shifrinlegal

Holiday Gifts, Vendor Appreciation and Condominium/Community Associations in Illinois: What is (and is Not) Legal

Tue, 16 Dec 2025 21:38:13 GMT

December 2025

Every year, condominium and homeowner association boards ask the same question:

“Are we allowed to give holiday or appreciation gifts to our vendors or employees—or is that illegal?” The short answer in Illinois is this: modest, transparent gift-giving by private community associations is not illegal, and in many cases is perfectly appropriate when handled correctly. This article explains where the confusion comes from, what Illinois law

actually says, and how boards can approach gift-giving in a responsible and defensible way.

Why This Question Comes Up So Often

Concerns about gift-giving usually arise when a board approves holiday gifts for vendors or staff, owners contribute to a “thank-you” or appreciation fund, someone circulates an article discussing public-sector ethics laws, a board member worries about fiduciary duties or misuse of funds. Most of the time, the concern is rooted in a misapplication of government ethics rules to private condominium/community associations.

Condominium/Community Associations Are Private, Not Public Entities

In Illinois, condominium/community associations are private, not-for-profit corporations governed by the Illinois Condominium Property Act, the Common Interest Community Association Act and the Not-For-Profit Corporation Act and funded by unit owner assessments, not taxpayer dollars.

As a result, condominium/community associations are not subject to state ethics statutes governing public officials, gift bans applicable to government employees or rules restricting the use of public funds. Those laws apply to government bodies, not to private associations managing private property.

Is There Any Illinois Law That Prohibits Holiday Gifts?

No, there is no provision in the Illinois Condominium Property Act, the Common Interest Community Association Act or the Illinois Not-For-Profit Corporation Act that prohibits a condominium/community association from giving modest holiday or appreciation gifts to:

Vendors
Contractors
On-site employees (such as janitors, engineers, or door staff)

So long as the board acts within its authority and fiduciary obligations, gift-giving is not illegal.

The Fiduciary Duty Analysis (What Really Matters)

Illinois courts evaluate board decisions under the business judgment rule.

Boards must:

Act in good faith
Act within their authority
Make reasonable decisions in the best interests of the association
Avoid self-dealing or personal enrichment

A modest, transparent gift to vendors or staff—especially when:

Approved at an open board meeting
Properly documented
Not directed to board members themselves will almost always satisfy this standard.

Owner-Funded “Thank You” Collections Are Even Clearer

Many associations collect voluntary owner contributions specifically designated as:

“Holiday funds”
“Thank you funds”
“Vendor appreciation funds”

When funds are:

Voluntarily contributed by owners
Clearly earmarked for appreciation purposes
Distributed pursuant to board approval

the board is simply administering owner-directed funds—not misusing assessments. This approach is common, transparent, and legally defensible.

What About USPS Mail Carriers and Delivery Drivers?

Some confusion arises because certain service providers, such as U.S. Postal Service employees, are subject to internal employer rules about what they may personally accept as gifts.

That is:

A matter of federal employment policy
The responsibility of the individual recipient—not the association

It does not make the association’s act of offering a modest holiday gift illegal under Illinois law.

Best Practices for Associations

While gift-giving is lawful, boards should follow best practices:

✔ Keep gifts modest and reasonable

✔ Avoid gifts to board members

✔ Approve distributions at an open board meeting

✔ Clearly document the source and purpose of funds

✔ Use voluntary owner contributions when possible

✔ Treat vendors consistently and fairly

Transparency is the board’s strongest protection.

The Bottom Line

In Illinois, there is nothing illegal about a condominium/community association showing appreciation to its vendors and employees through modest holiday gifts—particularly when the process is transparent, reasonable, and properly approved. Confusion often stems from applying public-sector rules to private associations, where they simply do not belong. As with most governance issues, clarity, documentation, and common sense go a long way.

Association Legal Counsel: Finding The Right Representation

MJS@shifrinlegal.com (Michael Shifrin) — Thu, 26 Dec 2024 18:59:59 GMT

When faced with legal challenges, finding the right law firm to represent you is crucial. While larger firms often boast of having extensive resources and a wide range of services, smaller law firms offer distinct advantages that can significantly benefit their clients. Here are some of the key benefits of working with a smaller law firm:

1. Personalized Attention

One of the most significant advantages of smaller law firms is the level of personalized attention they can provide. Clients are more likely to work directly with experienced attorneys rather than being passed off to junior associates. This hands-on approach ensures that your case is handled with the utmost care and attention to detail.

2. Strong Attorney-Client Relationships

Smaller firms prioritize building strong relationships with their clients. This close-knit relationship fosters better communication and understanding, leading to more effective legal representation. Clients feel more comfortable discussing sensitive issues and trust that their attorney truly has their best interests at heart.

3. Cost-Effective Services

Large law firms tend to have higher overhead costs, which are often passed on to clients in the form of higher fees. Smaller firms, with lower operating expenses, can offer more competitive pricing for their services. This makes quality legal representation more accessible to community associations operating on fixed budgets.

4. Flexibility and Agility

Smaller law firms are generally more flexible and can adapt quickly to the unique needs of their clients. They are not bound by the same bureaucratic processes that often characterize larger firms, allowing them to respond more swiftly and creatively to legal issues.

5. Specialized Expertise

While large firms may offer a broad range of services, smaller firms often focus on specific areas of law. This specialization means that attorneys at smaller firms are highly knowledgeable and experienced in their chosen fields, providing clients with expert representation.

6. Community Focus

Smaller law firms are often deeply rooted in their local communities. This local focus enables them to understand the nuances of regional legal issues and offer insights that larger, multi-state firms may lack. Additionally, supporting a local firm helps bolster the community's economy.

7. Transparent and Accessible

Clients of smaller law firms often experience better transparency and accessibility. With fewer clients to manage, attorneys can dedicate more time to explaining legal processes, keeping clients informed, and answering questions promptly. This level of transparency builds trust and confidence in the legal process.

In conclusion, while larger law firms have their merits, the advantages of working with a smaller law firm should not be underestimated and can make the difference for your community association. From personalized attention and strong relationships to cost-effective services and specialized expertise, smaller firms offer a unique and highly beneficial legal experience that is unmatchable. Partnering with a smaller law firm offers the type of support and dedication necessary to guide your board through numerous legal challenges.

The Advantages of a Monthly Retainer Program

In addition to the benefits of working with a smaller law firm, opting for a monthly retainer program can provide significant advantages compared to the traditional hourly billing model. Here are some of the key benefits:

1. Predictable Costs

One of the primary advantages of a monthly retainer program is cost predictability. Clients know exactly how much they will be paying each month, which helps with budgeting and financial planning.

This eliminates the uncertainty and potential financial strain associated with hourly billing.

2. Consistent Legal Support

A monthly retainer ensures that clients have consistent access to legal support whenever they need it. This ongoing relationship means that legal issues can be addressed promptly, without the delay of negotiating fees or waiting for availability. Clients can rely on their attorney to be available for regular consultations and urgent matters alike.

3. Stronger Relationship with Your Attorney

With a retainer program, clients and attorneys develop a deeper, more collaborative relationship. This ongoing engagement allows the attorney to gain a more comprehensive understanding of the client's needs, business operations, and long-term goals. As a result, the attorney can provide more tailored and proactive advice. Counsel becomes an ad-hoc board member and joins the community leadership team.

4. Proactive Legal Strategy

Rather than addressing legal issues as they arise, a retainer program enables a more proactive approach to legal strategy. Attorneys can work on preventing potential problems before they occur, advising on best practices, and ensuring compliance with relevant laws and regulations. This proactive support can save clients time, money, and stress in the long run.

5. Priority Access and Faster Response Times

Clients on a retainer plan often receive priority access to their attorney's time and resources. This can result in faster response times and quicker resolutions to legal matters. Knowing that they are a priority client gives peace of mind and confidence in their legal representation.

6. Comprehensive Legal Coverage

A retainer agreement typically covers a broad range of legal services, from routine consultations and document reviews to more complex matters. This comprehensive coverage ensures that clients receive the legal support they need, without worrying about additional costs for each service provided.

7. Cost-Effective in the Long Term

While a monthly retainer may seem like a larger upfront commitment compared to hourly billing, it can be more cost-effective in the long term. Clients avoid unexpected, high hourly fees for urgent or complex issues. The predictable, monthly cost of a retainer can lead to overall savings, especially for clients who require frequent legal assistance.

In summary, joining a monthly retainer program with a smaller law firm offers numerous benefits, including predictable costs, consistent legal support, and a stronger, more proactive attorney-client relationship. For clients seeking dedicated, high-quality legal representation, a retainer program provides the peace of mind and comprehensive coverage necessary to navigate legal challenges effectively.

Understanding the Impact of the Snow Removal Act on Condominium Associations in Illinois, December 2023

Mon, 11 Dec 2023 19:51:38 GMT

The arrival of winter in Illinois brings the inevitable challenge of snow and ice removal, particularly for condominium associations responsible for maintaining common areas. The Snow Removal Service Liability Act (815 ILCS 675 et al. ), enacted to address liabilities associated with snow and ice removal, significantly affects condominium associations in the state.

The Snow Removal Service Liability Act (SRSLA) in Illinois, established to encourage the clearing of snow and ice from properties, outlines crucial provisions regarding liability for snow removal contractors and the responsibilities of property owners or those responsible for property maintenance.

The SRSLA offers protection to condominium associations when they hire professional snow removal services. It shields associations from liabilities for personal injuries or property damage resulting from snow or ice removal on their premises, so long as they contract with licensed and insured snow removal services.

This act recognizes that snow and ice removal are essential for public safety during winter but also understands the potential risks and liabilities involved. It provides a level of legal protection to condominium associations that engage qualified professionals for these services.

Despite the protections provided by the SRSLA, condominium associations in Illinois should exercise diligence when hiring snow removal contractors. Ensuring that contractors are licensed, insured, and experienced in snow removal is crucial. Additionally, associations should clearly outline contractor responsibilities and limitations on liability between the parties in their contracts with snow removal services to mitigate potential issues.

Associations should also establish clear protocols and timelines for snow removal to maintain the safety of residents and visitors. Regular inspections of common areas should be conducted to identify and address any hazardous snow or ice accumulations promptly.

The Snow Removal Service Liability Act in Illinois serves as a protective measure for condominium associations when hiring professional snow removal services. By understanding the provisions of this act, acting prudently in contracting snow removal services, and having snow removal contracts reviewed by legal counsel, condominium associations can fulfill their obligations to maintain safe premises while minimizing potential liabilities associated with winter weather conditions.

Condominium associations must stay updated with local laws and regulations, including the SRSLA, to ensure compliance and effective snow and ice removal practices, ultimately fostering a safer environment for all residents and visitors during the winter months in Illinois.

Virtual Annual Elections: The Wave of the Future

Thu, 13 Apr 2023 23:04:38 GMT

For as long as I have practiced law, management companies and boards developed a strong comfort level and preference for in-person annual elections. Elections occurred inside condominium association lobbies, party rooms, downstairs laundry rooms, even outside on common element yards and gazebos. The notice requirements for annual elections, the documents needed to carry them out (i.e. proxies, ballots, candidate nomination forms, etc.) and the general process for conducting them was second nature. That is until the pandemic descended upon the world in early 2020 and threw in-person elections and gatherings of any kind out the window.

Electronic software platforms such as Zoom and Microsoft Teams ushered in a new era of virtual annual elections much to the dismay of technologically challenged folks. Despite moving past the Coronavirus and strict CDC guidelines, virtual annual elections appear to be here to stay. This article explores the advantages and disadvantages of conducting annual elections in a virtual instead of in-person format to help your Board decide if it makes sense for your community.

Advantages of Conducting a Virtual Annual Election

Convenience: Conducting a virtual annual election offers convenience for members who can cast their votes from the comfort of their own homes. This eliminates the need for members to travel to a specific location, which can be particularly beneficial for members with mobility issues.
Increased Participation: Virtual elections can increase participation rates, as members can cast their votes remotely. This can lead to a more representative election, with a broader range of views and opinions being expressed.
Cost Savings: Conducting a virtual election can also be cost-effective, as it eliminates the need for a physical location, staff and room rental costs (if applicable).
Time Efficiency: Virtual elections can be completed quickly and efficiently, reducing the time it takes to conduct an election.
Increased Accessibility: Virtual elections can be made more accessible for members with disabilities or other special needs. For example, electronic voting systems can be designed to accommodate visual impairments or other disabilities.
Greater Control: Those in charge of conducting the annual election can exercise greater control over the meeting by utilizing mute and other functions to reduce interruptions and other distractions.

Disadvantages of Conducting a Virtual Annual Election

Technical Difficulties: One of the most significant challenges of conducting a virtual election is the potential for technical difficulties, such as internet connectivity issues, which can impact the accuracy and security of the voting process or member participation. Associations must ensure the voting platform is reliable and secure and that members have access to the necessary technology to participate.
Security: Virtual elections may also be vulnerable to security threats, such as hacking, which can compromise the integrity of the voting process and impact the election outcome. Associations must take measures to ensure the security of the voting platform and protect member data from unauthorized access.
Lack of Personal Interaction: Virtual elections lack the personal interaction that can be present in an in-person election. This can make it more difficult for members to engage with the candidates and their platforms, potentially leading to a less informed electorate. Associations can mitigate this by providing opportunities for candidates to connect with members virtually, such as through virtual town hall meetings or online forums.
Legal Requirements: Conducting a virtual election may make it more difficult to comply with all legal requirements surrounding annual elections that stem from an association’s governing documents and applicable state law. Associations must ensure the virtual voting platform and methods for voting meet all necessary legal standards.
Limited Transparency: Virtual elections can be less transparent than in-person elections as it may be more difficult to monitor the voting process and ensure that each member is only voting once.

Other Considerations

While virtual elections can offer greater accessibility to members with disabilities or special needs, community associations must ensure the virtual voting platform is accessible to all members. This includes providing alternative formats for members with visual or hearing impairments and ensuring that the voting platform is compatible with assistive technologies.

Community associations must also provide clear and concise instructions to members on how to participate in virtual elections. This includes providing information on how to access the voting platform, how to cast a vote, and how to troubleshoot any technical issues that may arise. The community association should also provide educational materials about the candidates and their platforms to ensure the members are well-informed before casting their votes.

Effective communication is essential for any virtual election to be a success. Community associations should develop a comprehensive communication plan that includes regular updates on the election process, deadlines for voting, and other relevant information. This can be done through email, social media, the community association website or other communication channels.

Community associations must ensure the member data is protected and that the voting process is confidential. This includes ensuring that the voting platform meets all necessary privacy and security standards and that member data is not shared with third parties without consent.

It is important to have backup plans in case of technical difficulties or other unforeseen circumstances. This includes having contingency plans for internet connectivity issues, power outages, or other disruptions that may impact the voting process. Community associations should also be prepared to switch to an in-person election if necessary.

