Can a condo board keep employee disciplinary records private from owners?
Q. I am a condominium owner. The association employs a maintenance person, and I don’t think he does a very good job. I requested a copy of information from this employee’s file regarding disciplinary actions taken by the board. My request was denied. As an owner, who pays assessments and therefore a portion of this employee’s salary, am I entitled to the requested information?
A. Section 19 of the Condominium Property Act governs the books and records that an association must maintain for examination and copying by owners. That section also provides that unless otherwise directed by court order, an association need not make documents relating to appointment, employment, discipline, or dismissal of association employees available for inspection, examination, or copying by owners. Accordingly, the board may, absent a court order, deny your request for access to an employee’s disciplinary records.
Q. Our association is borrowing a seven-figure amount of money from a lender for a tuckpointing project. The board has been directly involved with the negotiations with the lender. One of the board members has a background in banking and reviewed the loan documents. We had the contractor lined up to start the work, anticipating that the loan was going to “close” and funds distributed. The loan documents were signed by the board and returned to the lender. The lender then reminded us (it was apparently in the loan commitment letter) that we needed an opinion of counsel. It took our attorney about a week to get us that opinion, and the loan closing was delayed, as was the commencement of the work. Should it have taken a week to get this opinion from our counsel?
A. I can’t speak to how long it took counsel to issue their opinion of counsel here. There is significant legal work involved in a properly prepared opinion of counsel letter for an association loan transaction. The opinion of counsel in these loan transactions is a representation to the lender regarding the association’s authority to enter into the loan transaction, and regarding the board’s procedure to approve items such as the budget, assessments and or special assessments that will fund the repayment of the loan, and the loan documents themselves. An inaccurate opinion from the association’s counsel can expose the attorney’s law firm to liability to the lender if not accurate. As such, the attorney needs to conduct significant “due diligence” before putting signing-off on the opinion letter. That isn’t something that can typically be done “last minute,” or quickly.
The attorney’s due diligence can involve, but is certainly not limited to, review of the corporate status of the association, notices of meetings, and meeting minutes, and review of whether any expenditure or special assessment was subject to owner approval. Counsel may also require a certificate from the association confirming the facts upon which counsel is relying on in connection with the preparation of the opinion of counsel letter.
The association should involve counsel early on in the loan process. This will permit counsel to instruct the association to determine what information and documents it needs to be provided in connection with the opinion of counsel, and as to the procedures the board must follow to properly approve a loan and adopt a special assessment that may be required to repay the loan. Too often, a special assessment is not adopted properly, and counsel needs to send the client back to the drawing board to adopt it properly. That could be a tremendous delay to the project. The best practice for a condominium board is to involve your association’s counsel sooner rather than later whenever considering project financing.
• 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.