Can developer extend control in a common interest community?
Q. We live in a Common Interest Community Association. The declaration, recorded about eight years ago, permits the developer to keep control of the association for 10 years from the date the declaration was filed. As of this date, the developer has sold less than 50 percent of the homes in the original plan. So it is conceivable that the developer will not be able to sell the remaining homes by the required turnover date. Can the developer file an amendment to extend the turnover date beyond the time frame established in the declaration?
A. The Common Interest Community Association Act provides that the election of the initial board, whose declaration is recorded on or after the effective date of the act, shall be held not later than 60 days after the conveyance by the developer of 75 percent of the units, or three years after the recording of the declaration, whichever is earlier. The act was effective July 29, 2010.
If a declaration, such as yours, was recorded prior to July 29, 2010, the declaration would control the turnover date. In my view, however, this would not permit a developer to record an amendment at this time that would permit a further extension of the turnover date set forth in the original declaration.
Under the act, the developer must give at least 21 days' notice of the meeting to elect the initial board of directors. If the initial board of a common interest community association whose declaration is recorded on or after July 29, 2010, is not elected by the time established in the act, the developer continues in office for a period of 30 days, whereupon written notice of his or her resignation must be sent to all of the unit owners or members.
Q. For political reasons, and not the result of any wrongdoing, the board of our association removed the president from that office at an open meeting of the board. Prior to that open meeting, there were several meetings of a quorum of the board that were not part of any public meeting or announced to the owners. These meetings excluded the president and another board member who was not likely to agree with the ultimate decision to remove the board president. Were these meetings permitted? And if their actions were illegal, what is their penalty?
A. These gatherings of a quorum of the board should have been properly noticed as a board meeting. It was improper under the situation you describe for a quorum of the board to meet and discuss the removal of an officer. The subject matter here does not fall squarely with any of the exceptions that permit certain topics to be discussed in a closed session of the board. Closed sessions are nonetheless required to be part of a board meeting with proper notice given. That said, there could be circumstances when a discussion regarding removal of a board officer could be held in a closed session, and the officer in question excluded. However, the board could not necessarily exclude a board member who may be sympathetic to the board member to be removed from an officer position.
There is no penalty that is applicable here. Legal action to prevent the board from this type of activity could be instituted, but that's expensive and outcomes are unpredictable. However, it sounds like this may have been an aberration, and not a reflection of how your board conducts itself generally. If the board routinely conducts itself in violation of the laws governing associations, the practical solution would be to elect different board members at future annual meetings.
• 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.