Condo buyer’s liability after foreclosure sale
Q. What amounts can a condominium association recover from a new owner after a foreclosure sale of a unit?
A. The law currently provides that the person who buys the unit from the lender, if the lender was the successful purchaser at the foreclosure sale, or the purchaser of a unit at the foreclosure sale other than the lender, will be responsible for up to six months of common expenses that were due from the foreclosed owner at the time the association initiated a collection action against the foreclosed owner. The six-month period in question is the six months before the date the association initiated a collection action. Common expenses means the proposed or actual expenses affecting the property, including reserves, if any, lawfully assessed by the board of managers of the association.
The key then is that the association must have initiated a collection action against the foreclosed owner, while they were still an owner. Many trial courts are now stating that the filing of a suit is when the collection action is deemed initiated, and not when the 30-day statutory demand letter is issued. Therefore, filing of a suit against the delinquent owner before the foreclosure sale is the prudent approach, rather than only issuing the 30-day statutory demand letter.
Q. Our board president continually overrules the majority of board members votes on the issue of violation fines. The board has voted on numerous occasions to send a fine to an owner after they have been previously warned in a letter, and our board president overrules the violation without our knowledge. When we vote to fine someone, she requests they receive a second warning letter in lieu of a fine. What can we do about this, as it goes on continuously?
A. The board president does not inherently have any greater authority here than any other board member, and the board president does not have veto power over decisions of the board. It is the responsibility of the board president to carry out and implement decisions of the board, regardless of whether the president agrees with the decision. The board should consider removing this person as president, and replacing her with someone prepared to follow the laws governing the association.
Q. A board member of our association publicly blogs about the association, and uses the blog to criticize the board and its decisions, and occasionally discloses confidential matters properly discussed in closed session of the board. Is this proper?
A. Each board member has a First Amendment right to criticize the board. However, this realistically should be tempered by what is in the best interests of the association. Spirited debate at a board meeting about an issue prior to a board vote on a matter is valuable. However, once a decision is made, the board should speak with one voice, particularly on controversial issues.
That is, all board members should support properly adopted decisions of the board, even if a board member does not agree with it. Otherwise, the board will appear unprofessional and can quickly lose the confidence and support of the owners. The public comments about the association may also have an adverse impact on the perception of the association in the real estate community and on prospective purchasers.
The board should be concerned by the disclosure of confidential information by the board member, as that is a breach of the board member’s fiduciary duty. The board should meet with this board member to address its concerns. If the conduct is severe enough, like disclosure of confidential information, the board could consider taking steps to remove this person from the board.
• 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.