Overall virtual annual elections offer several advantages and disadvantages for community associations in Illinois. It is important for community associations to carefully consider their specific circumstances and needs when deciding whether to conduct their annual election in a virtual format. With proper planning and preparation, virtual annual elections can offer a convenient, efficient, and secure way to elect board members and promote greater member participation.

Board Meetings vs. Membership Meetings: Is There a Difference?

Sun, 26 Feb 2023 03:21:51 GMT

Board Meetings VS. Membership Meetings: Is There A Difference?

Many association unit owners and board members believe board meetings and membership meetings are the same. That an annual election is a board meeting and no distinction exists between board meetings and membership meetings.

Although understandable, board meetings are very different from membership meetings and vice versa. They are called to order for different reasons, involve different notice requirements and are structured in different ways. This article is intended to help remove the veil of confusion that shrouds these meetings.

Board Meetings

Both the Condominium Property Act and the Common Interest Community Association Act require associations to hold at least four open board meetings each calendar year. The purpose of a bord meeting is to convene the sitting board members to allow them to discuss and, as needed, vote on association business. Often boards or their management companies create meeting agendas to assist the board in staying on track. The agenda items typically include: 1) officer reports (i.e. Treasurer report on association finances); 2) old business (which usually includes unsigned contracts or unfinished projects and the like); 3) new business and open forum. Notably, unit owners do not have a legal right to speak during board meetings, just a right to observe.

Membership Meetings

Membership meetings (aka unit owner meetings), on the other hand, are not called for purposes of allowing the Board to discuss and vote on Association matters. Membership meetings are called for purposes of allowing all members in attendance, in person or by proxy, to discuss and vote on a particular association topic. These meetings are designed for the unit owners to actively participate. The annual election held every year at your association is an example of a membership meeting because it is called for purposes of conducting an election in which all unit owners are invited to participate. Similarly, votes on amendments to the governing documents or a vote to remove a sitting board member from the board require unit owner votes and are conducted at membership meetings.

Often times for efficiency purposes management or the board will schedule a board meeting and membership meeting on the same day, time and location and will hold them back-to-back. This is perfectly legal so long as the board or management calls the different meetings to order one at a time, establishes quorum requirements and adjourns the first meeting before calling the second meeting to order. It is most common for condominium and community associations to hold back-to-back meetings at their annual election. Typically an open board meeting is held during which the board conducts association business and is followed shortly thereafter by a membership meeting to elect board members.

The law contains very different notice requirements for open board meetings and membership meetings. It is critical for any association board to carefully follow its governing documents and these requirements to ensure its meeting is proper and so that decisions made at that meeting remain valid and legally enforceable.

The basic notice requirements in Illinois for regular condo open board meetings are as follows:

Notice of the meeting should be provided to all board members at least 48 hours before the scheduled meeting.
The notice should include the date, time and location of the meeting and may include the agenda for the meeting.
The notice should be posted in a conspicuous location within the condominium building and sent via email to all unit owners that have provided appropriate written consent. Notice should be delivered or sent by regular mail to unit owners that have not provided such consent.
The notice should be clear, concise and easy to understand.

It is important to note that emergency board meetings may not require the same notice requirements as above. Emergency meetings may be called by the Board to address urgent matters that require immediate attention. If an emergency board meeting is called, notice should still be provided to board members but it may be given on shorter notice. Also, if the Board takes action in response to an emergency, the Board must provide notice to the unit owners of: 1) the occurrence of the emergency event within 7 business days after the emergency event, and 2) the general description of the actions taken to address the event within 7 days after the event.

The notice requirements for condo membership meetings/unit owner meetings in Illinois are as follows:

Notice of the meeting should be provided to all unit owners at least 10 to 30 days before the scheduled meeting. Electronic delivery is acceptable to any unit owner that has provided consent provided the board or agent certifies in writing to the electronic delivery.
The notice should include the date, time, location and purpose of the meeting as well as the agenda if one is available.
The notice should be clear, concise and easy to understand.

Failing to closely follow notice requirements set forth in applicable law and your association governing documents may give rise to legal issues. On the other hand, carefully following notice requirements ensures unit owners receive adequate notice, have the opportunity to participate, creates transparency and helps establish an inclusive environment that encourages community involvement and collaboration.

Owner Forums: Beginning of Board Meetings, End of Board Meetings or Not At All?

Fri, 09 Dec 2022 03:50:40 GMT

Owner Forums: Beginning Of Board Meetings, End Of Board Meetings Or Not At All?

I am often asked by board members and property managers to attend open board meetings for condominium and community association clients. I enjoy attending open board meetings because they provide an opportunity to observe associations function. That is, they allow me to watch firsthand as my clients discuss and conduct board business in front of the owners. Even better, they allow me to observe how boards interact with owners and vice-versa. Usually I am asked to attend open board meetings because boards are nervous and anxious about the “owner forum” section of their meeting. Owner forum is the period of time dedicated by the Board for the sole purpose of providing unit owners and homeowners with an opportunity to ask questions and make comments. It has been known to drive fear in the hearts of board members, cause mouths to go dry and palms to become sweaty. This occurs because boards have the least amount of control during owner forum. Owners can – and often do – say whatever they want when given the opportunity. And their comments are not praise for the chocolate chip cookies Betty baked for the neighborhood social. More often their comments are cynical and critical in nature. Given the difficulties presented by owner forum, must boards include them in their meetings? After all, these are open BOARD MEETINGS called for the purpose of allowing THE BOARD to conduct board business. If owner forums must be included, when and how does a board get through them with dignity and without causing further damage to community and board morale?

Community association boards that are governed by the Common Interest Community Association Act (“CICAA”) have a legal obligation to reserve a portion of their open board meeting for comments by members pursuant to CICAA. Condominium association boards do not have the same legal obligation; however, with transparency being a fundamental cornerstone of association legislation, it remains sensible to have mandatory owner forum included in board meetings. Owners have an absolute – in this case legal - right to gather information about the community in which they live. Thankfully, the Illinois General Assembly armed boards with two critical mechanisms to exercise control over owner forums. The law gives boards ‘sole discretion’ to determine the (1) duration and (2) placement of the owner forum within the open meeting. This gives boards an opportunity to conduct a successful owner forum, but they must be thoughtful and strategic.

Determining the proper duration of an owner forum requires a little planning as it varies from association to association. One approach is for the board to consider the average number of owners that attend each open board meeting. Then approximate what portion of owners are likely to participate during owner forum. Multiply the number of owners the board estimates will participate by the number of minutes allotted to each owner. The total number will determine the proper forum duration amount. For example, if you believe thirty owners will attend the open board meeting and fifteen will participate the math will be as follows: (15 participants x 3 minutes = 45 minutes). If 45 minutes seems like too much time a board can allocate 2 minutes per owner thereby reducing the owner forum to 30 minutes total in the above example. Using this formula allows a board to set aside a reasonable amount of time to allow for owner participation.

While establishing the duration of owner forum is helpful, “controlling” the duration requires a separate procedure. Overseeing the duration of owner forum is only possible with proper enforcement techniques. I advise all clients to review the “housekeeping rules” for owner forum before it begins. The board president - or whichever board member is most comfortable with public speaking - should inform the membership of the total amount of time set aside by the board for owner forum and for individual participation as well. Members should be informed the board has a timer and will be using it during owner forum to ensure everyone has a chance to participate. These days everyone brings their cell phones to open board meetings, all of which have built in timers. It is advisable to start the timer on one cell phone to keep track of the overall duration of the owner forum. Another cell phone timer may be used to track the individual time allotted to each owner. Finally, the timer should be set on the cell phone so that it beeps or plays a loud sound indicating when the allotted time has expired. This serves as a helpful reminder to the board, the owner and the entire membership that allotted time is being tracked and owners are being held to those time limitations. Note, if the board chooses not to use a timer owners will likely exceed their allotted time and the owner forum will greatly exceed the allotted timeframe. It is extremely important for the Board to remind owners of the housekeeping rules, as needed and when appropriate, after owner forum begins to maintain “control” over this section of the meeting.

The next major decision a board must make is where in its agenda to place the owner forum. There are advantages and disadvantages to placing the owner forum at the beginning of open board meetings and at the end. Many owners attend open board meetings for the sole purpose of airing their primary complaint or asking a question of the board that has been on their mind. This results in the presence of built up energy within these owners. The tension in the room is unmistakable. Placing the owner forum at the beginning of an open board meeting allows a board to quickly release built up energy and reduces the tension by immediately addressing owner questions and comments. Conducting owner forum first also provides the board with a legitimate reason to keep it short and concise - the board still has an open board meeting to execute. Another advantage is that some very vocal owners will leave the board meeting once owner forum concludes and their question has been answered or their complaint placed. This aids in the removal of tension inside the room and permits the board to progress expediently through its agenda with lower risk of owner interruption.

The primary disadvantage of placing owner forum at the beginning of an open board meeting is the risk that it energizes disgruntled owners and enhances tension levels. If this occurs and the board is not equipped to maintain control over the meeting, chaos and mayheim may follow. Unit owners may overtake the board meeting by grossly exceeding the alloted time for owner forum and by preventing the board from conducting board business. Should this occur the board may be forced to adjourn the meeting without ever conducting any business.

On the other hand, placing owner forum at the end of an open board meeting is advantageous because it ensures the board addresses each item on its agenda as the board meeting occurs before the owner forum. Delaying owner forum until the end of the open board meeting also forces owners to wait quietly through the entire board meeting before having the opportunity to participate. This forced silence may serve to calm highly disgruntled owners so that their participation is more reasoned when it arrives. The other benefit is that a board may more easily adjourn an open board meeting if the owner forum goes sideways after the board has finished conducting its business.

Viewed differently, placing owner forum at the end of an open board meeting forces energized and disgruntled owners to remain “patient” throughout the board meeting. It may prove difficult for even the best board to maintain control over highly motivated and disgruntled owners for an entire board meeting. The likelihood of unit owner interruption increases by asking owners to remain quiet throughout the board meeting. A second disasdvantage is that board members may feel hurried to rush through items on the meeting agenda knowing owners anxiously await the owner forum segment. This can be a real distraction that lowers the effectiveness of board member participation.

Clearly, both options have their pros and cons. Regardless of which approach a Board takes, those that are thoughtful and strategic when administering owner forum dramatically increase the likelihood of those forums being productive, structured and civil.

Association Contracts: Underestimated & Often Overlooked

Thu, 11 Aug 2022 02:54:21 GMT

Association Contracts: Underestimated & Often Overlooked

Many condominium and community association boards use the same group of vendors year after year after year. The same landscape company, snow removal company, maintenance man, accountant, management company, painter and more. They find their service to be fairly priced and of high quality. When presented with a contract to sign, boards assume (knowingly or unknowingly) the agreement is fair, reasonable, mutually beneficial and appropriate to sign without further review. So long as the pricing remains stable and level of service acceptable, the relationship carries on without much thought.

Sometimes, however, pricing changes or the level of service plummets. Either scenario inevitably triggers a comprehensive Board search to replace the vendor and careful scrutiny of the vendor’s contract. Unfortunately, often times this examination occurs too late. A close review of the contract, usually done by association legal counsel, reveals its flaws. Specifically, provisions found within the agreement make it near impossible to terminate. Either the termination window is exceedingly narrow, nearly impossible to determine or termination triggers payment of a penalty in some outrageous amount. At this time moment the board collectively experiences the proverbial “Uh Oh” moment. The board finds itself “stuck” in a contract - sometimes for an extended period of time – with a non-performing and disgruntled vendor. The board underestimated the significance of the contract because it became complacent. It lost its guard, dropped its defense and was outmaneuvered by the vendor. Could this have been avoided? Should this have been avoided? Yes!

Agreements between parties are memorialized in writing and signed by the parties for a reason. Written contracts exist because parties forget the specific terms of their agreement as time passes. Life circumstances change that sometimes cause parties to regret previous agreements they have made. Without written contracts establishing the terms, either party can stop honoring the agreement any time. The importance of carefully reviewing vendor contracts before signing them cannot be overstated. Although boards may have high comfort levels with a particular vendor, their contract must still be scrutinized. Vendor contracts have been prepared by their lawyer for the purpose of protecting the vendor. While reasonable, the Board needs to ensure the Association's interests are equally protected.

The opportunity to negotiate contract terms with a vendor is rare. It exists when the agreement is originally presented to the board for review and usually not again until the term is nearing expiration and requires renewal. These moments are extremely valuable as they provide an association with negotiating power. The threat of losing an existing or potential client is always in the back of a vendor’s mind. Vendors are significantly more willing to negotiate contract terms before the contract has been signed, not afterwards. Waiting until after a contract has been signed to negotiate new terms is a mistake because a board has no leverage with which to negotiate.

Many aspects of a vendor contract require close scrutiny and review by a legally trained eye. Does the agreement clearly articulate the scope of work to be performed? Does it outline in detail the materials to be purchased and include a timeframe in which the work will be completed? Does the agreement require the vendor to provide sufficient insurance to the satisfaction of the association? Does it require the vendor to provide notice before performing work on association property? Imagine a window washing company hired to wash every single window on a large high rise building in Chicago. The contract should outline the specific day, time and location that work will be performed. This allows management or the board to provide advance notice to owners of such work in case they desire privacy or simply want to reduce the interruption.

Does the agreement allow either party to terminate if dissatisfied? If yes, must the association have ‘cause’ to terminate or may it terminate ‘without cause’? Does the contract contain a liquidated damages provision or require the payment of a penalty for early termination? If yes, in what amount and is that amount reasonable? Does the agreement require notices to be sent in a specific manner to a specific address? If yes, is it feasible and reasonable to deliver notice in the manner set forth in the contract? When disputes arise between the parties to the contract, can either party recover its legal fees from the other party? If not, does only one party have the right to recover its legal fees and costs, such as the vendor?

These questions are not intended to overwhelm. They are designed to reveal the numerous pitfalls that exist when signing contracts with vendors. An association board of managers is not expected to have a mastery of contract or community association law. It is, however, expected to act responsibly and in the best interests of the association. This “fiduciary duty” imposed as a matter of law requires board members to seek professional advice when faced with association decisions such as contract negotiation and execution. Securing counsel to review vendor contracts accomplishes two objectives. First, it ensures the interests of the association are adequately protected from a legal perspective. Second, it safeguards the individual board members against breach of fiduciary duty claims resulting from a contract gone awry.

For the reasons articulated above, a "best practice" for any condo or community association board is to have all contracts reviewed by legal counsel regardless of size, scope, cost or contractor. Asking management to review an association contract is not an acceptable replacement for having it reviewed by legal counsel. Although skilled, property managers have not undergone the legal training required to practice law and it is unfair to expect them to perform this service. It may also constitute the unauthorized practice of law, which should be avoided. Next time that landscape contract comes up for renewal, be sure to have legal counsel review it before agreeing to its terms.

