First condo board given opportunity to end long-term contracts

Q: The initial meeting of our condominium association, to elect board members, was recently held by the developer. Soon after that meeting, the developer delivered books and records to the board that include multiple contracts between the association and various third parties. Some of these contracts run for years to come. Is the association stuck with these long-term contracts entered into by the developer?

A: Certain long-term contracts entered into by the developer may be canceled by the association. This is addressed in Section 18.2(e) of the Illinois Condominium Property Act. Once the election of the first unit-owner board of directors takes place (referred to generally as "turnover"), any contract made prior to the date of election of the initial board by or on behalf of association, which extends for a period of more than two years from the date of the turnover, is subject to cancellation by the association.

In order to cancel any such contract, the association must hold a meeting of the owners to vote on cancellation. If a majority of the votes of the unit owners, other than the developer, cast at a special meeting of members called for that purpose, approve cancellation, then the contract can be canceled. The meeting to vote on the contract or contracts must be held during the 180-day period that begins on the date of turnover.

At least 60 days prior to the expiration of the 180-day cancellation period, the board of the association is required to send notice to every unit owner that notifies the owners of this cancellation provision, and that describes what contracts are affected, and the procedure for calling a meeting of the unit owners for the purpose of voting on termination of such contracts.

Note, too, that during the 180-day cancellation period, the other party to the contract (not just the association) also has the right to cancel the contract. The cancellation is effective 30 days after mailing notice by certified mail, return receipt requested, to the last known address of the other party to the contract.

This provision was enacted to deal, to some extent, with long-term "sweetheart" contracts between a developer and entities created by a developer.

Q: The declaration for our condominium association says a board member can be an owner or the spouse of an owner. For the first time anyone can recall, the spouse of a person who owns a unit submitted a candidate form for the upcoming election to the board. A current board member claims a spouse of an owner is not eligible to run for the board. Can the spouse run?

A: Section 18(a)(1) of the Illinois Condominium Property Act is clear that board members are elected from among the unit owners. The spouse of the person that owns the unit is not a unit owner. The spouse of the person who owns a unit may not run for, or serve on, the board, despite the language in the condominium declaration to the contrary.

Let me add that many married couples "assume" that upon marriage the nontitle-holding spouse of the owner automatically becomes an owner; that is not correct. Similarly, many married couples "assume" that because the nontitle-holding spouse of the owner signs the mortgage for the unit that they become an owner; that is also not correct.

In order for the nonowner spouse to obtain an interest in a unit, the owner of the unit would have to convey an interest in the unit to the nonowner spouse by way of an actual recorded deed.

• 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.