Law doesn’t mandate that rule changes be considered separately
Q. The board of directors of our association circulated a proposed amendment that would make about six changes to our declaration. A proxy was also distributed for the owner meeting to vote on the changes. However, the proxy only allows an owner to vote “yes” or “no” on the whole packet of changes. The proxy does not allow owners to vote on each proposed change separately. What is required or best practice?
A. There is no guidance on this issue as a matter of law. However, the best practice, in my view, is to draft the proxy and the ballot so that an owner votes on each individual proposed change separately. Occasionally, a change to one provision requires a change to another provision, so it would make sense to group those items together on the proxy and on the ballot as a single item. However, the proposed amendment, proxy and ballot need to identify these amendments clearly to avoid confusion and inconsistent outcomes.
Q. Neither the declaration nor bylaws for our homeowners’ association identify who should be an authorized signer on our reserve fund bank account. I've checked the internet for guidance without much success. However, in one article I read, the suggestion was made that the elected officers or all board members be the authorized signers. Do you have any recommendation?
A. I don’t recall ever seeing the declaration or bylaws for an association identifying who specifically should be the authorized signer on any bank account. That is going to be a decision of the board. That said, I typically suggest that the president and treasurer be the authorized signers on bank accounts. If the association is professionally managed, a management company person should also be an authorized signer on the association operating account. This should be approved by the board at a board meeting.
Q. The insurance provisions in the governing documents for our association are a real mess. In particular, there seems to be some gaps regarding who is responsible for procuring what insurance on the individual units. Are there any laws requiring owners of units in a common interest community association to have insurance coverage for their individual units?
A. There are no applicable insurance requirements in the Illinois Common Interest Community Association Act. The types and amounts of insurance to be maintained by individual owners of units in a common interest community association is going to be governed by the association’s declaration and bylaws. Often, these provisions are sparse or confusing. The association could consider an amendment to the governing documents if the governing documents are not clear or adequate on these issues.
Q. Do owners in a condominium association have an opportunity to review, and provide written comments to the board on, proposed rules before the rules can be adopted by the board?
A. Sort of, but not exactly. The board of directors has the authority to adopt and amend rules covering the details of the operation and use of the property at a board meeting. The adoption of rules does not require the vote of the unit owners, and the board does not have to provide a period of time for the owners to provide written comments on the proposed rules.
However, the Illinois Condominium Property Act does provide that there must be a meeting of the unit owners called for the specific purpose of discussing the proposed rules before there is a meeting of the board to adopt the rules. The two meetings, the owners meeting and the board meeting, can be held back-to-back on the same evening. Further, no quorum is required at the meeting of the unit owners held to discuss the proposed rules.
• 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.