Owners must be notified of contract with board member
Q. The board of our condominium association entered into a contract with a board member to provide certain maintenance supplies to the association. The board member owns the company providing the supplies. The owners were not notified of this contract. Was there a process the board should have followed before it entered this contract?
A. Section 18(a)(16) of the Illinois Condominium Property Act governs contracts with board members and family members of board members.
That section states that a board of managers may not enter into a contract with a current board member or with a corporation or partnership in which a board member or a member of the board member's immediate family has 25 percent or more interest, unless notice of intent to enter the contract is given to unit owners within 20 days after a decision is made to enter into the contract.
Further, the unit owners must be afforded an opportunity by filing a petition, signed by 20 percent of the unit owners, to request and have a vote to approve or disapprove the contract. That petition must be filed, if at all, within 30 days after such notice from the board. If the petition is filed, the vote of the owners must be held within 30 days after filing the petition. Note that a board member's immediate family means the board member's spouse, parents and children.
If this procedure was not followed, the contract with the board member is arguably invalid. This is based on relatively recent Illinois appellate level case law that found a contract void when the board did not have the authority to enter into it.
Q. I live in a condominium that was built more than 30 years ago. The underground parking garage has always included water spigots to permit owners to wash their cars. This amenity is important to the owners and widely used.
Citing the increased cost of water, the board made a decision to remove the water spigots to conserve the water usage. Many of the residents are up in arms over the elimination of this important amenity. Did the board have the right to cut off this amenity without consulting the owners?
A. Section 18.4(a) of the Condominium Property Act provides that the board of managers of a condominium is responsible for the maintenance, repair, replacement and improvement of the common elements. This would include the common element water spigots. In general, a board cannot make the unilateral decision to permanently eliminate a common element amenity. This would arguably include the car wash spigots that have been available to owners for 30 years. While there may be circumstances under which the board could close the car wash spigots on a temporary basis, owner approval would generally be required to do so on a permanent basis.
The board should consult with counsel to address what level of owner approval would be necessary to eliminate a common element amenity.
Q. Owners in our association are told they are welcome to attend board meetings. However, when owners do attend, we are not allowed to speak until the board meeting has adjourned. Are there rules governing this?
A. In all associations, board meetings are for the purpose of conducting board business. While owners are permitted to attend the open portions of board meetings and observe, boards of associations are not required to permit owners to participate in a board meeting. However, the board of a common interest community association is required to reserve a portion of the meeting for comments by unit owners. The duration and time for an owner comment period is within the sole discretion of the board. Condominium and master associations are not under this obligation to include an owner comment period in board meetings; however, it isn't necessarily a bad idea.
• 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.