Board president threatens to refuse to sign loan documents
Q. Our condominium association board recently approved a bank loan to pay for a large common element replacement project. A majority of the board approved both the loan and the project at an open board meeting. Our board president, however, was not in favor of the loan and voted against it. The board president has now threatened that he will not sign the documents necessary to close the loan. What can the board do when a board president or other officer will not sign documents that have been properly adopted by the board?
A. In this case, since a majority of the board approved the loan agreement in an open board meeting, the board president is legally obligated by accepting and serving in the office of board president to sign the necessary documents to complete the loan process.
As a board member, the board president is entitled to object to the loan and vote against it at the open board meeting. The board meeting minutes can include his “no” vote and his reasons given. But, the majority vote of the board controls. A condo board president’s vote is not “weighted” more than any other board member. If the board president is adamant about not signing the loan documents, his recourse is not to refuse to sign the documents — that’s a possible breach of fiduciary duty. His proper recourse is to resign his office as board president and remain on the board (if he desires) as a board member.
If he continues to refuse to sign, a majority of the board can call a regular open board meeting (which can typically be convened with as little as 48 hours posted notice), remove him from the office of board president by a mere majority vote of a quorum of the board members and appoint a different board member as president who will carry out their legal duties as board president and sign the documents.
Q. Our condominium board was approached by a licensed and certified yoga and fitness instructor, who asked to utilize our clubhouse facilities and pool to provide yoga, fitness and water aerobics classes to those members interested in signing up. Any interested residents would pay the instructor directly and the association would only provide access to the association facilities for the fitness sessions to take place. This sounds like something our board would like to provide. Are there any liability or other issues the board be concerned with?
A. Since the classes are going to be on the association property and the instructor is an outside independent contractor, the board should require the instructor to provide proof of liability insurance and possibly even require the instructor to name the association as an additional insured party on the instructor’s policy. The board should also require the instructor to sign a hold harmless or indemnification form to help protect the association from claims which may arise related to the classes. The board should also provide a simple form for any unit owner interested in taking the class for them to sign as a waiver or release of liability for the association before they actually participate in the class.
From a practical standpoint, the requirement of insurance is not always anticipated by independent fitness instructors. So, the board should make sure the instructor is aware of the proof of insurance request and determine if the instructor is still willing to provide the service to the residents. If the instructor complies, then the board can ask the association’s attorney to provide the appropriate hold harmless, indemnification and release forms for the instructor and participating residents to sign.
Another issue to keep in mind is the possible requirement of an AED (Automated External Defibrillator) on the premises. If the association is using their common area facilities such as a fitness area, clubhouse and/or their pool to sponsor or provide physical fitness training, instruction or assistance of any kind, then the association may be required by state, county or local laws to provide an accessible and mobile AED on the premises. The board or management should check with their governmental agencies to ensure the association’s legal compliance in making these types of fitness classes available to their residents.
• Matthew Moodhe 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.