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Q: I’m a shareholder in a Brooklyn co-op. One 12 months in the past, the board abruptly 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 courtroom with a fee to the tremendous. We respectfully requested for extra data throughout a shareholder assembly however had been advised 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 may’t discover out extra.
“Whereas there’s no specific requirement for the board to element each expense, they’re obligated to supply a common accounting of how funds are used,” stated Joseph Colbert, who practices actual property regulation at Colbert Regulation, LLC, in Manhattan.
Settlements with confidentiality provisions are widespread, and the phrases of this settlement, together with the quantity paid to the aggrieved tremendous, can stay secret — it is determined by what the attorneys negotiated. However even when shareholders don’t have the proper to learn about all the settlement’s phrases and circumstances, the co-op board continues to be accountable to them, and it can’t conceal the monetary impression of your complete lawsuit.
Shareholders can assessment the co-op’s audited monetary statements, stated Leni Morrison Cummins, chair of the condominium and cooperative observe at Cozen O’Connor in Manhattan. These statements will replicate the price of the authorized motion. There needs to be a footnote explaining this, nevertheless it is likely to be imprecise. The auditor evaluations the books and data, and in addition requires a authorized affirmation letter from the board’s lawyer describing all pending or threatened litigation, claims and assessments, through the audit interval, Ms. Cummins stated.
If the audited statements should not obtainable but, shareholders have a proper to request to assessment the co-op’s books and data, so long as the request is in good religion and for a correct goal.
The $15,000 value of this lawsuit might sound low, nevertheless it’s attainable that determine was the co-op’s deductible, and the remainder was lined by the constructing’s insurance coverage.
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