Can a unit owner see condo employee records?
Q. I am an owner in a condominium association. The association employs a maintenance person. I don't think he does a very good job, and other owners have told me they have complained to management about the maintenance person's performance. I requested a copy of information from this employee's file regarding disciplinary actions taken by the board. My request was denied. As an owner, whose assessments pay a portion of this employee's salary, am I entitled to the requested information?
A. Section 19 of the Condominium Property Act governs the books and records that an association must maintain for examination and copying by owners. That section also provides that unless otherwise directed by court order, an association need not make documents relating to appointment, employment, discipline or dismissal of association employees available for inspection, examination, or copying by owners.
As such, the board may, absent a court order, deny an owner's request for access to an employee's disciplinary records.
Q. Our association is borrowing a seven figure amount of money from a lender for a tuckpointing project. The board has been directly involved with the negotiations with the lender. One of the board members has a background in banking and reviewed the loan documents. We had the contractor lined up to start the work, anticipating that the loan was going to "close" and funds distributed. The loan documents were signed by the board and returned to the lender. The lender then reminded us (it was apparently in the loan commitment letter) that we needed an opinion of counsel. It took our attorney about a week to get us that opinion, and the loan closing was delayed, as was the commencement of the work. Should it have taken a week to get this opinion from our counsel?
A. I can't speak to how long it took counsel to issue the opinion of counsel here. However, I can state that many associations incorrectly assume that the opinion of counsel is something "generic," and that such opinion of counsel can be issued like a candy bar from a vending machine.
The opinion of counsel in these loan transactions is a representation to the lender regarding the association's authority to enter into the loan transaction, and regarding the board's procedure to approve items such as the budget, assessments and or special assessments that will fund the repayment of the loan, and the loan documents themselves. An inaccurate opinion from the association's counsel can expose the attorney's law firm to liability to the lender if not accurate! As such, the attorney needs to conduct significant "due diligence" before putting signature to the opinion letter. That isn't something that can typically be done "last minute," or quickly.
The attorney's due diligence can involve, but is certainly not limited to, review of the corporate status of the association, notices of meetings and meeting minutes, and review of whether any expenditure or special assessment was subject to owner approval. Counsel may also require a certificate from the association confirming the facts upon which counsel is relying on in connection with the preparation of the opinion of counsel letter.
The association should involve counsel early on in the loan process. This will permit counsel to instruct the association as to what information and documents it needs to be provided in connection with the opinion of counsel, and as to the procedures the board must follow to properly approve a loan and adopt a special assessment that may be required to repay the loan. Too often, a special assessment is not adopted properly, and counsel needs to send the client back to the drawing board to adopt it properly. That can be a tremendous set back to project.
The bottom line though is that an association that asks for an opinion of counsel on the eve of a loan closing may be disappointed.
• 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.