Q&A: Risky Business

Q Currently, I am on a board that is involved in litigation brought about because of a resale denial. I was recently told by a lawyer that if a co-op board is sued “personally and as board members” the following is true:

The insurance company covering the directors and officers policy is only responsible for paying the lawyer and that if the case is lost the board of directors themselves have to pay the settlement.

When a board is sued personally and as individuals, they are responsible for the judgment themselves if the case is lost. And this could be a substantial amount!

All boards should keep all documents dealing with the acceptance and rejection of resales for at least five years because we, the board, have to show that the allegation is not true for a rejection rather than the plaintiff showing the accusations are true. Our lawyer had instructed us to write nothing, indicate only apartment numbers in the minutes and shred all applicants’ papers because they contain personal information that could put the applicant in risk for identity theft. We have always done this.

We, the board, really have no protection against any claims made and we are the ones who have to prove all the resale issues that we are accused of having done.

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