Housing federation holds legal seminar Oct. 23. (Transcripts).

A panel of real estate attorneys explained the latest legislation and court decisions affecting the cooperative and condominium community and the high cost of terrorism insurance, as well as the difficulty in obtaining it, at a seminar hosted by the Federation of New York Housing Cooperatives and Condominiums ("Federation") on Oct. 23 at the Roosevelt Hotel, announces Gregory J. Carlson, executive director.

The seminar provided information to the group of nearly 60 cooperative shareholders and condominium unit owners on the benefits of recently revised New York State and federal laws that directly impact their housing corporations at this second in a series of satellite discussions the federation is sponsoring in each of the five boroughs.

According to panelist Terry Lewis, Esq., vice-president of the National Cooperative Bank, there is a bill pending in the United States Congress that would make the federal government the re-insurer of terrorism insurance claims once they hit a yet to be agreed upon cap. Lewis claims if passed, this measure would relieve the beleaguered insurance industry of a huge liability. In addition, it will make terrorism insurance more readily available. Many boards are discovering, as their policies come up for renewal, that insurance companies are either charging a huge premium for the coverage or not offering it at all.

In addition, New York State has enacted revisions to the Uniform Commercial Code (UCC) to create a cooperative organization security interest, or "COSI." In case of a sponsor or shareholder default, this legislation puts the cooperative's interests first before any and all other creditors or liens.

Stanley Dreyer, Esq., partner in the law firm Gallet Dreyer & Berkey LLP, recommended that cooperatives and their legal counsel redo the corporation's proprietary lease, by-laws and amend the certificate of occupancy. Most of these corporate documents, originally developed in the 1960s, are "archaic" and have "basic defects" that are contrary to recent legislation and laws in regards to cooperatives.

Joel Miller, an attorney and adjunct professor at St. John's Law School, addressed the subject of the current litigious society and the frequent lawsuits shareholders launch against boards and directors. Under the business judgment rule, as long as a member of a board or a director is acting in good faith and in the exercise of honest judgment in lawful and legitimate furtherance of corporate purpose and absent a showing of a breach of fiduciary duty, a court will not question the board's decision.

Federation president Albert F. Pennisi, who is a partner in the law firm Pennisi Daniels Norelli LLC, served as moderator. He, along with the rest of the panel, agreed that a corporation's counsel should be kept apprised of the board's activities. For whatever reason, if a board chooses not to have an attorney present during board meetings, it is advisable to send the minutes to the attorney for review.

The next Federation satellite seminar will be in the borough of Brooklyn at the New York Marriott Brooklyn, 333 Adams Street in February 2003. An exact date will be announced in the near future. The topic will be security.