The tragic partial collapse and subsequent demolition of the Champlain Towers South Condominium in Surfside, Florida this past June revealed some gaping holes in the structures, governance, and oversight of the country’s multifamily buildings. Many condo, co-op, and HOA boards and owners have awoken to the consequences of deferred maintenance, poor planning, and indecision. Municipalities have taken steps to bolster their laws and regulations around inspection and repair of tall buildings. The real estate market has also taken note of the value of responsible leadership and due diligence when it comes to multifamily transactions.
Periodic reassessment of longstanding practices or overlooked loopholes is a good practice for any industry. But reactionary reforms or knee-jerk responses to such an overwhelming—if exceedingly rare—disaster can have their own downsides. CooperatorNews takes a look at three aspects of multifamily housing that bear review in the wake of Surfside and other catastrophic building failures, and some caveats that should be considered along the way.
Building Better Boards
The vast majority of co-op, condo, and HOA board members are volunteers, with no formal requirements or prerequisites for serving - just the will and the time, and usually a minimum age and duration of ownership in good standing, as spelled out in the community’s bylaws.
Although some states require some level of training upon election to a board, many leave it up to members themselves to understand their role and acquire the information they need to decide on the matters before them effectively and ethically. But as “fiduciaries”—a term with the same Latin root as “fidelity,” or “faithfulness”—board members automatically have the legal responsibility to uphold the duties of care, loyalty, and trust on behalf of their building or association as a whole. (In fact, in many localities board members are known as “trustees.”)
Of course, with legal responsibility can come liability. Boards are empowered with broad authority—especially in cooperatives, where board decisions exercised in good faith are protected by the Business Judgement Rule.