Board seeks to collect unpaid assessments

Q: We have a serious assessment delinquency issue in our association, and we are looking for ways to persuade owners to bring accounts current. Can our homeowner's association report owners who have unpaid assessments to the credit reporting companies?

A: Yes, the association can report unpaid assessments to the credit reporting companies. However, I understand that this will require the association to obtain a subscription for this service. Reporting, or the threat of reporting, unit owner delinquencies to a credit reporting company is a relatively passive approach to assessment collection.

A better approach to persuade owners to make timely payment of assessments is to adopt an aggressive collection policy.

An example of an aggressive policy is to turn over owners to legal counsel for collection if the owner is 60 days in arrears in the payment of assessments. The exposure to having to pay the association's attorney's fees incurred to pursue the owner can be a powerful incentive for owners to make timely payment of assessments.

Q: Our homeowners' association recently went "self-managed." The former management company forwarded the board a delinquency notice from the Illinois Secretary of State. It indicates that the annual report had not been filed, and the corporation could be dissolved. We obtained the annual report form and have a question about completing the form. The form refers to a registered agent. What is a registered agent? Who typically serves as registered agent?

A: Each Illinois corporation is required to maintain a registered agent and a registered office in the state of Illinois. The registered agent typically receives service of process on behalf of the association in lawsuits to which the association is a party. The registered agent would also receive the annual report form from the secretary of state.

Associations often name a board member as the registered agent, or others who "come and go" periodically. This can be a problem if the board member is not reelected or moves, and the annual report is "lost" and not filed with the secretary of state. Dissolution of the corporation can result.

I suggest that the association's attorney serve as registered agent, given the legal nature and significance of the documents issued to the registered agent and, hopefully, the long-term nature of the relationship.

Q: The annual meeting and election of board members for our condominium association is being held shortly. We have received proxies from owners that name "the board" as the proxy holder. A lot of these proxies do not direct the board to vote for any particular candidate. Instead, the proxies give "the board" the complete discretion to vote for candidates of the board's choosing. How does the board decide who to vote for among the candidates?

A: The board needs to hold a board meeting to decide whom the board will vote for under these proxies. The board also needs to designate who among the board members will actually cast the votes on the ballot. That is cumbersome. It would be much easier if an owner simply identifies a specific individual as the proxy holder, rather than a group like "the board." Further, owners should take the time to know the candidates, and to actually designate who they want the proxy holder to cast their votes for.

Q: Our association entered into a contract with a professional management company. Several owners have requested copies of the management agreement; however, the board has not permitted owners to examine the contract. Do owners have a right to examine the current management contract?

A: The specific language of the respective statutes that govern condominium associations, master associations, and common interest community associations is not identical on the subject of an owner's right to examine contracts. However, in general, an owner has a right to examine and copy contracts to which the association is a party, including the current management contract. An owner would need to make a request in writing.

• David M. Bendoff 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.