Nobody hands a new director an orientation pack.

You get elected, you are welcomed, and at the next meeting the board is three items into an agenda about a boiler quote. Some months later you realize you have been voting on things you did not fully understand, in a building whose documents you have never read, while carrying a fiduciary duty nobody quite explained.

This is the pack you should have been given.

The first ninety days: read four things

1. The governing documents. The proprietary lease and by-laws in a co-op; the declaration and by-laws in a condo. These are not background reading — they are the source of every power the board has. Almost every difficult question in the rest of this page resolves into "what do your documents say."

2. The most recent annual financial statement. You do not need to be an accountant. You need four numbers: cash and reserves, arrears, operating result against budget, and the notes.

3. Twelve months of board minutes. This tells you what the board has been dealing with, what is unresolved, and — by what is missing from them — how well the board records its own decisions.

4. The current budget. Read it against the financial statement. Where they diverge is where the interesting conversations are.

Ask the managing agent for all four in your first week. A well-run building produces them immediately. A building that cannot has told you something useful.

Understand what protects you, and what does not

New York gives boards real deference. Under the business judgment rule, a court will not second-guess a decision taken in good faith, within the board's authority, and in furtherance of the corporation's purposes. That is a strong protection and most directors do not know they have it.

It has three limits, and they are worth knowing on day one: the protection is lost where a board acts beyond its authority, in bad faith, or in a discriminatory manner. The full picture is in what a board can decide without being second-guessed.

And it does not make board service risk-free. In Fletcher v. The Dakota, the First Department held that a director who participates in a tort may be individually liable, and the business judgment rule does not shelter discriminatory conduct.

So ask, early and in writing: what indemnification do our governing documents provide, and what does our D&O policy actually say? Not because something is wrong, but because that answer is much better to have in advance.

The one question to ask in your first month

What is the building's capital schedule, and what does the reserve hold against it?

That question surfaces nearly everything: deferred maintenance, whether the budget is realistic, whether an assessment is coming, whether compliance deadlines have been funded, and — most tellingly — whether this board plans or reacts.

If nobody can answer it, that is the answer. The route out is a component schedule at minimum and a reserve study if the building warrants one.

Learn the calendar that nobody sends reminders for

A building's compliance obligations are not all announced. Several arrive with no filing, no notice and no portal, which means they lapse silently in a building where nobody owns the calendar.

The ones a new director should know exist:

You are not expected to run these. You are expected to know whether somebody is.

Disclose things

The most common way a well-intentioned new director creates a problem is by not mentioning a connection, because it felt too minor to raise.

If you have any interest in a proposed transaction — you are the contractor, your firm is bidding, your brother-in-law owns the vendor — say so, on the record, before the discussion. Business Corporation Law §713 makes an interested transaction perfectly valid when it is properly disclosed and approved; it is the silence that creates the problem, not the interest. The mechanics are in board conflicts of interest.

Disclosure costs nothing. Non-disclosure is what ends up in a complaint.

How to disagree

Argue during deliberation. That is when disagreement is useful, and a board where nobody pushes back is not a well-functioning board.

Once the board decides, the board has decided. Directors who continue relitigating outcomes in the lobby corrode the board's ability to function, and in a small building the damage is personal as well as institutional.

If a matter is serious enough that you want a dissent recorded, ask for it — that is a legitimate request, and worth raising with the board's attorney on how best to do it.

What to be quietly alert to

None of these prove anything. All are worth a question:

  • Financial reporting that arrives too late to act on, or that the board cannot rely on.
  • Compliance items nobody can confirm were handled — unfiled inspections, a lapsed registration, an obligation everyone assumes somebody else tracked.
  • Arrears aging past a couple of quarters, which is where a building's collection position starts to deteriorate.
  • Decisions taken outside meetings and ratified afterwards.
  • An undisclosed vendor relationship connected to a director.

Together, several of these are the recognized signals that a building has outgrown its managing agent, discussed in how a board changes managing agents.

The honest part

Board service is unpaid, occasionally thankless, and carries real responsibility. Buildings that recruit by understating that end up with directors who resign in year two.

It is also the only mechanism by which the place you live is governed by people who live there. In a small Brooklyn building, three or four people doing this competently is the difference between a building that is maintained and one that is not.

The commitment is manageable if the board is supported properly — good reporting, a working calendar, documents to hand, and professional advice available when a question needs it. Where that support is missing, the job becomes much harder than it should be, and that is a fixable problem rather than an inherent one.

Where a managing agent carries this

Giving new directors the four documents in week one, keeping the compliance calendar so nobody has to remember what nobody is reminded of, producing reporting a volunteer can act on, and getting questions to counsel before they become disputes is what co-op board management and condo association management should mean.

If you have just joined a board and cannot get the documents, schedule a consultation or call 718-568-9278.

This article is general information, not legal advice. A director's duties and protections depend on your building's governing documents and structure. Consult the board's attorney about your specific position.