In today’s litigious society, lawsuits are an unpleasant fact of life. Everyone has a gripe – and that gripe can often result in legal action. The question is, how is your cooperative corporation, condominium association, or HOA protected, and how should litigation be handled? It’s a complicated joint effort that involves board directors, residents, attorneys, managing agents, and insurance professionals. It’s also serious business and should be treated as such, and never neglected.
For the purposes of co-ops and condominiums, lawsuits can fall into several categories, all of them warranting professional attention. The first consideration is whether the cause of the suit is an item covered (or not covered) by the building’s insurance. The determination of whether the substance of the suit is covered or not will dictate the process of answering the complaint.
Types of Suits
Lawsuits can originate from any number of situations. The plaintiffs may be residents of the property; fellow co-operators or condominium owners who may have issues with the board or a board action; or with each other. Alternatively, the plaintiff might be a nonresident – perhaps someone who was injured somehow while visiting the property, say a slip and fall on an icy surface. Or the action might result from a disagreement with a vendor who has a conflict with the corporation or association.
Suits resulting from slips or falls or other injuries are generally covered under a property’s liability insurance. On the other hand, suits resulting from disagreements between residents and the board about substantive governance issues are more likely covered under the board’s Directors and Officers (D&O) policy. Conflicts with vendors tend not to be covered under any policy, and therefore are defended differently, as might usually be the case with conflicts between residents as well.
Defending a Suit—Timely Notification
Ed Mackoul is the President of Mackoul Risk Solutions, an insurance firm with offices in New York City, Long Island, and New Jersey. “There is no substantive difference in how insurance claims are handled from state to state,” he says, despite the fact that each state has its own insurance department and commissioner. “There is a difference from company to company, though. You have to know your carrier and policy.