THEY PROTECT BOARD MEMBERS FROM THEMSELVES
The Illinois Condominium Act states rather clearly that “In the performance of their duties, the officers and members of the board…shall exercise the care required of a fiduciary of the unit owners.”
Definitions of a “fiduciary” vary based on websites and who you might ask but for the most part the general idea is that a fiduciary is one who acts in the best interest of or for the benefit of another. As a board member, you have a fiduciary duty to act in the best interests of the unit owners. This includes a duty to follow the governing documents of your association which are comprised of the Illinois Condominium Property Act, the Common Interest Community Association Act or General Not for Profit Corporation Act depending on how your community is legally organized. On a more granular level, you are also bound to follow your association’s Declaration, Bylaws and finally the Rules and Regulations.
With all of this oversight, I still see board members who occasionally act contrary to or are unaware of the governing documents. I have also seen situations where board members simply feel the governing documents don’t apply in the current situation. I have seen attorneys in attendance at board meetings literally stop board members from committing acts or making decisions that could immediately trigger legal action against the board. There are a multitude of board members that still believe their association is exempt from filing a tax return or can’t tell you if they even file a tax return. Refusal to share meeting minutes or financial information, allowing unqualified individuals to be elected to the board, operating without a complete set of board members, lack of proper disclosures when units are sold, signing contracts without attorney review and not maintaining proper controls over association funds are all examples of board errors I have witnessed or heard about in my discussions with attorneys and managers in the industry.
I’d like to take a moment and address one specific area of importance: your association’s cash. Does your management firm have complete signing authority over the accounts where your operating and/or reserve funds are held? If you wanted to contact or even walk into the financial institution where your association funds are held, would you as board president or treasurer have the signing authority to close the account or change signers? What if you felt there was improper activity taking place with regard to your cash? Would it be easy enough for you to take action to protect your funds?
Licensed, professional property managers are the greatest asset a community association has besides the very unit owners who volunteer to serve on the board. However, as in any industry, there can always be the occasional bad actor who decides not to follow the rules. Anyone who has
been in the industry for an extended period can recount a story or two for you as an example. As a board member, you need to keep control over the lifeblood of your association, meaning your cash. All too often I have heard from board members who tell me they are changing management firms and the first question I ask is if any board members are signers on the checking account. More times than not, the answer I hear is “no.” My recommendation is that the next time you get a chance to speak with your attorney, ask that superhero if that “no” is an acceptable answer, and then follow their advice.
Superheroes can be a complex and difficult group to fully understand sometimes. They have varying strengths and cannot always solve every problem. Fortunately, when it comes to the legal world of community associations, we have a group of superheroes that fit the need perfectly. Whether it be an issue with a legal or governing document, a vendor, a unit owner or even a fellow board member, from the smallest, self-managed condominium association to the largest and most complex mixed-use professionally managed association, there is a superhero attorney who is available to assist. So how do you find your legal superhero?Well, you could try and point a bright light at the night sky using the symbol of “Lady Justice,” but my recommendation would be to start by reaching out to CAI-Illinois (
www.cai-illinois.org). It’s almost like having the MVPs of the community association justice world at your fingertips!
A history of responsiveness and reliability
retention
9% client
For more than 40 years, our family business has partnered with over 1,200 Chicago-area HOAs and condominium associations. We provide the boards of directors with state-of-the-art audit, review, and compilation reporting services to help them prepare more accurate annual budgets, make more informed operating decisions, or
At Cukierski & Associates, we’re not only experts in this area of accounting, but also have several team members who sit on boards of directors in their own associations. So, we can relate and are well versed in the dynamics and intricacies of community associations.
Want to know how we can help your association?
Check our website and reach out to start the conversation. We’d love to hear from you!
3850 N. Wilke Rd. Ste. 100, Arlington Heights, IL 60004 847-496-7180 |
info@cukierski.cpa |
www.cukierski.cpa
www.cai-illinois.org • 847.301.7505 | 19
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