November 24, 2018
By Ronda Kaysen
Q: A week after I interviewed with a co-op board to buy an apartment, a salesman contacted my attorney and my financial planner, identifying himself as my personal friend, to solicit them to invest in a real estate deal. It turns out the salesman was one of the board members, and certainly not a friend. Can a board member — who has extensive access to personal and financial history — use a prospective owner’s information for personal gain? It seems unethical, but is it also illegal? What can be done?
A: The board member’s behavior was certainly unethical, but probably not illegal, according to Adam Leitman Bailey, a Manhattan real estate lawyer. Since you did not suffer any financial loss because of his irresponsible behavior, you would not have grounds to sue him.
However, the board member has a responsibility to act in the best interests of the board, the building and the residents who live in it. Instead, he acted in his own interests, violating your trust, misusing his power and dishonoring the co-op. People applying to live in a co-op are obligated to share the most intimate details of their financial lives with the board. In exchange, they expect discretion and professionalism. Candidates sometimes worry that a board may not properly dispose of an application after the review is complete, or misplace the materials. But you should be able to trust that the board won’t turn around and try to make a business deal on the side based on your contacts.