligations of the Stockholder or joint Stockholders to the Corporation, arising under the provisions of said Bylaws and Proprietary Lease, or otherwise arising, are paid in full.”
SECTION 3. Transfers of Shares. (a) As used in this Article VI the words “Shares of Stock” and “Shares” shall include any interest in the Corporation (including but not limited to capital stock and income indebtedness certificates issued by the Corporation), and the words “Stockholders” and “Stockholder” shall include the owner or holder of any such interest.
(b) Transfers of Shares of Stock of the Corporation shall be made only on the books of the Corporation by the holder, in person or by power of attorney, on surrender of the certificate for such Shares.
(c) Transfers of Shares of Stock of the Corporation shall be made only to the holder of, or to an assignee or distributee of, the Proprietary Lease accompanying said Shares, and provided that the transfer, assignment, or distribution to such leaseholder, assignee, or distributee shall fully comply with the restrictions and conditions contained in these Bylaws and in the Proprietary Lease with respect to assumption, transfer, or assignment thereof.
(d) No transfer of Shares shall be valid as against the Corporation, its Stockholders, or its creditors for any purpose until it shall have been entered in the stock book of the Corporation by an entry showing from whom and to whom the Shares were transferred and the date of said transfer. Transfers of Shares shall be made only upon the stock book of the Corporation by the holder of record in person, or by power of attorney, duly executed and witnessed and filed with the Secretary of the Corporation and on the surrender of the certificate for such Shares, except that Shares sold by the Corporation to satisfy any lien which it holds thereon may be transferred without the surrender of such certificate.
(e) In the event that any stock certificate is lost, stolen, destroyed, or mutilated, the Board of Directors may authorize the issuance of a replacement certificate. Before issuance of such replacement certificate, the Board may require the owner of the lost, stolen, destroyed, or mutilated certificate, or the legal representative of such owner, to make an affidavit or affirmation setting forth such facts as to the loss, theft, destruction, or mutilation as the Board deems necessary, and may require said owner or legal representative of such owner to give the Corporation a bond in such reasonable sum as the Board directs, and to execute an agreement holding the Corporation harmless for the issuance of said replacement certificate.
(f) The Board of Directors shall have the authority to fix by resolution and to collect, before any transfer or assignment of a Proprietary Lease (in fee or as collateral for a loan) takes effect as against the Corporation as Lessor, reasonable fees to cover the Corporation’s expenses and attorneys’ fees in connection with such proposed transfer or assignment.
(g) Anything herein contained to the contrary notwithstanding, no Shares in this Corporation shall at any time be sold, assigned, alienated or transferred in any respect whatsoever by any Stockholder of the Corporation unless the Stockholder at the same time transfers as a unit all Shares owned or held by the Stockholder at that time allocated to the apartment being sold, assigned, alienated or transferred.
(h) If, in any case, the retiring Stockholder, after becoming bound to sell, convey or transfer said Shares of Stock to this Corporation, defaults in transferring said Shares, the retiring Stockholder’s Proprietary Lease shall automatically terminate on the date of default, this Corporation shall hold the purchase money to which the retiring Stockholder is entitled under this Article VI in trust for the retiring Stockholder, or the retiring Stockholder’s executors, administrators or assigns and shall substitute the name of the Corporation upon the books of the Corporation in place of the name of the retiring Stockholder. After the name of the Corporation has been entered on the books of the Corporation in the exercise of the aforementioned powers, the validity of the proceedings shall not be questioned by any person, and the Corporation shall be deemed and taken to be the owner of such Shares.
(i) Anything herein contained to the contrary notwithstanding, no Shares in the Corporation shall at any time be sold, assigned, alienated or transferred in any respect whatsoever by any Stockholder of the Corporation unless such sale, assignment, alienation or transfer shall have been authorized by written resolution of the Board of Directors.
SECTION 4. The Reconstitution Date. The Reconstitution Date, as said term is used herein, is March 15, 1987.
SECTION 5. Transfer Fees. (a) Pursuant to the authority conferred by Article 3, Section 8 of the Proprietary Lease, every sale (defined to include all transfers, whether by sale, gift, bequest or otherwise, except transfers which are expressly excluded in this Section) of Shares of Stock in the Corporation shall be subject to payment by the seller to the Corporation of a transfer fee determined as set forth below. Full payment of the transfer fee shall be a precondition to the Corporation’s obligation to permit and effectuate the transfer of any Shares that are sold.
(b) For the first sale of any apartment after reconstitution, the transfer fee shall be 20% of the gross sales price.
(c) For the second sale of any apartment after reconstitution and all subsequent sales of the apartment, the transfer fee shall be 5% of the gross sales price regardless of when the sale occurs.
(d) On all sales or transfers as to which a transfer fee is to be paid, in no event shall the transfer fee be less than a minimum transfer fee. The minimum transfer fee shall be calculated as if the shares were sold for the applicable Minimum Transfer Fee Sale Price(s) set forth on Schedule A annexed hereto and made a part hereof. The calculation shall be done by multiplying the applicable Minimum Transfer Fee Sale Price for the applicable type of apartment by the transfer fee rate that applies to the sale as per paragraphs (b) and (c).
(e) If two or more tenant-stockholders residing in the Affiliated Cooperatives (as said term is hereinafter defined) exchange apartments with each other, no transfer fee will be due on any part of that transaction. But, in ratification and confirmation of the Corporation’s policy and practice:
If any of the apartments involved in the exchange was not previously sold after reconstitution in a transfer subject to the first sale transfer fee, then the first sale of such apartment after the exchange shall be deemed to be the first sale of that apartment after reconstitution for the purpose of calculating the transfer fee due on such sale; and
If any of the apartments involved in the exchange was previously sold after reconstitution in a transfer subject to the first sale transfer fee, then the first sale of such apartment after the exchange shall be deemed to be the second or subsequent sale of that apartment after reconstitution for the purpose of calculating the transfer fee due on such sale.