Q: I’m a shareholder in a Brooklyn co-op. One 12 months in the past, the board all of the sudden fired our tremendous, who had labored right here for greater than 21 years. He instantly started authorized motion towards the co-op, and the matter was settled out of court docket with a fee to the tremendous. We respectfully requested for extra data throughout a shareholder assembly however have been informed that the matter was strictly confidential. All of the board has stated is that the ultimate value to the co-op was roughly $15,000. This appears low, contemplating a 12 months of authorized charges, mediation and the settlement itself. Our co-op paperwork suggest that the board should account for its use of funds, however there is no such thing as a particular language. Is the board required to clarify how a lot this value?
A: Your co-op’s board of administrators has a proper to enter right into a confidential settlement with the tremendous. However that doesn’t imply you’ll be able to’t discover out extra.
“Whereas there’s no express requirement for the board to element each expense, they’re obligated to supply a normal accounting of how funds are used,” stated Joseph Colbert, who practices actual property legislation at Colbert Regulation, LLC, in Manhattan.
Settlements with confidentiality provisions are frequent, and the phrases of this settlement, together with the quantity paid to the aggrieved tremendous, can stay secret — it is determined by what the legal professionals negotiated. However even when shareholders don’t have the fitting to learn about the entire settlement’s phrases and circumstances, the co-op board continues to be accountable to them, and it can’t conceal the monetary influence of the whole lawsuit.
Shareholders can evaluate the co-op’s audited monetary statements, stated Leni Morrison Cummins, chair of the condominium and cooperative apply at Cozen O’Connor in Manhattan. These statements will replicate the price of the authorized motion. There ought to be a footnote explaining this, but it surely may be imprecise. The auditor opinions the books and information, and likewise requires a authorized affirmation letter from the board’s lawyer describing all pending or threatened litigation, claims and assessments, in the course of the audit interval, Ms. Cummins stated.
If the audited statements usually are not obtainable but, shareholders have a proper to request to evaluate the co-op’s books and information, so long as the request is in good religion and for a correct objective.
The $15,000 value of this lawsuit might sound low, but it surely’s potential that determine was the co-op’s deductible, and the remainder was lined by the constructing’s insurance coverage.
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