Tips on Common Interest Community Association Act
Q. I read your recent article concerning the Common Interest Community Association Act, and homeowners associations. Is it a requirement that a homeowners association adopt the Common Interest Community Association Act? Our subdivision has been in existence since 1988 and there were instances that the act was not followed for 27 years.
A. Initially, when you refer to a "homeowners association," I assume you are referring to a common interest community association. The Common Interest Community Association Act governs Illinois common interest community associations. CICAA is applicable to common interest community associations, and no action of the association would be required to "adopt" the CICAA.
That said, certain smaller associations are exempt from CICAA. A common interest community association, organized under the Illinois general not-for-profit corporation act of 1986 and having either 10 units or less or annual budgeted assessments of $100,000 or less, is exempt from CICAA. However, such an exempt association can nonetheless affirmatively elect to be covered by CICAA with the approval of a majority of its directors or members.
But note that CICAA, effective as of July 29, 2010, would not have governed any association before that time. A common interest community association governed by CICAA was required to be in full compliance with its provisions no later than Jan. 1, 2012.
Q. Can the president of an association's board make a motion at a board meeting?
A. I have seen interpretations of parliamentary procedure that go both ways. Under Robert's Rules of Order (if the association has adopted), the chair does not make a motion (unless he temporarily steps down as president, and let's another board member preside over the meeting.). However, I have seen an interpretation of parliamentary procedure that says the president has the same right to make a motion as any other board member.
The safest approach is for the president to say something like, "Will someone make a motion to approve the contract with ABC Construction." If the motion has any "traction," it should not be an issue for another board member to respond favorably to that request. Another board member would actually make the motion, by stating "I'll make that motion." And then another board member would second the motion. A discussion would ensue, followed by a vote on the motion.
Q. I am president of a self-managed condominium association. I took over last year, and just realized our association has never filed any income tax returns. Can I just submit a completed form 1120-H for each year, or do I need to do something else?
A. The association is required to file a tax return for each year it had income, even if the income was not taxable. The board should speak with the association's accountant to determine on what form (Form 1120-H or Form 1120) it should file to have the least (if any) tax liability. The accountant can also advise you as to the association's exposure to late filing penalties, if any.
Q. What should the minutes of a board meeting state concerning the matters discussed in executive session?
A. Very little. Minutes of a board meeting should reflect the motions and votes to go in and out of executive session. The discussion or any details of what occurred in executive session should not be described in the minutes. However, any motion and vote concerning a matter that was discussed in executive session must be made in open session and should, of course, be included in the minutes. Such motions may have to be carefully worded to avoid disclosure of, for example, privileged litigation strategy.
• 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.