Is condo board required to send out proxy form for annual election?
Q. Our condominium association is small and self-managed. The board recently sent out a notice of the annual election meeting but they didn’t include any proxy with the notice. Is the condominium association board required to send out a proxy form for the annual election?
A. Under the law, a condominium board must make a proxy form available to a unit owner who cannot attend a board meeting (unless your association has adopted a “mail-in ballot” procedure). However, whether the board must mail or distribute the proxy as part of the election materials depends on what the bylaws/declaration say (and what the board’s normal practice or rules are). Under the Illinois Condominium Property Act, a condominium association is not explicitly required by statute to automatically send a proxy form (or proxy/ballot materials) along with the election meeting notice. If the association’s governing documents are silent, then the board should adopt reasonable procedures to make the proxies available and distribute them in a way that unit owners can obtain them. Even though not required to be mailed automatically, the best practice is that boards do distribute proxy forms together with notice of the election to ensure transparency and ease of participation. The Condominium Act clearly sets rules about what must happen if proxies are used, and what must be included. If your association’s governing documents allow proxies, then the board must make a proxy form available and the board must ensure that the proxy satisfies the requirements listed in the Condominium Act.
Q. I am on the board of a 20-unit condominium. To my knowledge, a reserve study has never been done and recent previous boards have just been “winging it” as far as guesstimating useful lives and future replacement costs of capital components of our building and property. With our budget strapped from past low assessments, I would like to attempt to create a reserve study without having to hire an outside company. Is this something best left to professionals?
A. I would not suggest attempting a “do-it-yourself” reserve study. Establishment of a reasonable reserve may be one of the more important of the fiduciary responsibilities of an association’s board of directors. In my opinion, a professionally prepared reserve study is the foundation of the establishment of a reasonable reserve. Reliance on a professionally prepared reserve study also helps insulate the board from a breach of fiduciary duty claim, if an owner contends that the amount of the reserve is not reasonable. There are many qualified community association reserve study providers. I think your board can find a professional reserve study provider by researching on-line.
Q. The declaration for our association requires unit owner approval for contracts over a described dollar amount. The amount of a proposed roof replacement project exceeds this amount. Is the spending limit applicable to a transaction for a project like this?
A. This question regarding expenditure cap language in declarations arises quite often and is frequently misunderstood and misapplied. The language in a declaration that establishes a cap on expenditures is almost always limited to “capital expenditures.” Necessary maintenance, repair or replacement projects for the common elements are rarely considered “capital expenditures” within the technical definition of that term. Moreover, Section 18.4(a) of the Condominium Act specifically limits the applicability of such expenditure caps for expenditures related to repair, replacement, or restoration of existing portions of the common elements. The term “repair, replacement or restoration” means expenditures to deteriorated or damaged portions of the property related to the existing decorating, facilities, or structural or mechanical components, interior or exterior surfaces, or energy systems and equipment with the functional equivalent of the original portions of such areas.
• 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.