Conflict of Interest Certification and Smoking Policy Requirements Impose Annual Obligation on Boards
By this time, all New York City cooperatives and condominiums should be in compliance with two important pieces of legislation that have previously been discussed in this Client Advisory. One of them requires boards to report annually to shareholders or unit owners on any contracts to which the cooperative or condominium is a party and as to which any board member has a conflict of interest. The second, which also applies to rental buildings, requires that each building adopt and publicize a smoking policy.
Board members who ensured that their buildings complied with these new requirements last year might now assume that this responsibility is behind them, but this is not the case. The conflict-of-interest legislation requires that boards report to their shareholders or unit owners annually on any contracts involving a director’s or manager’s conflict of interest. Even if there are no such contracts, a report must be distributed saying so. This report must be provided at least once each year. Thus, if a board issued its first conflict-of-interest report in December 2018 (which was the initial deadline), this year’s report will be due in December 2019. As numerous questions continue to arise as to what types of contracts give rise to conflicts of interest that must be disclosed, board members should raise any questions with their counsel well in advance of the deadline.
Similarly, boards and landlords are also required to disseminate the building’s smoking policy to residents at least annually, unless they are taking the alternative approach of posting the policy in a prominent place in the building. In addition, a copy of the policy must be provided to a prospective purchaser or tenant whenever a unit is sold or leased, whether by the cooperative or condominium itself or by an individual tenant-shareholder or unit owner.