Unit owners rise up, demand a special meeting on amendment
Q. Our condominium board received a petition signed by many owners asking to schedule a special meeting of the owners to vote on an amendment to our declaration. A majority of the board is not in favor of the amendment. Is the board still required to schedule a special meeting of owners and send notices? What is our obligation?
A. Your condominium association declaration and bylaws likely requires an amendment to the declaration and bylaws be approved by two-thirds or three-fourths of the owners at an annual meeting or special meeting of the owners called for the purpose of voting on the amendment. Pursuant to Section 18(b)(5) of the Condominium Act, a special meeting of the owners may be called by a majority of the board, the board president or a petition signed by at least 20% of the unit owners. In your situation, assuming the petition is signed by more than 20% of the unit owners, the board is obligated to schedule a special meeting of the owners. Within 30 days of being presented with the petition, the board should pick a meeting date and mail the notices for the special meeting. The meeting itself must take place no less than 10 days and no more than 30 days from the date the notices are placed in the mail to all the owners.
In the event that the board refuses to schedule the special meeting of owners, the owners have the right to schedule and send notices for the special meeting of owners. Hopefully, it will not come to that because the board is obligated to perform that task. At the special meeting of owners, the board has the responsibility to properly conduct the meeting. This includes opening the meeting, ensuring that a quorum of owners is represented at the meeting (either in person or by proxy, usually a minimum of 20%) and then conduct the vote by providing, collecting and tallying the ballots or proxies for the amendment. If the amendment receives the requisite owner approval, the board and its officers are required to take additional steps of executing the amendment, certifying that proper owner approval was obtained, and then have the amendment recorded with the county recorder of deeds.
Q. Can you please address what happens when a condominium association does not have enough owners willing to serve on the board. Recruiting volunteers to serve in this capacity is very difficult. What does an association do when they do not have enough board members?
A. Unfortunately, this situation occurs too often. Pursuant to Illinois law, the association must have at least three directors to properly function. If no unit owners volunteer to serve on the board, the association runs the risk of being forced into a court-appointed receivership to administer the association. A receiver may be appointed by a court when there is an insufficient number of board members to properly operate the association. The receiver takes the place of a unit-owner elected board. A receiver would be in charge of the day-to-day operations and make decisions concerning the administration of the association. A court may appoint a professional management company or even an attorney with expertise in association affairs. This is a significant expense to the association as a receiver charges the association for his/her time involved in administering the affairs of the association. Each individual unit owner will be responsible for their proportionate share of receivership expenses (in addition to their regular assessment) and the court will order each individual unit owner to pay their share. If a unit owner fails or refuses to pay their share of the receivership expenses, a lien can be placed against their unit or a collection action initiated. Obviously, the appointment of a receiver is not in the best interests of the association and will have a large financial impact on the owners and the property values.
Owners should be reminded that: (1) their condominium unit is likely their biggest individual investment; (2) current board members have been volunteering their time and serving on the board for quite some time; (3) it is time for other unit owners to show an interest and be responsible for assisting in administering the association; and (4) it is imperative that several unit owners step up and volunteer for the board of directors so all unit owners avoid significant costs in the near future.
• 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.