Court ruling could increase liability of individual condo, co-op board members

July 16, 2012 08:30AM

New Yorkers may become even more reluctant to sit on the board of their condominium or co-op building. A decision handed down by the state appellate court this month could increase the likelihood that individual board members will be held liable for their building’s decisions, the Wall Street Journal reported.

The decision was made in light of a discrimination case brought by Alphonse Fletcher Jr. against the Dakota co-op. The former president of the Dakota’s board sued the building and board members last year when he was turned down for the purchase of a second unit at the famed West 72nd Street building. The board claimed he couldn’t afford the unit.

Fletcher brought the case to court,And The Court allowed claims against the board members to head to trial. That overruled a 2006 decision in a discrimination case at a Park Avenue building that limited the circumstances under which board members could be named as defendants.

Most buildings carry insurance that pays for legal fees for board members, but that doesn’t cover costs of discrimination cases that are classified as “bad faith” acts. While real estate lawyers said the ruling shouldn’t prevent people from applying for board membership, they noted the decision could help embolden other shunned would-be buyers to sue boards. [WSJ]