Boards can borrow fundso cover maintenance issues
Q. Our not for profit homeowners association has an unexpected maintenance issue, and we do not have enough funds on hand to cover the expense. One of the owners in the association has offered to lend the association the funds. Is this permitted?
A. In general, yes. The association can borrow funds for its corporate purpose, and can (unless there is some prohibition in the association's governing documents) borrow the funds from a unit owner. The transaction does have to be approved by the board at a meeting.
Similarly, the transaction needs to be memorialized in a note between, and signed by, the owner and the association. The note should describe the terms of the loan. For example, the note should state the amount of the loan and interest, and whether the loan is to be repaid in a lump sum or in installments and when.
Q. The unit owners in our condominium association recently approved an amendment to the association's declaration. As required by our declaration, the board is preparing to send a copy of the amendment to mortgagees. However, the board is having a difficult time getting mortgagee information from owners. What can the board do to get this information?
A. This is a common problem. Each unit owner in a condominium is required to inform the board of the name and mailing address for their mortgage lender within 15 days from the date the mortgage is recorded. If an owner does not provide this information to the board, that owner is responsible for all of the costs, expenses and reasonable attorney's fees incurred by the association as a result of the owner's failure or refusal to provide the information.
The board should issue a letter to the owners requesting the mortgagee information. The letter should remind the owners of their responsibility to provide the information, and that they will be charged any costs and fees incurred by the board to obtain the information. If the owners still don't provide the mortgagee information, the board should obtain the information through a title company and charge the expense to the owners who did not provide it.
Q. I am a property manager and, to protect my privacy, I have used a pseudonym when serving as a manager rather than using my actual name. My Illinois community association manager license is in my actual name. Can I continue to use my pseudonym?
A. A property manager must practice under the full name shown on his or her license. Failure to do so is grounds for discipline under the Community Association Manager Licensing and Disciplinary Act.
Q. A unit owner in our condominium requested copies of every annual landscaping contract the association has entered into over the last ten years. Does the board have to provide these documents?
A. An owner, who makes a request in writing and states a proper purpose, is entitled to examine and copy all contracts then in effect to which the association is a party. Here, the owner's request is overbroad. The owner is only entitled to examine and copy — assuming the owner has stated a proper purpose — the current landscaping contract, if any. The board could, nonetheless, provide all of the requested contracts if it is so inclined to do so. The association can charge the owner its costs to retrieve and copy the documents.
Q. The board of our association reviews the declaration diligently when issues arise. I noticed the copy of the declaration the board uses is not signed and does not bear any evidence that it was recorded. Is the board safe using this unrecorded copy of the declaration?
A. "No." The unsigned and unrecorded declaration may not be reliable. The board needs to obtain a certified copy of the declaration with all exhibits, and any amendments, from the county recorder of deeds. Developers often provide prospective purchasers with an unsigned and unrecorded draft of the declaration. However, developers can and often do make revisions to the declaration before it is actually recorded. Further, the developer may have made and recorded some sort of amendment to the declaration. I have had clients make decisions based on provisions in an unrecorded copy of a declaration, only to learn later that the provision was changed in the recorded declaration. That's not a good situation to be in.
• 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.
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