Condo talk: Property managers should share signature authority
Q. Our property manager has signature authority on our association’s bank accounts. Is this normal?
A. It is customary for a property manager to have signature authority on an association’s operating account. This is necessary to pay the association’s expenses. However, the manager should not have sole signature authority on an operating account. That is, a board member or board members should also have signature authority. In addition, a board should consider requiring that checks over some designated dollar amount require dual signatures, one of which should be a board member. Seldom should a manager have signature authority on an association’s reserve account. The association’s bank should be advised whenever there is a change in an authorized signer on an account.
Q. Our longtime treasurer of our self-managed association pays all association bills and performs the reconciliation of the association’s checking account. Is this a good idea?
A. Not really. Every association should maintain financial checks and balances. One of the ways to do this is to have bank accounts reconciled by a person different from the one paying the bills/writing the checks. There are other safeguards that an association can implement to protect financial assets. The board should examine invoices and supporting documentation before signing checks, or review a monthly summary. Writing checks to cash should be prohibited. A bank reconciliation should be prepared monthly, and checks should be inspected for an authorized signer and to review the endorsement.
Q. I am an owner in a condominium, and I received a letter from the association advising me that I have violated a rule and that the board has levied a fine. I thought I was entitled to a hearing.
A. The board can levy a fine for violation of the association’s rules, declaration or bylaws. A fine can only be levied by the board after the owner has been provided written notice of the violation and an opportunity for a hearing. After the hearing (if the board finds that the violation did occur), or if the owner does not request a hearing, the board can levy the fine. However, the board cannot first levy a fine and then give the owner a right to “appeal” the fine; that would violate the due process required under governing law.
Q. A unit in our condominium association is leased by an owner to a person who repeatedly ignores and violates our rules. The board has levied fines that the owner pays, and the problems continue. The owner has ignored the board’s requests to deal with the tenant. The tenant is making life miserable for the other residents. What else can the board do?
A. Plenty. The board can terminate the lease between the owner and the tenant. This is permitted for any violation by the tenant of the association’s declaration, bylaws or rules. The association must issue a 10-day notice terminating the lease. The notice must meet very specific requirements, so it’s prudent to consult an attorney. If the tenant fails or refuses to vacate the unit within 10 days, the board can file a forcible entry and detainer (eviction) lawsuit against the tenant. The board can request the court to require the owner to reimburse the association for the attorney’s fees it incurs. Note that this remedy should be reserved for serious or repeated violations, as a court might not be inclined to order the eviction of a tenant for what the court perceives as a relatively minor infraction. That is, remedies should be in proportion to the violation.
Q. After a rather heated exchange during a board meeting, one of the board members stood up, shouted “I resign,” and stormed out of the meeting. A few minutes later, he returned to the meeting like nothing happened. The rest of the board members were happy to see this board member go, and the meeting ended in an argument over whether this person was still on the board. Was the verbal “I resign” effective?
A. The verbal resignation was not effective. A director may resign at any time by written notice delivered to the board, or to the president or secretary. The written resignation is effective when delivered, unless the notice specifies a future effective date. The next time the board member shouts “I resign,” hand him a pen and paper.
Ÿ David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.