Top 10 Misunderstandings About Condominium and Community Associations
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.
For more information and tips on Association topics visit www.shifrinlegal.com.