Association boards must follow village ordinances
Q. Garbage is picked up in our single-family homeowners association on Friday. Week after week, the same few homeowners leave their empty garbage cans at the curb all weekend after the Friday pickup, and it is pretty unsightly. These owners suffer no impairment, and are simply lazy or arrogant. Our village does have an ordinance requiring garbage cans to be removed the evening of the garbage pickup, and our association documents prohibit an owner from doing anything that is in violation of law or ordinance. Does the association have any remedies?
A. The violation of the village ordinance would constitute a violation of the association's covenants, based on the language you have described. I would suggest the board of the association issue a friendly reminder to these owners about the ordinance and the requirement to remove the garbage cans by Friday evening.
If that does not work, the board should levy a hefty fine for this violation; however, the board must first issue a written notice of violation to the offending owners and provide them with an opportunity for a hearing. It may also be worthwhile to contact the municipality to inquire if it will issue an ordinance violation citation. Or maybe you should suggest the owner start composting.
Q. I have a question on election procedures for our single-family homeowners association, in regard to land trusts. Only owners are permitted to serve on our board. Many homes are held in trust. Can the board write a letter to the trust inquiring as to the identity of the beneficiary of the trust, to determine who is eligible to serve on the board? If not, how can the board identify the owner of the trust?
A. When candidates come forward to run for the board, all associations should confirm that each candidate is an owner. Many associations perform tract searches to identify owners. If the tract search reveals a unit is held in trust, the board should require this candidate to produce a copy of the trust agreement. If the trust agreement reveals the candidate is a current beneficiary of the trust, they are an owner and eligible to serve on the board. One of the reasons title is held in a trust is to keep the "real" owner from the public record. As such, the trust is not going to identify the beneficiary to the board based solely on a letter from the association.
Q. I live in a townhouse association of less than 40 units and we have more than $50,000 in reserve funds. The current board wants to increase assessments by 20 percent for this reserve fund. Are there guidelines on how much money must be in a reserve fund based on the number of units?
A. All associations need to establish a reasonable reserve for replacement costs. However, there is no rule of thumb as to what constitutes a reasonable reserve based solely on the number of units. The Illinois Condominium Property Act provides guidance to condominiums as to what is to be considered; however, it offers instructive guidance to other types of associations. To determine the amount of reserves appropriate for an association, the board should take into consideration the repair and replacement cost, and the estimated useful life, of the property which the association is obligated to maintain, including but not limited to structural and mechanical components, surfaces of the buildings and common elements, and energy systems and equipment; the current and anticipated return on investment of association funds; any independent professional reserve study the association may obtain; the financial impact on unit owners, and the market value of the condominium units, of any assessment increase needed to fund reserves; and the ability of the association to obtain financing or refinancing.
• 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.