Some house corporations may face a time when the active chapter charter is suspended by the general fraternity. This event leaves the house corporation with assets that must be managed without an active chapter to pay the carrying costs. There are typically both funds and real estate to deal with.
Question: Can a house corporation member be sued for something that happens at the chapter house? Answer: Yes, all of us can be sued and for almost anything. The real question is what is the likelihood a lawsuit will be successful?
A recent movie came out called Snakes on a Plane. You can guess what it was about. Could it happen in real life? Of course, and if it did, there would unquestionably be problems. However, you are more likely to be struck by lightning while drawing the winning lottery ticket. Being involved in a lawsuit is not all that different.
Like “Jello” and “Kleenex”, the term “house corporation” has a generic meaning for some alumni groups that are operating chapter houses. The typical scenario is that a couple of well meaning brothers decide to take charge of chapter housing to raise money, sign a lease or buy a property. Voilá! A house corporation is born. That’s all it takes, right? Hardly.
Chapter houses seem to have an insatiable need for renovation. As the houses age and are subjected to “accelerated depreciation” by the residents, house corporations are challenged to keep the housing safe and competitive with other forms of university housing. Universities have long had the advantage of being able to use tax deductible contributions to maintain their property.
House corporations, like any corporation, need a legal basis and framework to work properly. The legal basis is established by filing Articles of Incorporation with your appropriate state agency, often the Secretary of State. This is usually a relatively simple and inexpensive procedure.