Does association have to comply with utility company’s request?
Q. Our homeowner’s association board recently received a request from a utility company to temporarily use part of our common area to access utility infrastructure in the existing public utility easement. They also want to use part of our common area to store equipment during the project. The HOA board requested assurances that the project will not take a long time and any damage will be repaired. Does the association have to legally accept whatever the utility company wants to do on our property?
A. Based upon your scenario, the association is not necessarily required to accept the proposal from the utility company. Since the request for a temporary use and access arrangement involves the association's property outside the existing public utility easement, the board can request additional, reasonable terms and conditions for the arrangement. Limiting the length of the arrangement may be reasonable, although that could be weather-dependent.
Most common area access/use agreements have general language concerning the utility company’s responsibility to repair damage to the association’s property. But the board can request specific provisions regarding the protection or indemnification from damage to the immediate area. It is not unusual for an association to request additional terms to these standard temporary use and access agreements in order to tailor the arrangement to fit the association's specific property or situation.
Ultimately, it's up to the utility company as to whether they want to agree to these additional provisions. If they don't, it is unlikely that any legal authority would allow the utility companies to forcibly require the Association to agree to the temporary use and access of the association's property outside the easement area.
Keep in mind that the utility company can always amend their plans and utilize their rights under the existing public utility easement provisions to reasonably access and use the property within the easement area for this project (subject to the property damage repair provisions in the easement language). This can be done without the express consent of the board although notice from the utility company is likely required if they intend on doing this.
Q. I’m on a condominium board. The majority of the board is attempting to adopt an annual budget which knowingly results in a budget deficit for the year. Can the board do that?
A. No, the Illinois Condominium Property Act specifically states that the board prepare and distribute to all unit owners a detailed proposed annual budget setting forth with particularity all anticipated common expenses by category as well as all anticipated assessments and other income. The budget shall also set forth each unit owner's proposed common expense assessment. Moreover, almost all condominium declarations contain provisions requiring the board to estimate the total amount necessary to pay the cost of wages, materials, insurance, services and supplies which will be required during the next fiscal/calendar year, together with a reasonable amount considered by the board to be necessary for a reserve for contingencies and replacements. These expenses become the “estimated cash requirement” which shall then be assessed to the owners according to each owner's percentage of ownership in the common elements
Therefore, the budget must be established according to the known or anticipated expenses and the assessments determined accordingly. If a board is aware of expenses, and they purposely or negligently disregard them and adopt assessments that do not cover those known expenses, that’s specifically in violation of the Act and likely their declaration resulting in a possible breach of their fiduciary duty to all the owners and their association.
• 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.