Top 10 Misunderstandings About Condominium and Community Associations

Thu, 02 Jun 2022 16:13:52 GMT

1. My Association Pays for Everything

Many people believe one of the biggest reasons to purchase property within a condominium or community association is because the association pays for all maintenance. That all roof work, landscaping, plumbing or electrical issues, painting, foundation repair, carpet replacement and driveway re-pavement is covered by the payment of one’s monthly assessment. This belief is incorrect. The scope and extent of maintenance covered by an association is set forth in the association’s declaration and bylaws. It varies from association to association and does not cover every single maintenance related malfunction. Be sure to carefully review your governing documents to fully understand what is your responsibility and that of your Association.

2. I Don’t Have to Pay Assessments in Certain Situations

Another common misconception is that in certain situations owners are not obligated to pay monthly assessments. Some owners believe they have the right to withhold the payment of assessments if they dispute the way in which the board is spending association funds or if they abandon the unit altogether. Others believe they may withhold the payment of assessments to protest a particular board decision they disagree with. These are all incorrect. Owners may never withhold the payment of assessments under any circumstance. In fact, Section 18(o) of the Illinois Condominium Property Act specifically prohibits the board from forbearing the payment of assessments by any unit owner. Assessments are the oxygen all Associations require to function.

3. I Can Lease My Unit Whenever I Choose

Some owners believe associations cannot control who they allow to live in their unit after all it is “their” property. That they have an absolute right to lease their unit to whomever they choose for however long they desire. This is a fallacy. Most associations have leasing controls in place to regulate the leasing of units within the association, usually in the Declaration but sometimes in the Rules and Regulations. Such restrictions usually dictate the number of units that may be leased at the same time, the length of each lease permitted, the order in which owners may lease, and may even outline eligibility requirements before leasing. It is critically important to review the governing documents to understand leasing within your association.

4. Board Meetings Permit Unregulated Owner Participation

Certain association members believe open board meetings are intended to allow free owner participation throughout the meeting. Owners of this mindset view board meetings as open forum townhall style meeting in which they may interrupt, blurt out questions and receive immediate answers. This is wrong. Applicable law requires association board meetings to be open to unit owners to increase transparency. The purpose is to allow owners to observe the board in action while discussing important association topics and while making board decisions. Owners do not, however, have an absolute right to interrupt or to participate in board meetings. That said, most condominium association boards designate a specific time during which owners may ask questions and make comments.

Section 1-40(b)(5) of the Illinois Common Interest Community Association Act requires boards to reserve a portion of their meeting for comments by the members; however, the duration and meeting order for the member comment period is solely decided by the board.

5. My Proxy is My Ballot

Many owners operate under the misbelief that completing their proxy and mailing it in or delivering it to another owner serves as their actual vote. Technically this is incorrect. A proxy is not a ballot and a ballot is not a proxy. A proxy is a document that legally authorizes an agent to act on behalf of another party. It permits the person that completed the proxy to vote without being physically present at the meeting. Individuals that attend annual meetings with proxies should receive association issued ballots in exchange for each valid and properly issued proxy in their possession. They may then cast ballots at the annual election on behalf of those owners that provided them with their proxies.

6. The Board Cannot Levy a Special Assessment Without Membership Approval

Tensions tend to run high whenever the phrase “special assessment” is mentioned in open board meetings or included in association newsletters and flyers. Some owners believe boards may not levy a special assessment of any kind without securing majority or supermajority approval. This is wrong. The purpose of the special assessment determines whether membership approval is required. A special assessment levied to raise funds to add or alter common element property requires two-thirds approval of all unit owners. For example, raising funds via special assessment to build a swimming pool requires advance membership approval. However, a special assessment levied for purposes of addressing deferred common element maintenance (e.g. replacing the boilers or tuckpointing the façade) does not require membership approval. Members do, however, have petition rights to overturn a special assessment as outlined in applicable law.

7. The Board Cannot Force me to Participate in a Tax Appeal

Some condominium association unit owners believe the board cannot force them to participate in an association wide tax appeal. Upon receiving their share of the legal fee they dispute it on grounds they never voted to participate in the appeal. This is incorrect for condominium association members. Section 10(c) of the Illinois Condominium Property Act specifically authorizes the board, upon vote of two-thirds of the board members, to seek relief from any taxes and to charge and collect all expenses incurred as a common expense.

8. The Association Carries Property Insurance to Protect the Inside of my Unit

Many condominium unit owners believe they do not need to purchase property insurance to protect the inside of their units because the association carries the necessary insurance. This is false. The Illinois Condominium Property Act requires condominium associations to carry property insurance that protects the common elements and the bare walls, floors and ceilings of the units. However, it does not require the association to insure improvements and betterments installed by the unit owners. Improvements and betterments refer to decorating, fixtures, furnishings, installed or added to the unit, electrical fixtures, appliances, air conditioning, heating equipment, water heaters, and built-in cabinets. Owners must secure proper insurance to protect these interior portions of property.

9. The Condominium Association Cannot Force me to Sell My Unit

Understandably, many condominium association unit owners believe under no circumstances can they be forced to sell their unit. The decision to sell their unit is theirs and theirs alone to make. This is inaccurate. Section 15 of the Illinois Condominium Property Act requires owners to fully cooperate in executing documents to sell their unit if at least seventy-five percent of unit owners affirmatively vote at a unit owner meeting to sell the property, unless a greater percentage is required by the governing documents or unless the local municipal ordinance requires a higher percentage such as in Chicago. Unit owners may, however, vote against selling the property and receive from the proceeds of the sale an amount equivalent to the greater of: 1) the value of the unit as determined by a fair appraisal; or 2) the outstanding balance of any bona fide debt secured by the owner’s interest in the unit.

10. Board Members Receive Compensation to Serve on the Board

Some association members believe board members are handsomely compensated for serving on the board of directors, which is why they choose to serve on the board. This is untrue almost all the time. Most association bylaws specifically prohibit board members from receiving compensation for serving on the board. However, as with other sections of the bylaws, this may be amended by membership approval as set forth in the association bylaws. While rarely done, permitting board member compensation may be used as an effective tool to promote board member participation in an otherwise apathetic association.

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Should Board Members Live Onsite?

Mon, 07 Mar 2022 17:14:30 GMT

Do you believe board members that live onsite in their unit or home make better board members? Do they care more about the property and the people than board members that live offsite? This debate has been ongoing for as long as I have been practicing law in the condo and community association arena (approximately 15 years now, eek).

While arguments can be made both ways, the Illinois General Assembly recently enacted a new law addressing this hot button issue. As of January 1, 2022, any condominium declaration being recorded for the first time or any amendment to the condominium instruments adopted by a board of managers, may provide that a majority of the board of managers, or such lesser number as may be specified in the declaration, must be comprised of unit owners occupying their unit as their primary residence. The declaration may not, however, require that more than a majority of the board be comprised of unit owners who occupy their unit as their principal residence.

Condominium association boards may now require a majority of the board members to live onsite. In practice, this likely has minimal impact on many condominium associations throughout Illinois since most boards already consist of a majority of board members that live onsite. However, perhaps this is a small step taken by the Illinois General Assembly to inch a bit closer to the day when condominium association boards may adopt policies requiring owners to live onsite to serve on the board of managers.

It is undeniable that onsite owner board members have a better grasp on the pulse of the community for which they serve. This personal insight results from walking the property - or portions of it - each morning before heading out for the day and again at night upon returning home. On weekends and weeknights some board members walk the property for exercise and to gather knowledge concerning the condition of the property. Unplanned conversations about association issues and concerns inevitably occur between board members and unit owners while enjoying and using the property in which they live.

While offsite owner board members may have a similar desire to inspect the property and familiarize themselves with pressing Association issues, they are unable due to the everyday demands of life. Making a special trip to the community in which they own a unit may prove inconvenient or unnecessary. Offsite owners used to visit the property to attend any open board meetings or informal board workshops held onsite (limited of course to the 6 exceptions for which boards may meet in private). However, with the recent pandemic and advancements in technology, offsite owners are beginning to attend open board meetings remotely. As such, they do not have the same luxury of walking the property day and night as do onsite owners.

One idea boards may wish to consider is to capitalize on the benefits of technology to enable offsite owners to more actively participate in association business. For example, boards may invite offsite owners to participate in an onsite landscape walk thru using Facetime. This allows that board member to be present “virtually” during and throughout the landscape walk thru on association property, to take notes and ask questions of the association vendor that come to mind. Another idea is for offsite owners to participate in closed session board meetings remotely over zoom to meaningfully participate despite not being physically present. The idea being to take advantage of technology and all that it offers to increase board member participation for offsite owners.

As technology continues enhancing and improving boards will find new and creative ways to allow for board member participation. However, the impact of board members that live onsite cannot be understated. For more association articles and topics to enjoy visit www.shifrinlegal.com .

Property Managers: The Unsung Heroes of Condo and Community Associations

Wed, 13 Oct 2021 16:30:05 GMT

Practicing law in the condominium and community association arena for over a decade has taught me many things. It has taught me that people are complicated and diverse. That each of us has our own perspective on socially acceptable norms and practices. And that we each have our own unique approach to living the best life we can. Sometimes our difference in perspective and our individual character traits make living in a community association setting challenging. Residing in close proximity to others sometimes highlights our differences rather than our similarities. When this occurs, association disputes arise that inevitably find their way to the association management company. At the epicenter of nearly all disputes are association property managers. These brave and dedicated souls must handle such disputes with confidence, grace, professionalism and diplomacy. No easy task. Picture the scenario in which the occupant of unit 1A complains to the property manager about excessive noise transmitting from unit 2A. The unit 2A occupant equally complains about excessive noise transmitting from unit 1A. The property manager is left with two very unhappy and frustrated unit owners to manage.

As if mediating an association noise dispute is not challenging enough, property managers must also manage the expectations and personalities of all board members. When you consider that most boards range in size from three to nine members, it quickly becomes evident how difficult it is to appease all parties. While some boards operate in a cohesive and succinct manner, many others do not. Nevertheless, the association property manager must maintain professionalism at all times and somehow juggle the melting pot of personalities. Again, no easy task.

On July 1, 2010 the Community Association Manager Licensing and Disciplinary Act was adopted. The legislative intent of the General Assembly was to provide for the licensing and regulation of community association managers to ensure that those who hold themselves out as possessing professional qualifications to engage in the business of community association management are qualified to render management services of a professional nature. Requiring individuals engaged in property management to obtain a professional license was designed to provide for high standards of professional conduct. This new law was believed by members of the community association industry to bring a new level of professionalism and respect for property managers.

Unfortunately, in my experience this does not seem to be the case. While most community association managers are professional, ethical and hardworking individuals, they are not given the level of respect and professional courtesy they deserve. I am often asked to prepare cease and desist letters to disruptive and rude association members. These members fail to extend basic levels of respect and civility to their property managers, choosing instead to treat them like verbal punching bags.

To make matters worse, with the lightning quick advancement of technology, we have all grown accustomed to near instantaneous response times. Tasks that used to allow two to three-day turnaround times are now expected to be completed in two to three hours. Board members and unit owners alike expect extremely fast response times to phone calls and emails. With the average property manager receiving anywhere from 50 to 150 emails a day, it is almost inconceivable for a manager to keep his/her inbox current. Further compounding the time constraints placed upon managers are onsite property inspections, attendance at board workshops, board meetings, annual meetings, annual budget preparation, ongoing continuing education requirements, overseeing large scale construction projects and much, much more. Emails left unanswered compile and compound forcing some community managers to spend nights and weekends playing catch up.

Aside from keeping up with the workflow, property managers sometimes face hostile and emotionally volatile unit owners while attending open board meetings. Unit owners of this nature usually attend board meetings with a single issue in mind. If frustrated and upset enough, owners interrupt the board meeting to discuss their sole concern. Oftentimes they expect the association property manager to have an acceptable explanation, an immediate solution to their dilemma, or neither; they simply want to use the meeting as a platform to publicly vocalize their disapproval of the manager and management company. In the face of such public hostility, managers are expected to control their emotions and maintain their professionalism. Yet again, no easy task.

Effective property managers work tirelessly behind the scenes to keep condominium and community associations running smoothly. They work closely with the board to oversee the day-to-day affairs of the association, interface with vendors on critical projects and pursuits, aid in balancing the budget, account for all association income and expenses, manage complaints from unit owners, juggle a variety of board personalities, work at a breakneck pace with an expectation of absolute perfection in everything they do and much, much more. Rarely, if ever, do they receive well deserved credit from association members for their hard work, dedication and professionalism.

The next time you speak with your property manager, take a moment to thank them for all that they do to keep your community running smoothly. They will appreciate the gratitude for they are, after all, the unsung heroes of condo and community associations.

For more articles on various Community Association topics visit www.shifrinlegal.com .

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Don't Roll the Dice With Unclear Rules for your Community Association!

Fri, 10 Sep 2021 16:31:02 GMT

Condominium and community associations are primarily governed by three separate documents: 1) declaration; 2) bylaws; and 3) rules and regulations. Federal and state statutes also apply; however, the declaration and bylaws are the most applicable on a daily basis as they are designed specifically for the association they govern, or at least they should be. The developer typically creates the declaration and bylaws of an association and records them before turnover. Truth be told, most association members never read their declaration and bylaws. They receive them with numerous other documents at their closing and place them in a drawer alongside other “closing documents” to collect dust. As a result, the rules and regulations document becomes their primary source of control. This is why most association boards create rules and regulations.

The purpose of association rules and regulations is to supplement the existing declaration and bylaws, not replace them. Let me restate that: the purpose of rules and regulations is to supplement, not replace, an association’s declaration and bylaws. Specifically, rules and regulations fill in the gaps and address areas of concern not already addressed in the declaration and bylaws. For example, most associations have a paragraph in their declaration that addresses noxious and offensive activity. It may say something like: “no noxious or offensive activity shall be carried on in any unit or in the common elements, nor shall anything be done therein, either willfully or negligently, which may be or become an annoyance or nuisance to the other unit owners or occupants.” A board may wish to add to this restriction by adopting a rule that is more elaborate. For example, many boards adopt rules that specifically prohibit the creation of excessive noise within the units from 10 pm – 7 am. They also provide examples of behavior they consider to be “noxious and offensive.” Establishing a timeframe within which excessive noise is prohibited and providing examples of noxious behavior helps drive home this concept for unit owners.

