Q. Many units in our association are owned by entities, rather than by individual people. Our annual meeting is coming up, and a question has been raised as to who is eligible to serve on the board when a unit is owned by a corporation or limited liability company.
A. This answer is contained within the association's declaration. Your declaration provides detailed guidance concerning who is eligible to serve on the board, give the different types of entities that may own a unit. It states if a unit owner is a trustee of a trust, then a beneficiary of such trust may be a board member. If goes on to state that if a unit owner or such a beneficiary is a partnership, then a general partner of such unit owner or beneficiary may be a board member. Finally, your declaration provides if a unit owner or such beneficiary or such partner is a corporation, then an officer of such corporation or an agent appointed by the board of directors of such corporation may be a board member.
There are variations of the eligibility requirements from declaration to declaration. Associations need to carefully review their governing documents to determine who is eligible to serve on the board when a unit is owned by a legal entity that is not a person.
Q. The board of our master association allows persons living in a unit, who are not owners, to be members of association commissions. As a homeowner, I feel that unless your name is on the title you are not representing the homeowners. These commission members have the power to vote on all matters brought before them. Is the vote of the non-unit owner commission member legal and can they be denied a vote?
A. The use of commissions can be a useful means for a board of an association to delegate some of its activities. The board can create and appoint persons to a commission, advisory body or such other body. None of the appointees to commissions have to be members of the board; nor do the members of a commission have to be unit owners. So, it is within the board discretion whether or not to permit a non-owner resident of the association to a commission.
A commission may not act on behalf of the association or bind it to any action. Rather, a commission makes recommendations to the board. However, only the board can take action with respect to recommendations made by a commission. In this regard, a commission is essentially an information gathering body, providing the board with data that it will consider in making a decision. Commissions are often used, for example, to conduct searches for property managers, vendors like landscapers, roofers, and other vendors, and to prepare suggested rules.
Meetings and action of commissions can generally be conducted and performed on an informal basis. Unlike association boards, since commissions do not conduct board business, meetings of commissions are not subject to notice requirements, even if the commission includes a quorum of the members of the board of a condominium association.
Q. Your June 8, 2013 column discussed ratification of informal board action at a subsequently duly called and held board meeting. Can a board member vote to ratify action that was taken prior to his/her term on the board? Can informal board action taken be ratified later by a board that could be composed of new members who had no prior involvement in the decision being ratified? Does the decision by the board to ratify informal board action have to be unanimous?
A. Initially, let me state that informal board approval of a decision outside of a board meeting, followed by ratification at a board meeting, should be reserved for emergency situations only where a decision must be made before the board can meet. This should not be the standard manner by which an association's board makes decisions.
That said; a board member can vote to ratify informal action that was taken prior to his/her term on the board. Like all matters requiring a vote of the board, the board members should be fully advised of the matter that is the subject of the ratification vote. Yes, it is possible informal board action can be ratified later by a board composed of new members who had no prior involvement in the informal decision. A decision to ratify prior informal board action does not have to receive unanimous approval of the board. A motion to ratify requires the same level of board approval as the issue being considered for ratification.
• 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.