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January 7, 2015

In New York, co-op and condominium board members have historically been afforded broad protection from personal liability in connection with performing their board duties.  Nonetheless, board members, who are typically unpaid volunteers, have understandable concerns regarding the prospect of becoming defendants in a litigation and personally liable for resulting damages, which may deter board service by qualified individuals. 

When the Appellate Division, First Department, issued its 2012 decision in Fletcher v. Dakota, it sent a shock wave through the co-op and condominium community. At that time, many viewed the Fletcher decision as an alarming threat to protection from personal liability for board members and a marked departure from prior case law. Two years after Fletcher, this column analyzes whether Fletcherhas had the feared impact and is appropriately viewed as a departure from prior case law. This column also reviews recent case law and attempts to clarify the somewhat murky state of the law regarding personal liability of board members. Lastly, we provide recommendations for co-op and condominium boards, their members and managers for protecting board members from personal liability, including adoption of broad indemnification provisions and purchasing appropriate liability insurance.

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