One of the major challenges of designing effective rules is the need for clarity. They need to strike a balance between specificity and ambiguity: of being specific enough to enforce but general enough to capture many potential violations. This is best explained by example. An association may have a rule that “prohibits the use of open flames on a balcony.” On its face it seems like an effective rule. However, some owners may interpret this rule to allow the use of gas grills on balconies because the flame is concealed inside the grill itself. The phrase “open flame” is subject to interpretation. A more effective rule would read “grilling of any kind is prohibited on balconies.” This distinction seems subtle, but it makes a big difference when the board interprets a rule and applies it to circumstances within the association. Boards that take time to think about specific language that convey their intent will have a much easier time with rule enforcement.

No matter how clear and concise an association’s rules are, the board must also have an established protocol for enforcement. Without enforcement, rules are meaningless. Enforcing association rules and regulations should be carried out by the board, often in conjunction and with help from management, and should work like a well-oiled machine. Many associations include their ‘enforcement procedure’ in the rules document itself. They do this to help educate association members about the process and to provide fairness and due diligence to all.

A strong rule enforcement procedure typically contains a few basic components. It usually outlines the ways in which owners may file complaints with the board about alleged violations. Such options typically include email, handwritten letters to management, or completion of specific incident complaint forms. Violation complaints should always be as specific as possible and include the date, time, and location of the incident. They should also include the names of witnesses and any evidence that may support the complaint such as video or tape recordings, pictures, written statements, or police reports.

Upon receiving violation complaints, boards should review them and discuss whether they believe a violation exists. The fact that a complaint is lodged does not in and of itself mean a violation notice must be sent to the alleged offender. This step is sometimes overlooked by boards and management. There may be occasions when complaints are filed and no action is taken because the board does not believe a violation occurred.

If a violation is suspected to have occurred, a warning notice to the alleged offender is usually the first step. The notice should outline the facts and circumstances, cite the specific rule that was violated, and provide the owner with an opportunity to cure the violation – if it’s ongoing – or to refrain from engaging in such behavior again. The warning notice should also outline the potential fine if the violation does not cease. If the violation continues or there is a repeat occurrence, a second violation notice should be sent coupled with the threat of a fine. As a matter of law, the owner must be given an opportunity to request a hearing before a fine is levied. If requested in a timely manner, a hearing is held with the board at which time the owner is afforded the opportunity to present his or her defense. Following the hearing and at the next open board meeting the board votes upon levying the fine. If no hearing is requested, the board votes at its next open board meeting upon levying the fine.

If the violation continues or there is a repeat occurrence, a third violation notice coupled with the threat of an increased fine should be mailed. The opportunity for a hearing should again be provided before the board votes upon levying the fine. Finally, if the violation continues or there is a repeat occurrence following the third violation notice, the matter should be turned over to legal counsel for legal action.

Each association’s enforcement procedure has subtle variation and may be customized to fit the association’s individual needs. However, these are the major components found in most association rule enforcement procedures. One of the keys to maintaining a first-class community is uniform and consistent rule enforcement. Violations left unchecked cause rapid deterioration of association property, association culture, and morale. Knowing the important role rules play in any community, now is a great time to have yours reviewed and, if necessary, updated.

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

Should your Community Association Allow Leasing?

Thu, 12 Aug 2021 16:32:25 GMT

The life of an association effectively begins when the developer turns over control to the members. At this moment, the owners are elected to the board and begin overseeing the creation and enforcement of policies, amongst other important administrative tasks. The board inherits policies found within the association declaration and bylaws. Many policies are acceptable to the board and left untouched. Leasing, however, is frequently a topic discussed, examined, discussed some more and then examined even more by boards. Whatever the initial leasing policy may be, it always remains subject to amendment.

Associations Have the Power to Create and Amend Leasing Restrictions

All condominium and community association declarations contain a section that allows them to be amended by the affirmative vote of sixty-seven percent or seventy-five percent of the owners. This section also applies to leasing. Unit owners become subject to and bound by all restrictions contained within an association’s governing documents when they become legal owner of a unit within the Association. This means they are automatically governed by whatever leasing policy exists at the time of purchase. Some associations outright prohibit leasing of units. Other associations permit a predetermined number of units to be leased at the same time. Still other associations allow all units to be leased without restriction. Although existing policy regulates leasing within the community, it may always be amended by the owners. What is the best policy to adopt on leasing?

Different Perspectives on Leasing

There is no “one size fits all” leasing policy for communities because associations are unique, diverse and have different cultures. Due to their individuality, each association should evaluate its options to find the policy that best matches the needs of its members.

Many associations prohibit leasing altogether. They believe the community should consist solely of owners that live onsite and share a deep interest in maintaining the property to its highest standards. Supporters of this perspective may also believe renters do not share the same desire to maintain the community in as excellent condition as onsite owners. Additionally, supporters believe the temporary nature of renters create increased turnover, which in turn speeds up the deterioration of common element/area property due to frequent moving. Backers of a “no leasing” policy usually plan on spending their entire lives residing in their unit.

Opponents of a “no leasing” policy typically view their unit as an investment vehicle more than a permanent home. They desire to secure the greatest return on investment possible when selling their unit. As such, they believe permitting leasing within the association ensures that potential investors remain interested in buying units within the association. This, therefore, captures the entire buyer marketplace without eliminating potential purchasers. Opponents of a “no leasing” policy also may have long term plans to convert their unit into an investment vehicle by renting it at some future date. Allowing the leasing of units would be mandatory to accomplish this objective.

Given the stark contrast in opinion on leasing, some associations strike a compromise. They establish a leasing policy that permits leasing for a predetermined number of units within the community. Usually, the leasing of units is determined on a first come, first serve basis. This type of compromise appeals to both supporters and opponents of leasing. It appeals to supporters because it ensures the community never is overrun with tenants. This helps curb supporters’ fear that the property will become run down and in disrepair. It slows the deterioration of common element/area property since fewer moves occur.

This policy appeals to opponents of “no leasing” because it allows them to market the sale of their units to potential investors whenever they choose to sell. It also affords them the option of leasing their units should they wish to hold them as investments.

Importance of Clear Leasing Language

Regardless of the specific type of leasing policy a community adopts, the policy itself must be clearly written and easy to understand. An ambiguously written policy will cause confusion and may give rise to large scale disputes and possible litigation.

For example, an association may have a leasing policy that allows twenty percent of units to be leased. However, it fails to include specific language that outlines how the policy is implemented. Owners lease their units at will. This causes more than twenty percent of units to be leased. In such a situation, it is extremely difficult to reduce the number of leased units below the twenty percent threshold; each owner claims their unit was first to be rented and they refuse to provide signed lease agreements. This leaves the board and association stuck and almost unable to enforce the leasing policy.

This dilemma can be avoided and it underscores the importance of utilizing legal counsel to help write leasing policies. Clear and concise language enables swift and effective policy enforcement. After all, without enforcement, policies are meaningless.

For more information and tips on Association topics visit www.shifrinlegal.com .

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3 Keys to Running Smooth Association Elections

Wed, 14 Jul 2021 16:33:29 GMT

Condominium and community associations are – to a large extent – a microcosm of democracy. Board members are association members that are elected by the people for the people. Each unit owner has the legal right to cast a vote for candidates at each annual election. This framework serves the overall interests of each condominium and community association. It also introduces politics into communities, which may lead to contentious elections. Some of the hardest times for associations surround annual elections and at the center of it all are board members. However, annual elections may be manageable and even satisfying if three concepts are followed.

Election Guidelines

All condominium and community associations are created by the recording of governing documents in the county where the property is located. Most association governing documents consist of a declaration, bylaws and any amendments to them. The bylaws usually consist of a separate document attached to the declaration as an exhibit. However, sometimes bylaws are contained within the declaration as a designated article or articles. Regardless of their location, bylaws exist and contain the election roadmap.

It is extremely important for boards to read and discuss election procedures found in their governing documents. While most election procedures are similar in form and structure, they are unique to each association and each set of bylaws. This makes it very important for boards to fully understand what they say and the procedures they require. The quickest way to derail an association election is for a board to unknowingly permit a method of voting that is not authorized by the association’s bylaws. If questions arise during board discussions when reviewing election procedure, it is advisable to consult with legal counsel for interpretation. Sometimes ambiguous language is used within governing documents that causes confusion amongst the board. Once the board reads, discusses and agrees upon the election procedure, then a timeline should be established and communicated to association members.

Clear, Concise and Timely Communication

Most boards invest the time reading and understanding how to conduct their annual elections in compliance with their governing documents. Problems tend to arise, however, when boards attempt to communicate the election procedure to association members. Communicating the election procedure must be clear, concise, and timely. For example, boards must make it abundantly clear how many board positions are open, how many candidates are running for the board, eligibility requirements that may exist to run for the board, the means in which owners may cast votes, details about how to submit votes in advance, and hard and fast deadlines for the election process.

The importance of timeliness cannot be overstated. Usually an election timeline includes three critical deadlines: 1) the date by which candidate submission forms must be submitted; 2) the date by which mail-in ballots must be submitted; and 3) the date of the annual election. The initial communication from the board must give owners a reasonable period of time to submit their candidacy. Owners should be given a minimum of two to three weeks to make this decision. Once the slate of candidates has been established, owners should have sufficient time to review the credentials of all candidates and to submit their ballots. This requires the board to send a second notice identifying all known candidates well in advance of the mail-in ballot deadline, if permitted. Finally, owners must receive sufficient notice of the date, time and location of the annual election and within the notice standards set forth in applicable law (e.g. Illinois Condominium Property Act or Common Interest Community Association Act).

Fairness is Key

The board, often in conjunction with management, is obligated to oversee and conduct annual elections. It may not, however, express a preference for an individual candidate or a select few candidates. It must always maintain impartiality and conduct the election in a fair, transparent and honest manner. This seems obvious and easy but sometimes this is not the case.

All candidates should receive the same opportunity to submit nominations and information relating to their credentials. Similarly, all candidates should be given the same information about any “meet the candidates” night and any campaigning that may be permitted.

The board should also be careful to select the order in which names appear on the proxies and ballots. Sometimes listing candidate names in alphabetical order is the easiest technique to ensure complete impartiality. Utilizing alphabetical order when inviting candidates to speak at “meet the candidates” night is also effective in demonstrating impartiality.

If budgets permit, the board may consider hiring an independent accounting firm to assist with tallying proxies and ballots on election night. Similarly, legal counsel may assist with reviewing proxies and ballots to ensure their legal validity. The further removed the board is from the ballot and proxy tabulation process the better. If an association does not have the aid of legal counsel or an independent accounting firm, it is wise to request the assistance of volunteers to assist with the proxy and ballot tabulation process. Of course, volunteers must not be candidates or related to candidates.

Boards that follow these three straightforward concepts will likely run smooth and efficient annual elections. This, in turn, builds trust and rapport within the community while increasing harmony. It also alleviates unnecessary aggravation and encourages passionate owners with new ideas to serve on the board.

For more information and tips on Association topics visit www.shifrinlegal.com .

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The Role Discrimination Plays in Condo and Community Associations

Thu, 17 Jun 2021 16:34:37 GMT

Discrimination Within Condo and Community Associations

The death of George Floyd in 2020 at the hands of police officers spotlighted widespread racial injustice in this country. It reinvigorated a nationwide outcry of equality for all. Energized protests, looting and rioting ravaged cities and suburbs throughout America. Without question, racial discrimination – discrimination of any kind – has no place in this country. Similarly, discrimination has no place in community associations. Now more than ever boards must be extremely thoughtful and considerate when drafting new association policies, when enforcing them, and when managing unit owner requests for reasonable accommodations.

Drafting Non-Discriminatory Association Policies

Drafting association rules and regulations in and of itself is a difficult task. The Illinois Condominium Property Act and the Illinois Common Interest Community Association Act require all rules to be “reasonable.” The word “reasonable” is ambiguous and subject to interpretation. Ensuring new rules and regulations are non-discriminatory adds an additional layer of complexity. Condominium and community associations are subject to a federal law known as the Fair Housing Act and a state law called the Illinois Human Rights Act. Both laws prohibit discrimination by providers of housing (including associations), based upon race or color, religion, sex, national origin, familial status, or disability.

There are three categories of discrimination boards must consider when drafting association policies: 1) overt discrimination; 2) differential treatment; and 3) disparate impact. Of the three, disparate impact is the most important to remember when creating new association policies. Disparate impact refers to the creation of a policy that is uniformly applied but still has a discriminatory impact on people within a protected class and is not justified by a business necessity. An example of a disparate impact policy may be a rule that prevents children from residing in a one-bedroom unit within an association. Such a rule could be construed as having a disparate impact on families with children (familial status) - which is a protected class under amendments to the Fair Housing Act – because it treats potential owners/occupants with children differently than owners/occupants without children. This can be tricky because such a rule may seem plausible given the relatively small space afforded in a one-bedroom unit. Further, the rule when evenly applied may not appear discriminatory on its face because larger units are available to purchase or rent within the Association offering alternate choices. Yet such a rule may be considered discriminatory based upon the “disparate impact” it has on families. Due to such uncertainty, it is strongly recommended that boards have new association policies or practices reviewed by legal counsel before moving forward with adoption.

Non-Discriminatory Enforcement of Association Policies

Boards should be mindful of the concept of “differential treatment” when enforcing association policies. Differential treatment consists of the unfair treatment of one person compared to another because of their membership in a protected class. An example would be the board’s unequal enforcement of a no overnight street parking rule. The rule itself is reasonable, valid and enforceable. Three homeowners that live next to one another park their cars overnight on the street and have done so for four months straight. The board has been alerted to these ongoing violations. Two vehicles are owned by white men and the third vehicle is owned by a Muslim woman. The board sends a violation notice to the Muslim woman to immediately stop parking her vehicle overnight on the street. It does not, however, send a violation notice to either white man.

In this hypothetical, the board has engaged in differential treatment of association members. It has targeted a member of a protected class based upon national origin and ignored two similarly situated violators. Depending upon which legal forum a discrimination complaint is filed, the association could be liable for punitive damages, civil penalties and attorneys’ fees and costs. The best rule of thumb for boards is to uniformly enforce association policy against all owners and residents. The Board’s enforcement of covenants and rules should not take the ethnicity, origin, religious or racial background of the specific offender into account.

Evaluating Unit Owner Accommodation Requests

Boards will receive disability related accommodation requests from unit owners and residents from time to time. Evaluating whether a request is “reasonable” and necessary can be challenging and costly if the wrong decision is made. A “reasonable accommodation” is defined as an exception, change or adjustment to a rule, practice or policy that is necessary for an individual with a disability to have an equal opportunity to use and enjoy their unit. There exists a three-step process a board should follow to determine whether an association is required to make an exception.

1. Determine whether the requesting individual qualifies for an accommodation.

2. Determine whether the accommodation is related to the individual’s disability.

3. Determine whether the accommodation is reasonable.

To qualify for an accommodation, the requesting individual must have a “disability” as defined by law. A “disability” is a physical or mental impairment which substantially limits one or more of an individual’s major life activities.

