Self-management may be an unwise choice

Q. Our association has always been professionally managed, and the management company has done very good work. In an effort to reduce expenses, the board of directors wants to self-manage the association when the current management contract expires. Is this permitted?

A. An association can be self-managed. However, before making this decision, the board needs to take a close look at the association's declaration of covenants. The typical declaration of condominium/covenants includes a section on the "rights of mortgagees;" referring to the holders of mortgages on the individual units. Stemming from secondary mortgage market guidelines, the "rights of mortgagees" language frequently requires the approval of some specified percentage of the first mortgagees in order for an association to change from professional management to self-management. This approval may be deemed implied under certain circumstances, after following a specified procedure to contact first mortgagees.

That said, the phrase "penny wise and pound-foolish" may have no greater application than in the decision to save money by moving from professional to self- management of a condominium or common interest community association. The benefits that professional management typically brings to the table cannot be overstated.

Q. The board of our association recently sent out notice of the annual meeting of the owners. The only identified candidates for the board are the current board members. No other owners were even offered the opportunity to run for the board. Will this invalidate the election?

A. I can't say, as a matter of law, the failure to seek other candidates invalidates the election. However, it is far from being a "best practice." Every eligible owner, not just the members of the board, should have an opportunity to run for the board.

The board (or a nominating committee if the declaration or bylaws provide for such a committee), should mail a solicitation for candidates to all of the owners in the association in advance of the election. The solicitation should identify the number of seats up for election and the term of office for each. The solicitation should also include a standard candidate form that provides a candidate the opportunity to answer a set of questions about their qualifications and experience. The solicitation of candidates should include a deadline by which time completed candidate forms must be returned to the association.

Eligible timely respondents to the solicitation for candidates should be identified as candidates and included on the association-issued proxy and on the ballot.

To overcome what the board has done here, the owners, if they are so inclined, could usually establish their own slate of candidates, collect proxies, and seek to elect other candidates than the list of candidates set forth by the board.

Q. For as long as I can remember, the board of our condominium set aside a portion of each board meeting for owner questions and comments. Citing time constraints, the board has eliminated these portions of the board meetings. As a substitute, the board has advised owners to submit questions/comments in writing to the board. Is the board required to have these owner sessions at board meetings?

A. The board of a condominium is not required to include a homeowner forum as part of its board meetings, as the Illinois Condominium Property Act is silent on the issue.

Notably. the board of a common interest community association must reserve a portion of its board meeting for comments by members of the association. However, the duration and meeting order for the member comment period is within the sole discretion of the board. This is set forth in Section 1-40(b)(6) of the Illinois Common Interest Community Association Act.

• 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.