Cohousing-L Mailing List: Re: Limited liability

[David B. Neeley (dneeley]

>Rowena Conkling asked:
>
>>Thanks for your response.   The question is whether the additional expense 
>>and formalities associated with a corporation are worth the protection given 
>>by corporate "limited liability" of members?
>
>
You might ask again about limits of liability given to stockholders in a
corporation, nonprofit or no. Those who are making active decisions in
managing a corporation may not be able to escape personal liability that
results from those decisions. 

For instance, if a corporation decided to authorize construction and wasn't
properly insured and someone was injured, those who made such a decision
might very well have personal liability just as if there were no corporation.

It is, though, tougher in most states to "pierce the corporate veil" as the
lawyers call it than it would be to go after partners in a joint venture.

By the way, corporate property can also be taken to satisfy a judgment. If,
therefore, a Coho property or the common area thereof were forfeited to a
liability judgment, it might be a hollow victory that the individuals aren't
liable.

As others have said, no project of any size at all should be undertaken
without consulting with a good real estate attorney. When you do, you might
bring up these points and see what he/she says.

Hope this is helpful.

David Neeley