Classified ads allowed on association website

 
Posted9/12/2020 7:00 AM

Q: The board of our association created an elaborate association website. The website includes a "classified ad" page that allows owners to advertise items for sale. The association charges a fee for the ads, as a revenue generator. In some instances, the association charges a flat fee, in other situations the board wants to charge a small percentage of the sales price. Is this permitted?

A: This practice is legal. Some associations seek third parties, like local businesses, to advertise in owner directories or on websites. That way, the additional revenue to the association is from third parties, and not an additional burden on owners.

                                                                                                                                                                                                                       
 

The board does need to realize that the income generated from these ad sales would be taxed at the corporate rate. That is, unlike assessment revenue, the ad revenue is not nontaxable exempt function income. If the income is substantial, the board would need to speak with its accountant as to which income tax form it should file to minimize the income tax burden to the association from these transactions.

Q: During the COVID-19 pandemic, the board of our condominium association has been carrying out its decision making via email, rather than at board meetings. Is this proper?

A: I appreciate that the board does not want to meet in person in these most unusual of times. However, with rare exception, the board needs to make decisions at board meetings open to the owners, and not by email.

However, "in person" board meetings can be avoided. The Illinois Condominium Property Act permits board members to participate in and act at any meeting of the board by telephonic means, or by use of any acceptable technological means (e.g., Zoom app). However, all people participating in the meeting must be able to communicate with each other. Owners would need to be provided access to the open portion of these telephonic/Zoom board meetings.

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Q: The declaration for our condominium provides that the balconies are limited common elements. The declaration further provides that the cost of maintenance, repair and replacement of the limited commons is to be assessed only to the unit to which the limited common element balcony is assigned. About half of the units in our condominium association have balconies. Nonetheless, the board has adopted a special assessment payable by all of the unit owners, not just those with balconies, to pay for a major balcony repair project. Can the board do this?

A: The language in the association's declaration, which is consistent with Section 9(e) of the Illinois Condominium Property Act, would not permit the board to assess all of the owners for this balcony work. Rather, the cost of this balcony work must be assessed only to the owners whose units have a balcony.

Q: Our condominium association has seen several units sold using an installment contract. Does the contract purchaser have any particular rights with respect to the association?

A: The Illinois Condominium Property Act established several rights of contract purchasers who reside in the unit.

The contract purchaser is counted toward a quorum for purposes of election of members of the board of managers at any meeting of the unit owners called for purposes of electing members of the board. The contract purchaser has the right to vote for the election of members of the board of managers, and to be elected to and serve on the board of managers. The exception to this would be if the seller expressly retains in writing any or all of such rights. Satisfactory evidence of the installment contract must be made available to the association or its agents. This is all set out in Section 18(c)(5) of the 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.

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