If an individual qualifies for an accommodation, there must be a clear connection between his or her disability and the requested accommodation. For example, a blind person is considered disabled under the Fair Housing Act. They have an impairment – seeing – that substantially limits their ability to engage in major life activities (walking, driving, etc.). The Board may grant this owner an exception to its no pet rule and allow him or her to have a seeing eye dog. There is an obvious connection between the disability and the requested accommodation. On the other hand, a blind individual’s request for use of a separate elevator may not be a close enough connection to justify granting the request. Unless the individual’s disability is obvious, and the accommodation clearly relates to the disability, the association may wish to request additional information from the requesting owner. Due to certain legal concerns in making such a request, it is best that they be made with the assistance of legal counsel.

The third and final step requires the board to determine if the owner’s accommodation request is “reasonable.” To be considered “reasonable,” an accommodation cannot create an undue financial or administrative burden on the association or fundamentally alter the association’s operations. For example, a blind man’s request to have a service animal live with him despite the no-pet rule is typically reasonable. It does not place undue financial or administrative burden on the association or fundamentally alter the association’s operations. Contrast this request with a blind man’s request to reserve one of the association’s elevators for his exclusive use due to his disability. Such a request would not be deemed “reasonable” as it would place an undue administrative burden on the association and would fundamentally alter the association’s operations and use of its elevators.

Discrimination related issues are real and ongoing concerns for condominium and community associations. They are complex matters that require a developed understanding of applicable federal and state law. For these reasons, boards are well advised to consult with association legal counsel whenever drafting association policy, enforcing them, and reviewing disability-related accommodation requests.

For more information and tips on Association topics visit www.shifrinlegal.com .

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Strategies for Conducting an Efficient Violation Hearing

Thu, 13 May 2021 16:36:22 GMT

Overseeing and participating in violation hearings is one of the most challenging aspects of serving on a board of directors. It serves as an opportunity for the owner accused of a violation to “face” his or her accusers. Often the subject matter of the hearing involves personal and sometimes contentious facts. Before the onset of COVID-19, the setting for a violation hearing usually occurred in a conference room inside the association, a local library, nearby police station, or some other public facility. The board members sit alongside one another at the front of the room usually behind a long conference table facing outward. The accused typically sits in a chair facing the entire board. The layout itself can feel more like a parole hearing than an association hearing and can be intimidating for both the accused and the board.

It is rare for board members to have served in a prosecutorial or judicial role of any kind. This inexperience may give rise to disorganized, contentious, and stressful hearings. However, methods and strategies exist that, if properly deployed, increase the likelihood for holding efficient and respectful violation hearings.

Preparation is Key

Of everything I have learned throughout my career as a lawyer, the most valuable lesson has been that preparation is key. Being the most prepared person in the room is often more important than the strength of one's case and the lawyer’s talent. The same is true for violation hearings. If the Board intends on conducting a violation hearing without the aid of a lawyer, it must take time to prepare. The individual board member that will lead the hearing (often the board president) must understand the specific charges levied against the accused. That individual must also be deeply familiar with the facts and circumstances that give rise to the violation. He or she must take time to develop questions he/she wishes to ask the accused and have a deep understanding of the rule or covenant that the accused is charged with violating.

Hearing Ground Rules

The second most important aspect to conduct an efficient violation hearing is reviewing the ground rules with all participants at the beginning of the meeting. The board member in charge should take a few minutes to verbalize the rules with the accused and any witnesses present. It is helpful to discuss the procedural order of the hearing such as who will speak first, how long they will be given to speak, and what types of information they may share with the participants. Addressing proper decorum is also important. It is beneficial to inform participants that basic levels of respect and courtesy are expected of everyone. For example, interruptions, name calling, and derogatory terms will not be tolerated. Violations of decorum will be grounds for immediately terminating the hearing.

Board Member Strength and Unity

Another very important aspect of conducting an efficient hearing is for board members to support one another. Sometimes board members disagree about the enforcement of a specific violation against an owner. It is acceptable, and even encouraged, for board members to disagree about certain association issues. However, these disagreements must remain confidential and should only be shared in private sessions among the board members. The easiest way to disrupt a violation hearing is for a board member to express his or her disagreement with the board about the alleged violation during the hearing itself. This sometimes occurs when the dissenting board member asks questions of his or her fellow board members in the middle of the hearing. In more egregious cases, it occurs when a dissenting board member openly voices his disapproval of the hearing. Dissent of this nature divides the board, empowers the accused, and jeopardizes the effectiveness of the hearing.

Strong Leadership

The personality type of the individual in charge of the hearing is of critical importance. The president of the board may seem like the obvious choice to conduct the hearing. However, if the president has a more meager and reserved personality, a separate board member may be the better choice. Ideally, the individual that leads the violation hearing should be comfortable with public speaking and confrontation, be organized, have a strong presence, be a skilled listener, and be patient. One of the easiest ways to disrupt a violation hearing is to appoint an individual with a mild personality to run the hearing. Without clear leadership, accused owners and residents feel empowered to take control of the hearing.

Finally, it is important for the board to designate at least one member to oversee and lead the hearing. Failing to identify a member in charge causes board confusion, represents a disorganized process and empowers the accused to disrupt the hearing method.

Consider Association Counsel

Not all violation hearings require the participation of association counsel. The Board can and should use its discretion to make this determination. That said, most violation hearings should involve association counsel for a few reasons. First, having the association’s attorney present sends a clear message to the accused that the board takes a serious view of violations. Second, attorneys tend to be organized, are comfortable with public speaking and confrontation, and are skilled listeners (at least the good ones are). This combination of skill serves an association well as it helps establish order and formality for the hearing process. Third, it increases the effectiveness of advice provided by counsel following the hearing. Association counsel had the opportunity to personally observe the accused, the witnesses, and the evidence presented. This permits counsel to develop an informed opinion of the character and creditworthiness of the accused based upon firsthand observations.

Conducting Violation Hearings During the Coronavirus Era

These days most boards conduct violation hearings remotely using Zoom or another remote conferencing platform. In the virtual setting arena, the above guidelines are even more important to closely follow. Without the physical presence of participants sitting inside the same room, societal rules of common courtesy and respect are more quickly forgotten. Interruptions, outbursts, and other disruptive behavior more likely rear its ugly head. As such, it is critically important for boards to establish those ground rules, seize control of the hearing at its outset, and closely stick to its predetermined outline.

Good Luck and Happy Hearings!

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

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Top 10 Board Member Mistakes to Avoid

Wed, 14 Apr 2021 16:25:45 GMT

Serving on a volunteer board of directors for a condominium or community association may seem like an easy and noble task. While true in part it can also be frustrating, difficult, and at times even maddening. Over the years I have worked with hundreds of board members. Throughout this time I have observed board members make the same common mistakes over and over again. This has caused them and their fellow board members frustration, turmoil and exhaustion. It is my sincere hope this article helps your Board avoid these ten common pitfalls.

Number 10: Prioritizing a Single Association Issue

Board decisions are made at open board meetings by majority vote of those board members present at the meeting, so long as a quorum is present. In other words, no single board member – not even the president – has authority to make an association decision on behalf of the entire community. This manner of voting is set forth in the bylaws of every association and in the applicable statute. Yet, certain individuals join a board with the sole purpose of preserving or changing a single association issue.

As an example, the association may presently permit rentals within the community. The newest board member joined because she is determined to change this policy to ban all rentals. This single issue becomes her entire focus and she devotes all her energy and time into changing the policy. Upon learning that at least two-thirds of all owners must vote in favor of making this type of policy change, she begins a grassroots effort to convince every association member to vote her way. Her fellow board members support her desire for change until it becomes apparent the community does not. Once the other board members realize not enough owners will vote to eliminate rentals, they withdraw their focus from this issue and move on to other association matters.

Because this was the only reason she joined the board, she refuses to give up and continues badgering association members and board members to change the policy through an association vote. This drives her fellow board members crazy and causes them to dislike her. A clear divide appears within the board and progress on other important association issues screech to a halt. This board member has destroyed board unity and ruined an entire year of progress. Once she realizes she is not able to eliminate rentals within the community, she resigns from the board.

Word to the wise: Do not join your board to accomplish a single issue you are passionate about.

Number 9: Underestimating Time Commitment

Getting elected to your board is exciting and validating. It serves as a reminder that your neighbors believe you can positively impact your community and view you as a leader. Once the initial excitement of being elected to the board wears off, the real work begins. Boards generally meet more than the legally mandated four times per year. In fact, boards usually meet at least twice that often throughout the year to remain current on association issues. Oftentimes these informal meetings occur inside one of the board member’s homes or condominium units. They usually occur at nighttime or on the weekends during non-business hours.

Nothing is more frustrating to a board than an individual that underestimates the time commitment of serving on the board. When this occurs, this person usually stops attending informal board meetings (commonly known as board workshops or planning sessions) and eventually stops attending formal open board meetings as well. Even worse, at times these individuals create excuses for missing important meetings and deadlines. This behavior causes frustration among other board members and ensures important association tasks are not completed. It harms the community at large, the board as a whole, and damages the individual’s reputation.

Word to the wise: Serving on the board is a significant time commitment that should not be underestimated.

Number 8: Micromanaging Other Board Members

Generally speaking most personality types offer opportunity for board improvement and productivity. However, the “micromanager” personality type always wreaks havoc on a board and destroys board unity. Some people are overeager to make an impact on their community. That or they have too much free time on their hands. Regardless, this leads them to mercilessly micromanage other board members.

For example, Jane becomes the new board secretary. At a recent board workshop Jane and the other board members design a laundry list of items to complete. The list consists of approximately fifteen items and is broken down and assigned three per person. The board agrees to reconvene in one month for another board workshop to revisit progress on each item. During this month, Jane emails each board member four times per week to verify their progress. She is relentless and grows frustrated and angry when she does not receive a response to her email within twenty-four hours. Board members begin ignoring Jane’s emails. By the time the next workshop arrives Jane has managed to upset every board member. During that workshop one board member resigns because he cannot deal with her need to micromanage.

Word to the wise: Serving on a board is a group effort; remain patient and permit other board members to complete their tasks on their own timeline.

Number 7: Exceeding Board Authority

Efficient boards operate as a team. Each member of the team understands his or her role and responsibilities and sticks to them. Inefficient and chaotic boards often have runaway board members. These board members believe serving on the board grants them unrestricted access to all association matters. These board members can be found at 6 am every Saturday walking the association streets or hallways inspecting every square inch, seemingly looking for violations to flag and warning notices to send.

They insist on attending every single meeting with association vendors and schedule additional meetings with vendors without notifying the rest of the board. Runaway board members also have a tendency to give instructions to vendors without having authority to do so. They instruct the landscaper to cut down a series of bushes without the board’s knowledge or consent. They insist on accessing the association roof alongside the roofing contractor to oversee the contractor’s work. They believe serving on the board gives them special privileges.

Word to the wise: Accept the role and responsibilities assigned to you and respect that boards make decisions as a team, not individually.

Number 6: Expecting Personal Favors

It is rare for board members to join the board for the sole purpose of receiving benefits and favors from the association. However, over time board members become more comfortable in their role on the board. They may end up serving multiple years in a row sacrificing their time and energy for the betterment of the community. Unless the association’s governing documents expressly provide for compensation, board members do not receive compensation. Thus, they sometimes develop a sense of entitlement that they deserve a minor favor here and there. After all, they have dutifully served their community for many years in a row.

The expectation of personal favors comes in many forms and sizes. I have seen board members expect late fees to be waived when late on assessment payments. Some board members expect the board to grant them permits or variances to alter their units in ways expressly prohibited by the governing documents. Board members have asked their board to turn a blind eye to ongoing violations such as pets or renters. Board members with access to association credit cards or gift cards may take certain liberties they should otherwise avoid. Associations must treat all members the same, which includes board members. Giving board members special treatment creates a potential for claims of preferential or unfair treatment and exposes the association to legal liability.

Word to the wise: Serving on a board is rewarding and fulfilling because of the positive impact it allows individuals to make for their community. It does not offer compensation or preferential treatment. Acting upon this expectation can be dangerous.

Number 5: Failing to Delegate

Overzealous board members are those individuals who believe they can single-handedly accomplish the seventeen items on the board to-do list. They take it upon themselves to spearhead each board initiative. They invest excessive amounts of time balancing the association budget, working with the designer on the lobby remodel and researching qualified contractors to replace windows throughout the building. They work tirelessly because it is the only gear they know, full speed ahead. When other board members offer assistance they politely decline to ensure “things get done and are done correctly.”

Unfortunately the overzealous board member inevitably hits a wall and burns out. That or they develop frustration and animosity towards other board members for not equally sharing in responsibility. This may cause board breakdown and disconnect.

Word to the wise: Serving on a board means being part of a team and requires allowing other board members to complete association tasks.

Number 4: Betraying Board Loyalty

Like American politics, the political environment within associations evolves over time. Because associations act by majority vote of the board, it only takes the banding together of a few board members to effectively control all board decisions. A board of five is typically controlled by any three individuals that consistently vote together, much like the divide witnessed by Justices on the US Supreme Court. On occasion, associations with longstanding board members experience board overhauls.

Case in point: three of five new owners are elected to serve on the board of directors. The three new board members replace three individuals that had served five years in a row. This change in board composition represents a major overhaul. Sometimes this can be welcome and needed for the community, other times not so much. New waves of board members would benefit from remembering their loyalty lies with the board, not the unit owners. They are elected to serve on behalf of the unit owners and always in their best interest, but their loyalty is to the board.

Word to the wise: Bring fresh new ideas to the board to improve the association but respect the integrity of serving on the board and be mindful of board loyalty.

Number 3: Losing Compassion for Owners

Association members that do not serve on the board often feel board members lack compassion. Interestingly, sometimes they become board members and lose the compassion they once complained about. This is human nature as we all struggle to remain mindful of compassion for others.

I have attended numerous violation hearings with boards threatening to levy significant fines ($500 - $1,000) against owners for violations ranging from pets, renters, parties and drugs. Rules exist for a reason and need to be enforced to ensure the association remains a clean, healthy and desirable place to live. That said, on occasion having compassion for others is the better approach.

For example, levying a $500 or $1,000 fine against an owner that threw a party one time may infuriate him and increase the likelihood of another raging party. Whereas issuing a strict reprimand but foregoing the levying of a fine may decrease the likelihood of another disruptive party. The owner may remember the compassion he received from the board and respect the rules. There is no magic book boards consult when facing association issues like the one above. Instead, they must exercise common sense and good judgment when acting as a board.

Word to the wise: Remain mindful that compassion goes a long way towards building community rapport and preserving a safe and healthy community within which to live.

Number 2: Disclosing Confidential Board Information

Individuals that serve on association boards are exposed to confidential and sensitive information. Information such as alleged rule violators, the nature of those violations, delinquent unit owners, the nature and amount of their delinquency, pending foreclosures, bankruptcy filings, neighbor-to-neighbor disputes, long term board planning, and more. They are trusted with this information and expected to keep it confidential. This requires board members to avoid sharing such information with their husbands, wives, children, neighbors, and friends in the community.

