Board officer selection must be in open meeting
Q. Our single-family HOA conducts the selection of board officers in executive session. The discussion and vote are not open to the residents. My own research indicates that the officer selection is normal board business and should be conducted in the public part of the board meeting. However, I don’t see a specific statement in Illinois laws that officer selection cannot be in executive session. Is there any statute that has this? The bylaws don’t state they should be held in executive session either.
A: Under Illinois law, officer selection among the board members must be done in an open board meeting. There is no Illinois statute that specifically lists what cannot be done in closed or executive session. Rather, Section 1-40(b)(5) of the Common Interest Community Act states that meetings of the board shall be open to any unit owner, except that the board may close any portion of a noticed meeting or meet separately from a noticed meeting: (i) to discuss litigation when an action against or on behalf of the particular association has been filed and is pending in a court or administrative tribunal, or when the common interest community association finds that such an action is probable or imminent, (ii) to discuss third party contracts or information regarding appointment, employment, engagement, or dismissal of an employee, independent contractor, agent, or other provider of goods and services, (iii) to interview a potential employee, independent contractor, agent, or other provider of goods and services, (iv) to discuss violations of rules and regulations of the association, (v) to discuss a member's or unit owner's unpaid share of common expenses, or (vi) to consult with the association's legal counsel. Any vote on these matters shall be taken at a meeting or portion thereof open to any member.
A board meeting in closed session to discuss or decide officer positions is a very common misconception and practice of many community association boards. While it is understandable that board members would like to confidentially discuss either their desire or special qualifications to serve in a certain officer position, the law is very clear on this issue: the discussion and election of the president, secretary, treasurer, and vice president (vice president is rare but may be required by the governing documents) must be conducted by the board at a board meeting open to all of the owners. That said, the mere fact that a board may have conducted officer selections in closed or private session does not automatically negate prior board decisions. However, once the board becomes aware of this required process, then they should ratify their prior officer selection decisions at an open meeting and ensure it is done properly after each annual election meeting in the future.
Q. The members of the board of our condominium are not paid. However, the board members receive a discount on their assessments. Is this permitted?
A. The amount of the assessment discount that the board members receive is the legal equivalent of paid compensation. The declaration for most associations will provide that board members serve without compensation, unless compensation is approved by two-thirds of the owners in the association. Assessment discounts are treated the same way. The question of board members assessment discounts would have to be submitted to the ownership for approval at a meeting of the owners.
That said, board members can be reimbursed for their actual out of pocket expenses, if any, incurred as a board member on behalf of the association, without owner approval. Examples of some of these expenses might be office supplies, and paper and ink for their printer used for association business, mailing, etc.
• 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.