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Real estate agent can serve on the board

Q: A real estate agent serves on our condominium association board. This real estate agent lists many units in the building, serving as an agent for unit owners in the association. Does this board member have a conflict of interest that would prevent him from serving on the board?

A: It is not uncommon for real estate agents to sit on condominium boards. A person can act as a real estate agent on behalf of a unit owner in the association and serve on the board.

It is not a conflict of interest, per se, for a board member to act as a real estate agent on behalf of unit owners in the association. Section 18(a)(16) of the Illinois Condominium Property Act addresses board member "conflicts of interest." That section does not prohibit a conflict of interest.

Rather, that section provides that the board of managers may not enter into a contract with a current board member or with a corporation or partnership in which a board member or a member of the board member's immediate family has 25% or more interest, without providing certain notification to owners. Such notifications could lead to an owner request for a vote on the proposed contract.

That scenario/section could only be applicable if the board member were acting as a real estate agent for the association, and not as a real estate agent for individual owners.

That said, a board member serving as a real estate agent on behalf of a unit owner in the association does need to recuse himself or herself from any vote with respect to the transaction (e.g., vote of right of first refusal). Further, the board member must not disclose or use "confidential" association information learned as a board member in the role of real estate agent for an owner.

Similarly, a board member does have a "duty of loyalty" to the association. A board member needs to act in the best interest of the association, and not make decisions as a board member based on their personal interest. So, for example, a board member who votes against pursuing a unit leasing restriction because it limits the pool of buyers for the units they are listing for sale in an association may be in breach of this duty.

Q: The janitor for our association is provided housing, as part of his compensation in a unit owned by the association. The janitor does not pay rent. The agreement between the association and the janitor provides that he must vacate the unit upon termination of his employment. The janitor has been terminated; however, he refuses to leave the unit. One of the board members suggested just changing the locks to the unit when he runs an errand. Is that allowed?

A: The association cannot simply change the locks on the residence of the janitor. Simply changing the locks, so that the janitor cannot have access to the unit, is an unlawful forcible entry and detainer. Such action would expose the association to liability. Rather, the association needs to evict the former janitor from the unit through appropriate legal proceedings.

Q: Our 45-five unit condominium association is self-managed. Do the board members need to be bonded?

A: A condominium or common interest community association in Illinois with 30 or more units is required to obtain and maintain fidelity insurance covering people who control or disburse funds of the association. The fidelity insurance needs to be for the maximum amount of coverage available to protect funds in the custody or control of the association, plus the association reserve fund. The board of your 45-unit association should obtain and maintain this insurance.

• 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.

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