Builder can be liable for not enforcing rules
Q. I am a regular reader of your column and hope you can be of assistance.
I live in a community of single-family homes that has recorded covenants and restrictions in place. We have a neighbor who is running a business from his home, which has produced a lot of noise and safety complaints. The operation of this business violates the covenants for the association.
Several complaints were filed with our builder, who is still in control of the association. Last summer, the resident who is operating the business was served via process server with a demand notice from the association to cease and desist the operation of the business from the home. However, the developer did absolutely nothing to follow up or enforce the covenants or the demand letter, and the owner continues to operate the business.
Can I sue both the resident and the builder for failure to enforce the demand letter? Would I be able to recover attorney fees from the builder?
A. The failure of the developer, while the association is under developer control, to enforce the covenants is a breach of the fiduciary duty the developer has to the owners. This would give rise to a cause of action by an owner against the developer. Such a suit could seek damages (if there are any that can be proven) and/or seek an order requiring the developer to enforce the covenants and take legal action against the owner operating a business that is in violation of the covenants. There could be a theory of relief here that would entitle you to recover your attorney's fees against the developer in this situation.
Further, if the developer fails or refused to enforce the covenants, you may be able to file what is known as a derivative action on behalf of the association against the offending owner. You may be able to recover your attorney's fees from the offending owner in a successful derivative action.
Q. Some time ago, a question about providing notice of board meetings was discussed in your column. The answer stated something like failure to give proper notice of a meeting potentially invalidates the meeting and all action taken at the meeting. Can you expand upon this response? What would cause all board actions to be invalidated? What would cause the board's actions to still be valid? Our board frequently fails to give timely notice for its meetings.
A. In general, proper notice is required to hold a board meeting and for the board to conduct association business, and to vote on matters coming before the board. If proper notice is not provided, the gathering is not a valid board meeting. If the gathering of the board is not a valid board meeting, then decisions cannot be made by the board. A decision made at an invalid board meeting is generally invalid. Proper notice of a meeting is critical. In Illinois, there is an exception for emergencies that permits a board of a condominium to make decisions outside of a board meeting.
Q. I live in a community association with a high percentage of leased units. One of the board members rents his unit out and does not reside on the property. Can he have a position on the board if he rents out his unit?
A. The statutes that govern condominium associations and common interest community associations in Illinois do not expressly address this issue. In general, though, the owner of a unit that is leased out by the owner is eligible for and can serve on the board.
However, in a non-condominium association, the covenants could establish a requirement that a unit owner must reside on the property to be eligible to run for and to serve on the board.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. 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.