Foreclosure filing alone does not disqualify board member

Q. One of the members of our condominium association's board is in the middle of a mortgage foreclosure action involving his unit. Is this owner eligible to serve on the association's board of directors?

A. Generally, ownership of a unit is the criteria for serving on a board of an Illinois condominium association. The mere filing of a foreclosure action by a lender does not affect ownership of an owner's unit. Unless and until the board member's unit is sold at a judicial sale at the conclusion of a foreclosure, the board member would be eligible to serve on the association's board.

Q. Our property manager has sole signature authority on our association's bank accounts. Is this normal?

A. It is customary for a property manager to have signature authority on an association's operating account. This is necessary to pay the association's expenses. However, the manager should not have sole signature authority on a bank account, or have sole authority to change the authorized signers on the account. That is, a board member or board members should also have signature authority on the accounts and authority to change the signers on the accounts - after all, it is the association's funds.

In addition, the board should consider a rule that any check exceeding a certain designated dollar amount requires dual signatures, one of which should be a board member. The specific circumstances of an association should guide the board as to whether it is necessary to have a manager have signature authority on an association's reserve account. The association's bank should be advised whenever there is a change in an authorized signer on an account.

This could all be spelled out in the management agreement.

Q. Our condominium association has been in a dispute with the developer for some time. It does not look like it is going to be settled, and the board now wants to file suit against the developer. However, the declaration requires the approval of two-thirds of the unit owners in order to proceed with litigation. That is going to be very difficult to obtain. It seems like this requirement was included to shield the developer! Is this provision of the declaration enforceable?

A. The board can proceed with the litigation against the developer without obtaining unit owner approval. Section 18.9(a) of the Illinois Condominium Property Act provides that any provision in a condominium instrument is void, against public policy or ineffective, if it limits or restricts the rights of the board by requiring prior consent of the unit owners in order for the board to take any action - including the institution of any action in court.

So, the provision in your declaration that requires unit owner approval to file suit is invalid. The board of managers alone, without owner approval, can approve the initiation of litigation against the developer.

Q. The board of our association collected proxies over a year ago in connection with a vote on an amendment to the declaration. A meeting was finally called to vote on the amendment, and ballots were cast using the year-old proxies. Was it proper to use proxies that were over 11 months old?

A. A proxy for a condominium or a common interest community association is valid for 11 months from the date it is signed by the owner, unless the association's declaration or the written proxy itself provides otherwise. Both the association's declaration and the proxy need to be reviewed to determine if they provide that the proxy is valid for more than 11 months. If they do not include this language, the proxies would not have been valid after 11 months from the date they were signed by the owner.

• 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.