A crazy person on the board means corruption or even litigation
A crazy neighbor gaining a board seat in your boutique building might lead to self-dealing, corruption and even litigation in your building.
It’s fairly common for a crazy neighbor serving on the board to have no sense of what’s right or wrong, and to essentially self-deal to the detriment of everyone else, perhaps because they believe they deserve to be compensated for serving on the board.
A classic example is a board president who insists on overpaying a part-time super a salary of $20,000 a year, just to spend a few hours each week taking out the garbage. Why would the board president do this when the average wage for a part-time super with limited responsibilities is only $5,000 a year?
Because he or she utilizes the part-time super as a personal handyman, and frequently calls upon the super for personal favors without telling anyone else. Essentially, the board president has co-opted the building’s part-time super as his personal servant.
In a similar vein, a corrupt and crazy board member might actually take kickbacks from contractors who over-charge the building for very large jobs. For example, the board president illegally pockets a cash kickback of $25,000 on a $100,000 roof repair job that should have cost $50,000.
The board president pushed for and picked the higher cost contractor because unbeknownst to everyone, he was getting a secret referral fee.
Lastly, it’s important to remember that all of this craziness usually ends up in litigation once other neighbors discover the extent of the treachery. This leads to the building suing people and neighbors suing each other, all of which are terrible for the building’s finances, and can lead to units being unfinanceable or unsalable.