This is easier said than done as non-board members often find confidential information interesting. Moreover, sharing such information with non-board members may cause board members to feel important and powerful. The unauthorized disclosure of confidential board information disrupts the trust shared between board members. It also threatens to embarrass other unit owners and may lead to liability concerns if it reaches the wrong person.

Word to the wise: Respect the sensitive nature of confidential board information and avoid sharing it with others. Think about whether you would want information about you shared with others.

Number 1: Assuming You Know Everything

Far and away the most damaging mindset a board member may have is Mr. Know-It-All. This individual believes because she served as CEO of her wallpaper company for thirty years and served on three separate boards during her lifetime she knows everything. She understands how to perfectly balance the budget, how to handle disruptive unit owners, lead association board meetings, fix broken mechanical components, review contracts, draft declaration amendments, serve as registered agent and much more.

Unfortunately, this is one of the most common board member mindsets. Something about serving on a board of directors of the community in which they live causes people to believe it is easy. After all, it is nothing like running a complex wallpaper business. Actually, it is.

Serving on a community association board may be more important than serving on the board of trustees of a privately held company. The reason is because decisions made by a board directly impact the safety and wellbeing of tens if not hundreds of other people. Furthermore, these people are not just employees, but neighbors and friends. The law imposes a fiduciary responsibility on board members for this very reason. The law is designed to protect the general public and, therefore, expects board members to act with common sense and good judgment at all times.

There are many pitfalls, legal and otherwise, that exist when boards make decisions of any size. If you are not an architect, mechanic, engineer, lawyer, or insurance agent then do not assume you have the knowledge and expertise to make decisions about renovations, boilers, rental amendments and liability insurance. Consult the experts before making important decisions to be sure you are informed and educated about your options. Remember, you don’t know what you don’t know. Stop and think about this for a moment.

Word to the wise: Take the time to surround your board with professionals (lawyers, accountants, engineers, insurance agents, property managers) to protect yourself and your association from liability.

For more information and tips on Association topics visit www.shifrinlegal.com .

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360 Degree Perspective on Dealing With Excessive Noise

Thu, 25 Feb 2021 17:24:20 GMT

One of the most common complaints within condominium and community associations is excessive noise. The scenario usually plays out in a way similar to the following hypothetical. The association property manager or the board receives numerous complaints from a frustrated resident about excessive noise. The complaints range in variety from loud music, parties, banging and thumping from children, musical instruments, to elevated speaking voices. Regardless of the source of noise, complaints of this nature often involve four categories of people: 1) the complaining owner; 2) the alleged offender(s); 3) the property manager; and 4) the board of directors. This article provides a three hundred and sixty degree look at the rights, responsibilities and techniques available to help resolve a noise complaint from all perspectives.

Complaining Owner

If you have endured frequent noise disruption of any kind from a neighbor you understand the maddening impact it can have. Excessive noise disrupts sleep, interferes with an individual's psychological and physiological wellbeing, and destroys the peace and enjoyment derived while being home. Living in a condominium or community association environment often means living in close proximity to other people. Some noise will inevitably transmit between units, but too much noise is problematic. Unfortunately, noise complaints are subjective in nature since each of us has a different threshold for noise tolerance; therein lies the problem.

A complaining owner has a few available options for addressing excessive noise. Because noise complaints are subjective, when appropriate it is helpful to replicate the noise for the alleged offender. If the complaining owner feels safe and comfortable speaking directly with the alleged offender, the complaining owner may wish to invite the alleged offender into his or her unit to hear the noise. The noise may be replicated by blasting the stereo, increasing the volume on the television set, having a fake conversation with elevated voices, pretending to have children run across the floor, etc. The purpose of this exercise is to enable the alleged offender to experience firsthand what the excessive noise sounds like. Often times we are unable to fully appreciate the level of one’s suffering until we experience it ourselves. Note, it is important for both parties to have a neutral third party join them during this exercise. The ideal neutral third party is an uninvolved neighbor. Having the presence of a third party offers a second “ear” and presents more objectivity when evaluating the noise level. As a reminder, since the parties will be entering each other’s units, it is imperative they are comfortable with this arrangement and proper consent is provided.

If the complaining owner is unwilling to speak with the alleged offender for fear of retaliation or some other reason, he or she may contact the board or association property manager to file a complaint. Noise complaints should be filed in written form with as much detail as possible. Important information includes the date and time, location of the noise and a description of it including its frequency. Capturing the noise with a recording device is also helpful as it supports the complaint and may be shared with the alleged offender, board or both. Complaining owners may also invite another person or two into the unit to observe the excessive noise, if possible. Some associations allow complaints to be submitted by email while others require the completion of a specific complaint form. Be sure to review your association rules and regulations about lodging complaints to ensure proper compliance.

Alleged Offender

On occasion individuals have a heightened sensitivity to noise or an unreasonable expectation about the level and extent of noise transmission within a condominium or community association. This may lead to frequent complaints about excessive noise from a particular unit that may become disruptive to the alleged offender. One example that comes to mind is a family of four with two children under the age of five that reside in a three bedroom condominium unit on the thirty-third floor of a high-rise building. Directly below them resides an elderly couple in their seventies. Two weeks after the family moves in, the elderly couple begins lodging regular noise complaints with management. The complaints allege excessive noise at early hours each day (between 6 and 8 am) caused by the pitter-patter of children running and playing on the hardwood floors. The family receives a written warning notice from management about the allegations of excessive noise with instructions to cease such behavior or face fines. What should they do?

If a conversation alone is insufficient to end ongoing noise complaints, an alleged offender may try the noise replication technique described above. If the alleged offender has good reason to believe the noise falls within “reasonably acceptable levels” then recreating it for the complaining owner to experience may bring complaints to an end.

In the event a neighbor-to-neighbor conversation is not feasible the alleged offender may consider encouraging board members to visit the complaining owner’s unit, with proper consent, to experience the noise. The complaining owner may be inclined to grant a board member access to the unit to prove the truthfulness of his or her complaints. This may help resolve the complaints if the board member or members perceive the noise levels as reasonable.

In certain situations, if neighboring units vehemently disagree about the reasonableness of noise transmitting between units, an acoustic engineer may be hired to measure the sound transmission. The cost for hiring the engineer may be paid for by the complaining owner, the alleged offender or split equally between both parties. Acoustic engineering firms use a sound-level meter to measure various noises. The engineers then compare the reading to a standardized guide to identify where the sound falls on the scale of sound. The sound scale has a broad range from tiny subtle vibrations, to indoor speaking voices all the way to airplane or spaceship engines. It can prove helpful in establishing a more “objective” measurement of sound to assist in resolving a noise complaint between owners.

If all else fails unit owners have a legal right to the quiet use and enjoyment of their property. This includes a right to live within their unit in a reasonable manner without ongoing disruption or interference from neighbors. Notably, ongoing disruption and interference could present itself in the form of repeat unfounded complaints. If none of the above strategies bring resolution to the noise complaint, an alleged offender may consider consulting with a licensed attorney that focuses in the condominium and community association industry.

Property Manager

Addressing noise complaints for a property manager can be very challenging. As previously mentioned, they are subjective in nature which makes them difficult to outright declare a “violation.” Managers may find it beneficial to bring the parties together in some forum to discuss the ongoing noise. Doing this opens up lines of communication between the parties that may not have previously existed. It also forces the parties to face one another, which may soften the anger between them and may develop deeper understanding and empathy for one another. Managers are caught between a rock and a hard place. On the one hand they have an obligation to the Association to enforce the rules and regulations. On the other hand, they have an obligation to use their discretion to fully investigate whether alleged conduct constitutes a violation before action is taken. The ultimate decision of whether a violation exists should always be made by the board members and not the property manager.

An overeager board sometimes places undue pressure on a property manager to declare excessive noise a violation and to take immediate action. Managers should be careful and thoughtful in such situations before proceeding. Taking action against an alleged offender to appease an overeager board may result in liability for the association if a court rules that no violation occurred. The best course of action for a property manager is to consult with association legal counsel before sending any violation notices and before taking action of any kind. Rule enforcement requires interpreting association governing documents and applying rules to a specific set of facts. This type of analysis is best left to lawyers to perform. It also insulates the manager from any personal or professional liability.

Board Members

A condominium or community association board also has a difficult task when reviewing owner complaints of excessive noise. The board has a fiduciary responsibility to address all owner complaints with diligence. This means boards must reasonably investigate alleged violations until satisfied that one exists or does not exist. A mistake often made by boards is to immediately assume a violation exists whenever a complaint is lodged. This can and should be avoided by gathering necessary information and evidence before deciding whether further action is needed. Boards are well within their rights to request copies of any evidence supporting the allegations such as video recordings, audio recordings, pictures, witness statements, witness testimony, etc.

Further, boards may wish to experience or hear the alleged excessive noise firsthand if feasible. This involves coordinating a duplication of the noise with the cooperation of both parties. Often this helps board members decide whether the noise in question rises to the level of “unreasonable” such that a violation exists. Of course, boards must exercise caution and vigilance when entering units and should always ensure consent is provided and owners are accepting of this exercise.

If a violation exists based upon all of the evidence gathered by the board, it has an obligation to send a violation notice to the offending owner. Oftentimes a warning notice giving the owner an opportunity to stop the offending behavior is appropriate before levying fines. Sometimes offending owners are unaware they are creating noise that disrupts other owners and a simple warning notice resolves the nuisance.

If the offending conduct continues, boards should closely follow the violation enforcement protocol set forth in their rules and regulations. This usually involves a formal violation notice that includes an opportunity to be heard and the potential imposition of a fine. A second violation notice with escalating fines is usually the next step in the enforcement process. If necessary, a final violation notice followed by the commencement of legal action may occur. The board’s objective when deploying rule enforcement tactics is to halt the disruptive behavior. The objective should not be to raise additional funds for the association. Nor is it to punish a particular owner or resident because the board has a specific dislike for that individual. To the extent feasible, personal feelings and opinions should not factor into board rule enforcement decisions. While discussions about potential rule violations may occur in private outside the presence of unit owners, votes on any and all such decisions must be made during open board meetings, as required by law.

Rule enforcement in general is a difficult but necessary task boards must carry out on behalf of their association. It can cause animosity, anger fellow unit owners and neighbors and cause discord within the community. Alternatively, it also curbs disruptive behavior, protects the safety and wellbeing of association members, and helps ensure the association remains an enjoyable and safe place to live.

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

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Attorney Michael Shifrin Adds a Human Touch to Condo and Community Association Law

Sun, 14 Feb 2021 17:23:21 GMT

Michael Shifrin and his team at Shifrin Legal aspire to walk a valuable line in the field of condominium and community association law, merging the capability, resources and experience of a large firm with the personal touch of a boutique practice. It's an approach based on the knowledge that failing to look beyond the text of laws and contracts to resolve an association dispute is, frankly, too simplistic and too narrow in scope to serve clients entangled in disagreements between neighbors coexisting within the same association.

An in depth understanding of human psychology—of the needs that drive people, the fears and resentments and misunderstandings that simmer and boil over—is just as important as understanding the minutiae of legal documents. Michael Shifrin has built his practice on the proven belief that this wider skill set and personal attention to human detail can effectively prevent, defuse, deescalate and resolve conflicts efficiently and humanely. Importantly, that it can be done without expensive, unnecessary litigation that so often leaves all sides feeling betrayed and unsatisfied.

Michael Shifrin's experience in the field runs deep. He has spent over a decade in condominium and community association law, including a period as co-chair of the Illinois Chapter of the Community Association Institute Membership Committee. He's a prolific writer and has published extensively in industry trade publications. Illinois Super Lawyer's Magazine identified him as a “Rising Star” on three separate occasions, an honor reserved for the top 2.5% of attorneys in the state under the age of forty. He was selected as an “Emerging Lawyer in Illinois” by Leading Lawyers, another designation reserved for the top 2% of younger high-achieving attorneys. Perhaps most importantly of all, he has become a sought-after speaker at trade shows and expositions, a testament to the personable, upbeat and pragmatic persona he brings to his work.

Shifrin's mission is about more than settling disputes. It’s about using those years of experience to help his clients build a culture of sustainable communities rooted in a solid foundation of economic stability, clear and honest communication, and shared goals and expectations. This is the unifying theme of much of Michael Shifrin's writings - sustainable budgets, ethical board behavior, fiduciary responsibility, and getting the right minds in the right places to steer the ship. It is always easier to prevent problems than it is to solve them. While Shifrin Legal is more than equipped to pursue collections and litigation when necessary, perhaps the greatest value the firm provides lies in the construction of a community culture that does not require constant court intervention to handle its affairs. Shifrin helps shape such cultures by providing personalized legal counsel, attending board meetings, closely working with management and the board, and crafting amendments when governing documents are flawed or incomplete. This is the hard, important work that shapes the kind of condominium or community association that is built to last - stable, honest, clear, clean and human.

What does this mean for the client? It is the security of knowing that you have a legal partner every step of the way, so that when things do go wrong – a vendor breaches its contract, owners fail to pay assessments, construction defects are found, or a host of other legal headaches – there is an attorney already in place, intimately familiar with the governing documents and the parties themselves, fully prepared to both mediate or litigate as necessary. Problems happen fast and come from unexpected directions, and this level of familiarity and proactive representation is invaluable in times of crisis. Michael Shifrin and his team are excited to bring their expertise to the condominium and community association communities throughout Chicago and the surrounding suburbs. He understands that the needs of clients are fluid and evolve over time, and he looks forward to watching the firm grow and adapt alongside the communities it serves. More information about Michael Shifrin and Shifrin Legal can be found at Shifrinlegal.com, or call 312-470-2276 to set up a consultation.

Does Humanity Play a Role in Condo and Community Associations?

Wed, 27 Jan 2021 17:22:25 GMT

The 2020 outbreak of the coronavirus pandemic caused waves of uncertainty, panic, fear and heightened anxiety in Americans and people around the world. As is often the case with large scale disaster, it also united Americans in a single cause and brought humanity to the forefront of our minds. Notably, the word “humanity” is a blending of the words “human” and “unity.” Human + Unity = Humanity. Vocabulary.com defines the word “humanity” as the human race, which includes everyone on earth. It’s also a word for the qualities that make us human, such as the ability to love, to feel and to have compassion.

Do the qualities that make us human such as the ability to love, feel and have compassion for others play a role in condominium and community associations? Of course they do! After all, what are condo and community associations at their core? They are a collection of human beings living together, sometimes in close quarters, in the most intimate of settings, with a common goal of preserving and protecting possibly their greatest asset while experiencing as much enjoyment as possible.

