What happens if a board does not adopt a budget?
Q. What happens if a board does not adopt an annual budget?
A. If a board does not adopt a budget for the upcoming or current year, it is not uncommon for governing documents to provide that assessments would remain at the level established by the prior year’s budget. This assessment amount would typically continue until the board adopts a budget for the current year.
Q. There are two seats on our board that are up for election at the upcoming annual meeting. Is there a limit on the number of owners that can run for the board?
A. There is no limit as to the absolute number of owners that can run for the board at any one time. However, in a condominium or common interest community association, if there are multiple owners of a unit, only one of the multiple owners may serve on the board at one time. Implicitly, only one of the multiple owners of a single unit could run for the board at any one time as well. You should also look to the association’s governing documents to see if there are any restrictions as to eligibility to run for the board.
Q. A new member of our association’s board insists that he has a right to contact the association’s attorney whenever he wants. In the past, all communication with counsel go through the president or property manager. What is the protocol here?
A. The standard in the industry is that association counsel communicates with and accepts instructions from the board of the association through the president and the property manager only, unless and until directed to the contrary by the board. This includes phone calls, letters, and emails. The consensus of the board on an issue requiring involvement by counsel should be funneled through the president or property manager only. This helps avoid misunderstanding as to the board’s instructions, and unnecessary attorney’s fees that arise from communications with multiple board members. This protocol should be set out in the engagement letter between the association and the association’s attorney.
Q. A water pipe on the outside of our condominium building is leaking, and needs to be repaired. The association is trying to determine if it is an association expense or an expense of the municipality. How do we determine this responsibility?
A. The municipal ordinance for your community should be reviewed for an answer. In general though, the municipality will be responsible for the pipe from the municipality’s water main to the “buffalo box.” A “buffalo box” or “B-box” is a small underground access box or pipe used by municipalities or private utilities to access a shut-off valve for a property’s water service line. The association is generally responsible for pipes from the buffalo box point to the building. The association’s declaration should also be reviewed carefully as there may be language that addresses this issue.
Q. One of the candidates for our condominium association’s board is in the middle of a mortgage foreclosure action involving his unit. Is this owner eligible to be voted to and 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 a unit is sold at a judicial sale at the conclusion of a foreclosure, an owner would be eligible to serve on the association’s board. It is more of a practical issue as to whether the owners want to elect someone to the board who is involved in a foreclosure.
• 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.