Personal injury lawsuits typically arise in housing cooperatives when a member, a person of a member’s family, or guest are injured on the Cooperative’s real property. Injuries can range from slip-and-falls, physical confrontations or fighting, to criminal assault and battery. Since the range of different types of cases in which a Cooperative may be defending claims seeking liability and damages, this serves as an important reminder to Cooperatives, of the legal responsibilities that Cooperatives owe. Specifically, this article focuses on those duties owed to non-members, such as guests.

In the past, many cooperative housing providers prohibited pets. This policy resonated with its members who were tired of living next door to other members with barking dogs or caterwauling cats. Yet, federal and state law now require cooperative housing providers allow assistance animals. Assistance animals are animals which a disabled member may keep in a cooperative housing situation, as long as a medical provider is persuaded that the member needs the animal in order to overcome a specific disability and that the animal will ameliorate that disability.

Our coop did not have its 2020 annual meeting and election of Directors. We were supposed to have voted to fill two seats last year but instead, those Directors continued to serve for an additional year even though all of our Director seats are three-year terms per our Bylaws. Now it is time for our annual election in 2021 and there will be another seat open for election this year. Can we just skip the 2020 annual meeting and election and just run all three seats in 2021 for three-year terms and just skip the 2020 annual meeting since we are already in 2021? Sincerely, Concerned Board Member Dear Concerned Board Member: No. All states require cooperatives to hold their annual meeting on the date set forth in the Articles of Incorporation or Bylaws or as soon as thereafter possible. Some states permit specific time leniency for scheduling but no states simply permit a corporation to “skip” an annual meeting or election. The Members have a right to have their annual meeting and annual election, even if it is tardy. Failure to hold the annual meeting within permitted times or even finding an alternative means for holding the annual meeting could result in a lawsuit against not only the cooperative, but individual Directors as well for failing to fulfill their fiduciary obligations. Knowing that there is a risk to the Cooperative, the Board must look to correct as soon as possible. Understandably, the Cooperative chose to adjourn the meeting because of continuing group meeting restrictions, however, the obligation to exercise due diligence to explore alternatives is a continuing fiduciary obligation of each Board member as well. This could result in not only a court interfering with the Board’s business judgment but could result in a finding that the Board acted in bad faith, neglected its duty, breached its trust and acted contrary to the corporation’s purposes. Your Bylaws indicate that all terms are for three-years however you have incumbents who sat an additional year because their seat was not put up for election due to COVID. The absence of the meeting does not also translate to a reset of the term because essentially what has happened is an appointment was made to the position that would have been vacant but for COVID. Appointments only sit until the next annual meeting and then that seat term will only be for the balance of the remaining term, i.e., two years. The Board at this point can either combine the 2020 annual meeting and election with the 2021 annual meeting and election, or, hold 2020 first and then hold 2021 perhaps later in the summer. Either way, your membership will be voting to fill two seats for a two-year term and one seat for a three-year term. Should the Board wish to explore meeting options, they really need to consult with the cooperative attorney for legal options and to show due diligence in their decision making process. Very truly yours, Co-op Counselor

With discrimination claims on the rise and the possible expansion of protected classes (i.e., sexual orientation or transgender status) from a recent United States Supreme Court opinion in Bostock v. Clayton Cty, Georgia, Nos. 17-1617 et. al., 590 U.S. ___ , (more) 140 S. Ct. 1731 (2020), in which the court held that under Title VII, it is unlawful discrimination for employers “to fail or refuse to hire, or to discharge any individual, or otherwise discriminate against any individual” because of their sexual orientation or transgender status, there is never a better time for housing cooperatives to refresh their knowledge of fair housing and employment issues. The law pertaining to fair housing, discrimination and sexual harassment claims are ever evolving and a complex field, so knowledge of key factors and best practices will put cooperatives in a better position to avoid unwarranted discrimination lawsuits. First, a recap of some fundamental laws, concepts and illegal conduct.

Membership Equity in a cooperative housing corporation is one of most fundamental characteristics, and benefits recognized in this unique form of housing and stock ownership. For housing cooperatives where members gain equity in their membership or stock certificate, whether or not based on increased value of the dwelling unit, improvements, or general trends in real estate markets, in instances where a member sells their membership, the return equity amounts frequently become issues of legal dispute. These disputes, if unresolved, can easily reach a point where a former member files a lawsuit against the Cooperative seeking money damages.

Many of us already know that housing cooperatives are made up of the entire membership. By this token, cooperatives are inherently diverse. Since a cooperative’s Board of Directors typically consists of a group of members elected by the entire membership, its Directors are usually equally diverse and important as the entire membership that makes up the cooperative. There are several important characteristics, traits, and duties that each director holds as a position of trust and fiduciary to the corporations they serve. It is important for Cooperatives to understand these duties and the extent upon which they bestow obligations to each director. A good approach to doing this is for a cooperative to adopt certain ethics, conduct and confidentiality policies, and for their Directors to execute agreements avowing their fiduciary duties and obligations to the cooperative. These policies and agreements should strengthen the sense of loyalty and ethical conduct of the Directors, and add a sense of transparency. In addition, they may also insulate the Cooperative from potential liability from legal claims and challenges to official Board actions.