I am a member of a hunting club of 6 members. Four of the members held a secret meeting and decided to sell property to one of those four members for less than fair value. Is there anything I and the other member can do, or do we just have to accept the check and the fact they sold it out from under us without involving us in the decision.
I don’t normally recommend getting a lawyer involved in internal disputes at nonprofits as the first step because they are expensive and many things can be done politically within the organization that require persuasion of others rather than lawsuits. But this case could involve a lot of money, the sides of the controversy seem to have already been solidified, and time may be critical in preventing the completion of an illegal sale.
A lawyer who understands nonprofit law can read your governing documents and see whether the procedures were permissible. It is likely that a secret meeting to authorize the sale is not permitted. Even if they could act without giving you notice, selling to one of the group at less than fair market value is likely to be considered a breach of fiduciary duty. You may have a basis to enjoin the sale and rescind the attempted transfer.
You don’t give us enough specifics to know exactly what your rights may be, but you have sufficiently raised the smell test to make it worthwhile to determine whether you have any potential remedies. Good luck in your pursuit.
Comments
We faced a similar situation with our water co-op. The directors stubbornly dug in and spent millions defending the former board and the director at the center of the issue. A unanimous jury found that director guilty of conspiring against the co-op and breaching fiduciary duties. Unfortunately, because we live in a deeply corrupt county, none of the other directors were ever held accountable.
Add new comment