Unit owners are not always people
Q: Each board member for our condominium association must be a unit owner. One of the current board members is an investor in a limited liability company that owns many units in the association. Does this person qualify as an owner who can be on the board?
A: An entity that is not a natural living-breathing person can own a condominium unit. The association's declaration should describe who is eligible to serve on the board if a unit is owned by an entity, such as a trust, a corporation, partnership or limited liability company. With respect to a limited liability company, the typical condominium declaration provides that a member of the limited liability company is eligible to serve on the board.
The board should confirm ownership/eligibility of all candidates to the board; whether the unit is owned by a natural person or an entity. In the situation described here, the board can require the candidate to provide a copy of the limited liability company documents to demonstrate membership in the limited liability company.
Q: Under what circumstances can the board of my condominium levy a special assessment for repairs to the common elements without being subject to a potential vote of the unit owners?
A: Section 18.4(a)(8) of the Illinois Condominium Property Act provides that separate assessments for expenditures relating to emergencies or mandated by law may be adopted by the board of managers without being subject to unit owner approval, or the procedure whereby owners can request a vote if a special assessment exceeds a certain threshold.
The "emergency" exception would be applicable to raise funds if there is an immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners. This conclusion is typically supported by the written opinion of an engineer or other expert.
The "mandated by law" exception would be applicable, for example, if the association receives a notice of building code violation and the association needs to raise money to pay for necessary repairs to correct the violation.
Q: The declaration for our association describes a number of remedies that are available to the association to deal with violations of the covenants. One of the remedies is to seek a judicial sale of an owner's unit. We have an owner who engages in conduct at the property that many say is criminal. Can the association seek a judicial sale of the unit?
A: An involuntary sale is one of the remedies frequently set out in an association's declaration to address violations of the governing documents. It can be difficult to obtain; however, there are certainly situations where it would be appropriate.
That said, and if the facts warrant, it can be a very effective bargaining chip if included in a lawsuit against an owner among other remedies, like seeking an injunction. That is, it can be effective in persuading an owner to voluntarily sell their unit rather than potentially face a court-ordered sale of the unit.
Q: Our homeowner's association employs an on-site property manager. Currently, only this association employee has signature authority on the association's checking account. That is, no board member has signature authority on the checking account. I have requested the board to have a dual signature requirement. The board has refused to do so, saying that no check can be issued without the board approving an invoice. What is your feeling on this situation?
A: At least one board member should have signature authority on the association's checking account. It would also be a good practice to require dual signatures, one of which has to be a board member, on checks over a certain dollar amount established by the board. The board is in a state of delusion if it believes association funds are protected from misuse because it thinks a check can only be issued if it approves an invoice. It may also be a good idea to have a board member do the monthly bank account reconciliation here, as a prudent check and balance.
• 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.