It seems obvious that humanity would play a significant role in condo and community associations, right? Wrong. Serving as legal counsel for countless community associations throughout my legal career has taught me that people benefit from being reminded of the role humanity plays in their community. For example, sometimes overzealous board members take it upon themselves to police the association within which they live. They voluntarily walk the property on a weekly or monthly basis looking for violations to cite and fines to levy.

On the one hand, rule adherence and enforcement is a benefit, as it ensures community associations remain clean and tidy in appearance, uniform and desirable. These traits support the shared purpose of preserving and protecting the property value for everyone within the association. On the other hand, overzealous and constant policing of rules and regulations may cause divisiveness, anger, animosity, and distrust within the community. This, in turn, frustrates the shared goal of maintaining community harmony, a necessary ingredient for enabling association members to derive pleasure from their neighborhood. Can these conflicting objectives be reconciled?

Yes! Both goals may be accomplished. The secret (shhhhh, don't tell anyone) is assembling a thoughtful and considerate board of directors and leadership team that embraces the role humanity plays in community associations. A board that endeavors to preserve and protect community association property with the understanding that “human beings” live among them as neighbors. A board that drafts humane and reasonable rules and one that enforces them uniformly. A board that treats fellow association members with respect, kindness and compassion. A board that surrounds itself with like-minded professionals that share this same set of core values and principles.

Serving on a board of directors and fulfilling the responsibilities placed upon a board while practicing humanity may feel unnatural, if not outright oxymoronic. Rest assured, a seasoned and thoughtful leadership team can make all the difference in showing a board how to humanely serve.

The “leadership team” that surrounds a board plays a critical role in establishing the tone, tenor, and culture of the association. The leadership team typically consists of association property management and legal counsel. Knowledgeable and skilled board members consult with management and legal counsel before making important association decisions that impact everyone. Decisions such as drafting new policies, interpreting and enforcing policies, pursuing delinquent accounts, overseeing rule violations, managing noise complaints and more. If the board’s leadership team understands the role humanity plays within an association its advice will reflect this. Policies will be drafted and decisions can be made that enhance the culture of an association not divide it. After all unity, not divisiveness, seems to be in high demand at this moment in time.

Does your board consider humanity while fulfilling its roles and responsibilities? Does the leadership team provide professional guidance that accounts for humanity? Only board members know the answers to these important questions. Condominium and community associations that routinely practice humanity and exhibit compassion flourish and become highly desirable places to live.

What direction is your condo or community association headed?

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

Shifrin Legal

Assessments: The Lifeblood of Every Association

Wed, 13 Jan 2021 17:21:44 GMT

Serving on a board of managers of a condominium or community association brings with it numerous challenges. One such challenge is running the association like a business. Chief executive officers and business leaders understand the importance of protecting the financial health of the companies in which they lead. They regularly monitor the assets and debt of their company along with revenue and cash flow to ensure the company’s survival. Condominium and community association boards must do the same.

Although condominium and community associations are legally created as not-for-profit corporations, they still must operate like businesses. Board members have a fiduciary responsibility to the owners to preserve and protect the association. For most people, their home is their largest asset. In an association setting, this means elected board members are responsible for overseeing the largest asset of tens if not hundreds of people.

The primary source of income for any condominium or community association is assessments. Each member of an association is responsible for paying his or her proportionate share of assessments by operation of law. For condominium associations, a unit owner’s share of assessments is based upon the unit owner’s percentage ownership interest in the common elements. This obligation is set forth in the Illinois Condominium Property Act and the association declaration. An association’s annual budget for its fiscal year serves as the basis from which assessments are calculated. It is common for condominium association unit owners to pay different monthly assessments.

For non-condominium association members, each owner’s assessment responsibility is based upon the community declaration and the annual budget adopted by the board. More often than not, community association members pay equal assessments.

Being the primary - and sometimes only - source of income for any association, it is of utmost importance that board members actively monitor each owner’s assessment payments. Many associations require members to make monthly assessment payments, although others require quarterly or annual assessment payments. Regardless of the frequency or manner in which assessments are paid, boards should not hesitate to adopt and strictly enforce collection policies.

For example, if a condominium association has a rule that requires the imposition of a $25 late fee for any assessment not paid within ten days after its due date, the Board should strictly enforce this policy. Enforcement must be consistent, uniform and without regard for the individual behind in his or her assessment payment.

This is easier said than done. Often times it is a board member’s friend or neighbor that fails to pay his or her assessment on time. The personal connection between the two may create a greater sense of compassion and understanding for the owner’s delinquency. Even worse, the board member may be intimately aware of the personal struggles of the friend or neighbor that gave rise to the delinquency. The temptation to look the other way or give the delinquent member additional time before levying a fine can be strong. While understandable, a board member must avoid succumbing to this temptation. He or she must remember the importance of collecting assessments in a timely manner from all owners to preserve the overall financial health and well-being of the entire association.

One practice boards utilize to avoid this temptation is to establish a clear collection policy. Once adopted, the board expressly empowers the association property manager to enforce the policy with the aid of legal counsel. Empowering the property manager to strictly enforce an established collection policy, with minimal input from the board, ensures rigorous enforcement of the association’s collection policy. It also sends a message to association members that the board understands the importance of collecting monthly assessments and will strictly enforce its policies. The likelihood of missed or late assessment payments usually diminish once owners understand there are no exceptions to the policy.

Board members that view their role on the board as that of an executive leading a business often make productive and impactful board members. They understand the importance of collecting assessments from the owners to ensure the association’s financial health and well-being. This, in turn, solidifies the association’s financial standing for years to come, which allows it to better navigate unexpected future capital expenses, catastrophes, or events that could jeopardize association well-being.

It is always advisable to be a proactive and overprepared board than a reactive and underprepared board. After all, problems are much easier to prevent than to solve. If you do not have an association collection policy or have not had your association collection policy reviewed by legal counsel within the past few years, now is as good a time as any to do so.

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

What is a Fiduciary Duty and Do Board Members Have One?

Mon, 28 Dec 2020 17:21:09 GMT

Simply put, a fiduciary duty is when one party must act in good faith on behalf of another. The unique nature of this relationship imposes a special trust or confidence in the acting party on behalf of the other. For example, a director of a corporation owes a fiduciary duty to shareholders of the corporation, just as doctors owe a fiduciary duty to their patients, and lawyers owe a fiduciary duty to their clients. A fiduciary relationship exists where there is a special confidence imposed upon a person who is bound to act in good faith with regard for the best interests of another.

A fiduciary duty requires a person to act with honesty, loyalty, in good faith, and with the best interests of another in mind. Community associations are by their very nature, not-for-profit corporations. Once incorporated, the legal entity commonly known as “not-for-profit corporations” is the form in which they take. Much like corporations, unit owners are elected to serve on the board of their association. Some, if not most, board members also serve in an officer position (e.g. President, Treasurer, Secretary). Owners of units within the association are similar to shareholders of a company insomuch as they have a vested interest in the preservation and wellbeing of the association. Board members have a legal obligation imposed upon them by operation of law to act in the best interests of the unit owners and the association at all times. While most association governing documents require board members to act as a fiduciary on behalf of association members, section 18.4(s) of the Illinois Condominium Property Act also requires officers and members of a board to exercise the care required of a fiduciary on behalf of the unit owners.

YES! Yes, board members have a fiduciary duty imposed upon them whether they are aware of it or not. Importantly, failure to act in a manner in furtherance of this fiduciary duty may result in liability not only for the association, but also for the individuals serving on the board. Illinois courts have previously stated that this fiduciary duty requires strict compliance with the governing documents of an association. This fiduciary responsibility does not require board members to know everything about operating a community association as no one person has that level of knowledge. It does, however, require board members to secure proper advice before making a decision outside their area of expertise.

For example, when determining the type and amount of liability and property insurance to purchase on behalf of the association, board members should consult with a knowledgeable insurance agent or broker for guidance. Similarly, board members would be well served to consult an architect before devising renovation plans for the common area lobby or pool. Finally, it would be prudent for board members to consult with legal counsel before interpreting association governing documents, signing contracts, or making decisions about particular covenants or rules.

Understanding one’s fiduciary responsibility and acting appropriately at all times while serving as a board member may be challenging. Oftentimes board members face difficult decisions with competing interests and little experience making such decisions. For example, a board may have a reserve study that benchmarks how much in reserves the association should have as of 2021. The board recognizes it is significantly below the recommended reserve amount. This reserve shortfall may cause the board to consider levying a special assessment to raise capital for unanticipated repairs of major mechanical components.

When evaluating this decision, the board must consider all available options for raising such funds. It must also conduct a risk/reward analysis. Its analysis involves balancing two competing interests: 1) increase the association’s reserve contributions – which means a budget increase - to avoid levying a special assessment; or 2) leave the annual reserve contribution as is and carry the risk associated with a failed building component.

On the one hand, the board is undoubtedly aware that an increase in the operating budget will be met with harsh skepticism from the owners and cause acrimony. On the other hand, the board knows failing to increase its reserve contributions will likely result in a future special assessment when a building component fails. What should the Board do? This is a difficult decision for any board to face with strong competing interests to balance. The “best” and “correct” decision is not always crystal clear.

Whenever faced with difficult decisions like the one above, board members should ask themselves a single question: “Am I taking into account the best interests of the entire association by casting my vote this way?” While it seems obvious, putting the best interests of the association before one’s own is often the hardest decision to make. Humans are hardwired for survival, which dates back to prehistoric times. Human behavior causes us to think of ourselves before others. Pumping the brakes on this instinctual tendency and honestly answering the above question usually yields positive results for association boards. It also ensures board members fulfill their fiduciary duty and allows them to sleep soundly at night.

For more information and helpful tips on Association topics visit www.shifrinlegal.com .

Tips to Create and Communicate a Sensible Budget for your Community Association.

Wed, 16 Dec 2020 17:20:11 GMT

How To Establish An Association Budget With Proper Reserves

Most individuals that serve on a board of managers of a condominium or community association appreciate the importance of establishing a sensible budget with sufficient reserves. After all, Section 9 of the Illinois Condominium Property Act and Section 1-45 of the Illinois Common Interest Community Association Act require boards to adopt budgets on behalf of the association each year. That said, establishing a “sensible budget” is subjective and may cause intra-board turmoil during budget season. This occurs because one board member may be focused on immediate association financial needs and another on long term financial planning. The personal relationship board members have with money also impacts their view and opinion. One board member may be fiscally conservative while another fiscally liberal. Such differences can cause meaningful disagreements.

Further complicating the budget adoption process is the reality that each owner’s assessments are directly tied to the budget. An increase in the annual budget will cause an increase in each owner’s assessment obligation. Most association members do not take kindly to increased assessments – regardless of the reason – and are not shy about expressing their disapproval. For some board members, making an unpopular decision is extremely difficult to do even if in the best interest of the association.

How can a group of three or five board members establish a sensible budget with proper reserves without destroying board and association harmony?

The short answer is strong communication and reviewing historical facts and figures. Boards that appreciate and embrace the importance of communication, both internally and openly with members at large, usually diffuse the potential for conflict. A good starting point is for the board to review the previous fiscal year’s budget. The budget may be compared to the previous year’s expenses to identify budgetary shortfalls and surpluses. After all, a budget is not an exact science but rather an estimated guess of anticipated future expenses. Reconciling the prior year’s budget with actual expenses may reveal a $15,000 surplus for snow removal services. In light of this surplus, the board may choose to lower the figure it included for snow removal in next year's budget. This budgetary analysis may be conducted for each line item within the association budget. If the previous year was an anomaly, the board may review multiple years to gather more financial figures and data.

Once this budgetary reconciliation has been completed and a new budget established, it is important for the board to communicate its thinking to the unit owners. Boards have a legal obligation to provide a draft budget to all unit owners before its formal adoption. The board may wish to include a cover letter with its draft budget that touches upon the board’s rationale for each line item. Including such a letter demonstrates transparency, reduces membership speculation about certain line items and answers membership questions before they arise. A cover letter also signals to the members that significant thought and time went into creating the new budget and reduces membership concern about financial mismanagement.

A key component to any budget is reserves. Both the Illinois Condominium Property Act and the Illinois Common Interest Community Association Act require boards to provide for reasonable reserves for capital expenditures and deferred maintenance for repairs or replacement unless the membership elects to waive this requirement in whole or in part, which is uncommon. Determining the necessary amount of money to set aside for reserves is unique to each association and must be evaluated on a case-by-case basis.

The law provides five separate factors a board should consider when arriving at its reserve amount. Those factors are: 1) the repair and replacement cost, and the estimated useful life, of the property which the association is obligated to maintain, including but not limited to structural and mechanical components, surfaces of the buildings and common elements, and energy systems and equipment; 2) the current and anticipated return on investment (ROI) of association funds; 3) any independent professional reserve study which the association may obtain; 4) the financial impact on unit owners, and the market value of the condominium units, of any assessment increase needed to fund reserves; and 5) the ability of the association to obtain financing or refinancing.

Many associations elect to hire an engineering firm to conduct an official reserve study and prepare a written report detailing the findings. This type of report helps serve as a financial roadmap for boards to follow. Boards are not required to strictly follow a reserve study down to the penny; however, using it for general guidance may prove useful for boards looking for assistance. The basic concept behind establishing reasonable reserves is to set aside sufficient funds that will prove adequate for short-term and long-term maintenance, repairs and replacement. It sounds easier than it is. A board that reconciles its budget with prior expenses, considers short-term and long-term association goals and invests time articulating its rationale increases transparency and its likelihood of adopting a sensible budget.

For more information or to read more association articles visit www.shifrinlegal.com .

Proven Strategies to Run an Efficient Association Open Board Meeting

Wed, 02 Dec 2020 17:19:19 GMT

Ask anyone that serves on a board of managers of a condo or community association for a great story from one of their open board meetings and they will likely immediately launch into one. The reason is that open board meetings easily transform into mob-like public outcries. Individuals that live in condo and community associations are passionate about their homes and are comfortable expressing their displeasure when given the opportunity. Open board meetings cannot be avoided. Both the Illinois Condominium Property Act and the Illinois Common Interest Community Association Act require boards to meet at least four times annually. Fortunately, by implementing effective controls and proven strategies your board of managers can avoid the next association revolution.

Articulate the Meeting Roadmap

Often times association members attend open board meetings because they have a specific issue of importance they want to address. The other major reason is to lodge a complaint against the board. It is important that these attendees be informed when they will have their opportunity to speak. If a clear roadmap for the meeting is not provided at the beginning of the meeting, they will likely lose patience and interrupt the board meeting.

To combat this common occurrence, your board should inform everyone in attendance of the meeting roadmap. The board president should review the meeting agenda with the members, inform them approximately how much time will be allocated to each agenda item, and notify them which portion of the meeting will be reserved for membership questions and concerns. Equally as important is for the board president to remind the members that the purpose of the open meeting is to allow the board to conduct board business. Specifically, to permit the board to review and openly discuss association items of importance and to vote on them. This conducting of business must be done without interruption from the membership. At this juncture, the president should also vocalize the “housekeeping rules.”

