President improperly denied contract after vote
Q: A few months ago, one of our board members presented multiple proposals for a project. After heated discussion, one of the proposals was accepted by a 4 to 3 board vote. The president was one of the "no" votes, so he refused to sign the contract. The following month, the president brought the motion back to the board, and the board voted 4 to 3 to rescind the previous vote. Is this proper?
A: Initially, voting against a contract is not necessarily a valid reason for the president to refuse to sign it. That just comes off as "sour grapes." If a president refuses to sign an approved contract, the board can meet and authorize another board member to sign.
Under Robert's Rules of Order, a motion to reconsider may only be made by a person who voted in favor of the motion (and usually the motion to reconsider must be at the same meeting as the original motion). The action by the board here to rescind the prior approval of a contract is not in keeping with this and is questionable.
Further, if a contract is approved by a board and signed and delivered to a contractor, later action to rescind a vote to approve the contact is not going to insulate the association from a breach of contract claim by the contractor.
Q: A board member in our condominium would be affected by a decision of the board to charge back certain repair costs to owners of first floor units with patios. Does this board member have a conflict of interest that requires him to recuse himself from the discussion and vote on this issue?
A: The issue you raise here is not a conflict of interest under either the Illinois Condominium Property Act or the Illinois General Not For Profit Corporation Act. Many issues board members vote on have an economic impact on that board member (i.e., payment of more or less in assessments); however, that is not a conflict of interest under either statute, and would not require board members to recuse themselves from the discussion/vote.
That said, board members do have a fiduciary responsibility to act in the best interest of the association and the owners and not in a board member's own personal self-interest. If a board member is unable to do so on a particular issue, the board member should recuse themselves from the vote on that issue.
The type of matters that are addressed in the Illinois Condominium Property Act or the Illinois General Not For Profit Corporation Act regarding conflict of interest would be relevant if the board member (or a member of the board member's family) would actually have a contract with the association to do the work in question, for example.
Q: Our condominium association comprises 25 residential units and two commercial units. The declaration of condominium for the association requires that one of the three board members be an owner of a commercial unit. Is this valid?
A: I understand why the declaration includes this requirement. However, I don't think the requirement that one board member be a commercial owner is valid or enforceable. I contend that such a requirement would violate two provisions of the Illinois Condominium Property Act. It would violate Section 18(a)(1) of the Act that says "all board members shall be elected at large" and it would violate Section 18(b)(2) that states "the association shall have one class of membership."
Similar to what I indicate in the answer to the prior question, board members do have a fiduciary responsibility to act in the best interest of the association and the owners - not just in the interest of owners of residential units. That doesn't mean there won't be disputes between the residential and commercial unit owners that require difficult decisions to be made by the board.
• 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.