Personal and financial liability

Started by FlorC • 1 replies • 1329 views

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FlorC (North Carolina)
Posts: 7

Posted:

Hi,

I have another post title LOST NEW BOARD MEMBERS IN NC(if you can, read it in order to understand this post).

We will like to know when a new board of directors take over, Are they personal and financial liable from any wrong doing(if any) from the prevoius board of directors? Thanks.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Yes and No.

The new Board are now in charge of the Association and must answer for any issues created by past Boards. However, Board members are typically protected by various State laws and Insurance for causing those issues (depending on the specific issue of course). This is why your lawyer, mentioned in your previous post, suggested verifying your D&O Insurance policy was still good.

If the Association discovers any major issues, they should consult with an attorney to identify any actions that may be taken against those who caused those issues to occur (including past board members). The attorney may just say forget it and move forward, or they may have other options - again depending on the specifics.

Hope this helps.

Tim

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