7. Adopt Rules and Regulations. The new Board will need to administer the property, which includes regulating the conduct of unit owners, their guests and occupants within the Association. To that end, it is a recommended best practice that the new Board develop and formally adopt rules and regulations for the Association pursuant to Section 18.4(h) of the Act. A clear and concise set of rules and regulations is important to establish expectations and help ensure a harmonious living environment for all unit owners and residents. However, the Board would be wise to avoid over-regulating and instead adopt rules and regulations that are necessary, appropriate, and tailored to the particular building and community.
Tip: Proposed rules and regulations should be reviewed by the Association’s legal counsel before being adopted to confirm that they are legally enforceable and do not pose any legal or practical issues or unintended consequences.
8. Review the Budget. The new Board should review the existing Association budget (which was set by the developer) and revise as needed to ensure that the Association has sufficient funds to meet its financial obligations prospectively. If the Association’s budget is insufficient to cover Association expenses, the new Board will need to evaluate the Association’s financial needs and determine whether adopting an amended budget, a special assessment, and/or taking out a bank loan, increasing the assessment amount in the next fiscal year’s budget, is the appropriate method to address financial distress.
The first year following the turnover from developer control is a critical juncture for the new unit owner-elected Board and sets the tone for unit owner control of the Association via their duly elected Board. The new Board will need to look backward at the prior actions of the developer (e.g., review and timely submit claims for construction defects or accounting issues) and forward (review contracts, adopt rules, review and revise the budget, etc.) to properly administer the Association on an ongoing basis. This task can seem daunting at times, particularly for volunteer Board members who may lack professional experience or formal training on issues that come before the Board. The good news is that Boards can rely on the Association’s professionals, such as professional management, legal, accounting, and architect / engineer, to ease the burden and provide expertise to help ensure a smooth transition and proper and efficient operation of the Board.
The above list is not exhaustive and instead is intended as a starting point to help unit owner-elected Boards better navigate the turnover process.
We partner with our clients to provide creative solutions, thought leadership,
and industry knowledge based on more than 40 years of experience in the fi eld.
HOWARD DAKOFF 312.476.7556
hdakoff@lplegal.com
LAURA MARINELLI 312.476.7595
lmarinelli@lplegal.com
LPlegal.com
2 N. LaSalle St., Suite 1300 Chicago, Illinois 60602
www.cai-illinois.org • 847.301.7505 | 39
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