Establish Meeting Housekeeping Rules and Secure Membership Commitment

Although we would like to believe adults behave appropriately in all settings, life experience tells us otherwise. Thus, it is vital to establish housekeeping rules at the beginning of a meeting to ensure it runs efficiently. The president should state in his or her own words that the board expects a basic level of respect, courtesy and civility from the members. That this basic level of respect requires everyone at the meeting to avoid interrupting and otherwise speaking over one another. To that end, name calling, insults and other derogatory comments will not be tolerated. The board will extend the same level of respect and courtesy to each association member. Following this prelude, the board president should ask the members if the housekeeping rules seem fair and if the members are willing to abide by them. Any sort of vocal response from the membership indicating approval is acceptable. The reasons for securing membership commitment of the rules will be explained later in this article.

One other tip to remember is that the housekeeping rules must be delivered with a level of certainty and confidence to establish the tone for the meeting. The first few minutes of any open board meeting are critically important to demonstrate that the board, and not the members, is in control of the meeting.

Enforce the Housekeeping Rules

More important than just establishing housekeeping rules is the actual enforcement of them. The probability is high that at least one attendee will violate the housekeeping rules within the first five to ten minutes of the meeting. It is extremely important that the board president take this opportunity to reiterate the housekeeping rules to the members. This should be done in a stern but respectful manner. Following the interruption and without responding to or otherwise addressing the interrupter’s comment or question, the president should address the members at large. An example would be something like: “As a reminder to everyone we all previously agreed to abide by the housekeeping rules. This commitment we made requires us to avoid interrupting and otherwise speaking over one another. It also requires us to avoid name calling, insults and making derogatory comments. Please remember these rules and we assure you that you will be given the opportunity to speak during the designated membership portion of the meeting.”

This tactic can be very effective when delivered in this manner immediately following an interruption and in front of the members. It reinforces that the board - not the unit owners - is in control of the meeting. It simultaneously serves as a deterrent to further interruptions from other members. This tactic may be repeated on an as-needed basis if further interruptions occur.

Successful Presidential Character Traits

The final component to ensuring efficient board meetings is putting the right person in charge. One of the primary roles of the board president is to preside over meetings of the board of managers. This duty is outlined in the applicable statute and in the bylaws of each association. The president is the chief executive officer and ideally should have natural leadership characteristics. The president should be comfortable with public speaking. He or she should be a reasonable and sensible individual willing to listen to input from other board members. The president must ensure the meeting flows at a steady pace and remains on topic. This may prove challenging as unit owners and board members steer the discussion off topic wasting valuable time. Having a task master with a good demeanor in charge helps ensure the meeting progresses at an acceptable pace and provides order to the meeting itself. Best of luck!

What Kind of Association Do I Live In?

Wed, 18 Nov 2020 17:18:33 GMT

Oftentimes the phrase “condominium association” is used interchangeably with townhome association or homeowner association. The phrase “common interest community association” is also frequently used in place of condominium association to further the confusion. While understandable, a condominium association is an entirely separate and distinct form of property than a common interest community association. Taking a closer look at the various types of residential associations should help remove the confusion.

In 1963 the Illinois state legislature enacted the Illinois Condominium Property Act (“Act”) for purposes of creating a statute that would provide more specific guidance and legal structure for condominium associations. Even though the Act has been amended, revised, and updated numerous times since 1963, its core principles remain intact and it continues to serve as the primary piece of legislation for condominium associations throughout Illinois.

To create a condominium association in Illinois, the property owner must record a declaration. This declaration must expressly state that the property is subject to the provisions of the Act. Further, the declaration must contain specific provisions, one of which requires the official name of the association to include the word “condominium” or be followed by the words “a condominium.” Thus, the simplest and easiest way to determine whether your property is a condominium association is to identify its official name on the recorded declaration.

Another relatively easy way to determine if your association is a condominium association is to consider the words used in the declaration. The Act contains certain definitions that are unique to condominium associations and which invariably get incorporated into an association’s governing documents (i.e. Declaration and Bylaws). Condominium association declarations often use the phrase “common elements” and “limited common elements” when describing specific portions of property within the community. These terms are generally reserved for use within condominium association declarations, although they can appear in other declarations as well.

In 2010, the Illinois state legislature enacted the Common Interest Community Association Act (“CICAA”). Known largely as the sister statute to the Condominium Property Act, CICAA was enacted to provide more specific guidance and legal structure for non-condominium associations. The law defines the term “common interest community” as “real estate other than a condominium or cooperative with respect to which any person by virtue of his or other ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association.” A common interest community does not include a master association.

If you live in a residential association in which you pay assessments that contribute towards the maintenance, improvement, insurance premiums or real estate taxes of the common areas within your community AND the word “condominium” or the words “a condominium” do not appear in the name of your association declaration, you most likely are part of a townhome association or a homeowners association. These are commonly known as common interest community associations. Another easy way to determine whether you live in a common interest community association is to review the language used in your association declaration. If you see the word “common area” as opposed to “common element” you likely reside in a common interest community association.

You may be thinking why does any of this matter? Identifying the type of association you live in matters because it determines which Illinois law applies to your community. Understanding which law applies enables association members to educate themselves about their legal rights and responsibilities. Since these differ depending upon which law applies, it is critically important to review the correct law.

While many sections of the Illinois Condominium Property Act, General Not-For-Profit Corporation Act of 1986 and the Common Interest Community Association Act are straightforward and self-explanatory, others are confusing and vague. Without legal training and a deep understanding of applicable case law that interprets these laws, understanding them can be complicated. In the event you do not know which law applies or you encounter sections of applicable law that are confusing, please speak with qualified legal counsel for advice. Doing so will save you time, resources, aggravation, and money.

Should I Run For My Condo Association Board?

Wed, 04 Nov 2020 17:17:50 GMT

Article Highlights

1. Serving on a Board of Directors Requires a Sacrifice of Personal Time and Energy

2. Serving Your Community Can Provide Personal Satisfaction and a Sense of Unity as a Productive Team Member

3. Personality Traits of Successful Board Members Include Emotional Intelligence, Integrity and a Collaborative Mindset

November 4, 2020

Board Members: What Do They Do and Should I Run For the Board?

Serving as a board member of a condominium or community association can be personally rewarding and provide an excellent opportunity to make a meaningful impact on your community. However, the job itself requires more than meets the eye and should be given thoughtful consideration by potential candidates before deciding to run to serve on a board. Such thoughtful consideration requires one to understand the job responsibilities and sacrifices associated with serving on a board and the types of impact one can make on a community for which they serve.

Most boards consist of three to five individuals. Boards are elected by the members of their association at an annual meeting held for the specific purpose of conducting an election. Terms typically last two years in length and board members are eligible to run for re-election upon the conclusion of their term. Most condo and community associations elect officers to serve in specific capacities on their boards. This election is made by votes cast by the individual members of the board and not the general membership. Generally speaking most association boards have a president, treasurer and secretary. In addition, some boards have a vice-president or two. Any additional board members tend to serve as directors at large without a specific officer title.

The general tasks and responsibilities of a community or condominium association board include, but are not limited to, the following:

1. Preparing the association annual budget

2. Reviewing and updating association rules, regulations & covenants

3. Reviewing alleged violations and conducting hearings as needed

4. Overseeing the work and services performed by various association contractors and vendors

5. Preparing for, attending and running at least four open board meetings per year as required by law

6. Overseeing the association’s financial wellbeing

7. Participating in discussions and decisions about delinquent owners

8. Working directly with association vendors to ensure the community is adequately protected and represented (e.g. property manager, lawyer)

9. Making difficult and unpopular decisions on occasion for the betterment of the community (e.g. levying special assessments)

10. Researching alternate vendors and collaborating with fellow board members to identify creative solutions to overcome association challenges

Most individuals serve on their community board in a volunteer capacity unless their bylaws provide otherwise. As a volunteer position, potential candidates should consider the personal sacrifice that is required to effectively serve on their community board. Board members invest a reasonable amount of personal time throughout the year collaborating with fellow board members to complete their job responsibilities. Board members often face personal scrutiny from association members concerning community developments and decisions of the board. Board members must, from time to time, make difficult and unpopular decisions in public and before the membership for the benefit of the community at large. Such difficult decisions may cause board members personal turmoil and aggravation resulting from disapproval in the court of public opinion (i.e. membership’s vocal opposition). Serving on a community or condominium association board is not for the faint of heart. It can, however, provide board members with personal fulfillment and satisfaction when boards operate as a cohesive unit and bring about positive change to their community.

So…..Should you run for and serve on your Board? While that decision is personal in nature and should only be made by the individual contemplating his or her candidacy, there are basic character traits and attributes that lend themselves to a strong board member. A person with energy and one who has passion about his or her community usually translates into an effective and productive board member. An individual who is reliable and delivers on his or her word or promise typically excels in a board position. Someone with high emotional intelligence, integrity and a collaborative worker usually enhances the effectiveness of his/her board. Importantly, a person with self-esteem who is comfortable in their own skin and capable of withstanding public scrutiny and judgment often makes a strong candidate for the board.

On the other hand, if you cherish your personal time away from work and the notion of spending it with neighbors - and to some degree strangers - makes you recoil, then you may wish to reconsider running for the board. If having to make unpopular decisions in public in front of your community causes your palms to clam up and your heart rate to increase, your free time may be better spent with family and friends engaging in activities of your choosing. Finally, if you have a strong opinion about one isolated topic (e.g. pets) and could not care less about all other association issues, you should not serve on your board. You will regret serving on your board to accomplish a singular objective of keeping your community pet-friendly. A better approach would be to undertake a grassroots effort to garner membership support to ensure the permissibility of pets in your community. This will take considerably less time than serving a two-year term on your board.

Ultimately only you can decide whether you should run for your board. But at least now you have a deeper understanding of what the position requires and the type of qualities that make for a strong and effective board member. Good luck!

Assemble Your Team of Professionals

Wed, 21 Oct 2020 16:16:58 GMT

Article Highlights

1. Property Management and Legal Representation are Critical Team Members for Condominium Association Long Term Success

2. Boards Should Research and Interview Potential Representation to identify the Best Match for their Association

3. Avoiding the Mistake of Going it Alone Saves the Association Time, Money and Aggravation

October 21, 2020

Assembling Your Association Team of Professionals

A good friend of mine recently moved into a new home he constructed from the ground up. Not literally, but with the help and involvement of a design and construction team. He is a resourceful guy that knows how to “figure things out.” After compiling and totaling all home line items he realized he was well over budget. Being the resourceful guy that he is, he elected to serve as the project’s general contractor for two reasons. First, he felt he was more than competent and capable of overseeing the construction of his home. Second, serving as general contractor would save him tens of thousands of dollars – or so he thought.

About three months into the home construction process, he gave up. The plumbing, electrical and HVAC work had been installed incorrectly and needed to be redone. Portions of framing proved to be improperly installed and needed to be reframed. Finally, exterior driveways and concrete walkways were given insufficient time to cure, which resulted in the need to tear them out and reinstall them. These mistakes caused major work delays and significant cost overruns. Worst of all, they could have been avoided had he hired a reputable professional contractor from inception to oversee construction. Once the home was complete and the final cost calculated, my friend learned the ugly truth. His decision not to assemble a complete team of professionals increased his overall out-of-pocket expense by 25%. It also delayed delivery of his home by more than six months, which landed him a permanent place in the ‘dog house.’

The hard lesson my friend learned through this grueling process was the importance of assembling a proper team of professionals when building a home. Thankfully, individuals serving on a condominium association board are not responsible for overseeing home construction. They are, however, responsible for establishing sound and sensible rules and regulations that govern the day-to-day lives of numerous people. They are also responsible for interpreting and fairly enforcing them for the betterment of their community. This is no easy task and certainly not one in which a volunteer board should pursue on its own.

Instead, a board is well advised to assemble a team of professionals to assist with establishing reasonable regulations, interpreting and enforcing them. At a minimum, boards should explore the feasibility of hiring a full time or part time property management company to assist with administering and operating their condominium association. There are hundreds of reputable and qualified property management companies in the greater Chicagoland area with expertise in condominium association management. There are full-service property management companies outfitted to dedicate an employee to provide onsite property management for large high-rise buildings. There are midsized property management companies equipped with the latest technology and resources to assist all sized condominium associations. And there are neighborhood management companies able to assist with providing customized management services for medium to small sized buildings. A simple search on the internet will quickly reveal the numerous qualified options available to your condominium association.

The “team” of professionals does not stop there. It benefits a board to explore hiring legal counsel as well to assist with the creation, interpretation and enforcement of condominium association policies and procedures. Like management companies, there exist numerous types of law firms ranging in size and feel. Regardless, it is important that a board take the time to interview potential lawyers to get to know them, their personality types and their philosophy about the practice of law. This is essential to ensure a proper match is made as a condo lawyer is a key component of any association team of professionals.

Once a condo association board has hired a property manager and attorney, it has completed the initial steps of assembling a proper team of professionals. Over time, additional team members may become necessary. Such members may include, but are not limited to, accountants, engineers, insurance brokers, mortgage brokers, construction contractors, designers, architects and landscapers. The team of professionals will be ever evolving as a condominium association board faces different challenges and tackles different tasks.

So long as your board assembles the proper team of professionals, it can rest assured knowing it stands ready to conquer whatever challenges await.

Inaugural Blog Post

Tue, 06 Oct 2020 16:16:08 GMT

One of the core principles at Shifrin Legal is to educate the community association industry about the law, legal trends, and association related topics of importance. It is for this reason that we intend on publishing frequent articles and blog posts addressing a full range of legal issues and topics. Articles and posts will be published on a weekly or biweekly basis, deposited in the inbox of email list subscribers and disseminated via social media channels such as YouTube, Facebook and Twitter.

Shifrin Legal strives to provide more than just top notch legal services. We endeavor to bring value to the industry, generate thought provoking discussions and improve the condominium and community association landscape. Through education, effective counsel and the creation of meaningful relationships, Shifrin Legal strives to enable associations to operate more efficiently. Our mission is to reform outdated legal practices while providing condominium, townhome and homeowner associations with fresh, innovative and industry leading legal services.

Shifrin Legal believes in making a positive and meaningful impact not just on firm clients but on association leaders, property managers, board members, volunteers, and industry trade organizations. A major part of this commitment includes ongoing and frequent education to ensure maximum impact and lasting results.

We thank you for the role you play within the community and condominium association industry. Without the contributions of each of you, the industry we have all come to know and love would not exist.

For more information and tips on relevant Association topics visit www.shifrinlegal.com .

Shifrin Legal