A friend of mine is the president on a board of a non-profit entity. This same non-profit has several different boards with each one managing their own specific area. She is also on one of the other boards as a member, but not the president. She has served for many years on these boards. The board for which she is president, now has only two members as people have passed on, including the treasurer. This gal now wears many hats and was going through some files. She found that her board had borrowed money from another board. But, it appeared that only one payment had been made. She can't find any record as to why the is is the case, and the treasurer has passed away. Note: this treasurer kept the books in order otherwise. My friend mentioned this at a board mtg hoping to get answers about the loan as it is still being carried on the tax return. The members of the other board are demanding that she pay the outstanding amount immediately. They were unaware of the outstanding loan until my friend spoke of it. Because they ultimately are supporting the same cause, she feels they are just being greedy. Whew! Finally, my question: Since this loan was taken out nearly 40 years ago, is there a statute of expiration on a loan? I hope I have worded this correctly! Thank you!
2 Answers from Attorneys
Your fact pattern is very unique.
If this was a conventional loan, then it would be considered a contract and the statute of limitations would dictate how long the creditor has to act on the default. In MI, I believe that is 6 years.
But in your case, I can't how this is actionable in any event. It was not a loan because you are all part of the same entity. It was merely one silo of the organization moving money to another silo. What are they going to do if the borrowing board does not repay the money to the lending board?
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This is a very unfortunate situation and your friend has some real legal exposure here. She definitely needs representation in her personal capacity, and as Board president.
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