Will higher natural gas bills sink condo's budget?
Q: The 2022 budget for our association includes a line item for natural gas. It looks like the actual cost for the year is going to be substantially higher than the amount budgeted. Does the board have to obtain owner approval for this increase in expense?
A. Budgets are planning tools for the board. However, actual expenses can be higher or lower than contemplated for a particular budgeted category. Generally, a board can spend more than is budgeted for a particular item like this. However, to keep from operating at a deficit, the board would have to spend less in another budget category or adopt a special assessment to pay for the additional expense.
The board will not need owner approval to levy this special assessment. However, depending on the size of the special assessment, owners may have a right to seek a meeting of the owners to vote on it.
Q: We have a serious issue with an owner who engages in egregious conduct. He pays the fines levied by the board, and just continues to violate various provisions of the condominium declaration and rules. The board has authorized the filing of a suit against this owner. However, the declaration requires the board to obtain the consent of two-thirds of the owners before it initiates any litigation. Unfortunately, the ownership is so apathetic that we have been unable to get this approval. This has emboldened this owner and his conduct is worse than ever. Is there anything the board can do despite this draconian provision in the declaration?
A: The language to which you refer is found in a number of condominium declarations. The Illinois legislature, recognizing that these barriers to litigation are unreasonable, amended the Illinois Condominium Property Act some time ago to address this.
Section 18.9 of the Act provides that any provision in a condominium instrument is void as against public policy and ineffective if it limits or restricts the rights of the board of managers by requiring the prior consent of the unit owners in order for the board of managers to take any action, including the institution of any action in court.
As a result, the board of your association can proceed with litigation against this owner without obtaining the consent of the unit owners. However, the board does need to approve proceeding with the suit at a board meeting.
Q: We are an Illinois Common Interest Community Association. The board and a group of owners have expressed an interest in putting the entire association up for sale. We understand that the Condominium Property Act includes a provision that includes a procedure to sell the entire property, with approval of less than all the owners. However, the Common Interest Community Association Act does not include such a procedure. Can the declaration of covenants for our association be amended, with the necessary owner approval, to include a similar provision to address a sale of the entire property?
A: You are referring to the process described in Section 15 of the Illinois Condominium Property Act to sell an entire condominium property. And you are correct that the Common Interest Community Association Act does not include such a procedure.
Under the Illinois appellate court decision known as "Apple II," an amendment to a declaration will be upheld unless it is arbitrary, against some public policy, or violates some fundamental constitutional right of the owners. While the Condominium Property Act includes a statutory procedure to sell the entire property, the governing documents for a Common Interest Community Association could seemingly be amended to provide for a similar procedure.
• 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.