of running the association will also affect when and how often the association should turn to an attorney for legal guidance. For example, the property manager of a medium- sized association who has several years of experience managing associations will most likely be less reliant on an attorney than a small association managed by the board, all of whom have no experience managing an association.
Sources of Legal Information for Self-Managed Associations – The board or manager can find the answer to a legal question in a variety of sources. Sometimes the association’s declaration or bylaws will contain the answer. Other times the Illinois Condominium Property Act (“ILCPA”), the Common Interest Community Association Act (“CICAA”), or possibly other federal, state, or municipal laws and regulations will provide the answer. Case law, whether state or federal, can also resolve a legal issue. A knowledgeable attorney will be able to provide the guidance the self-managed association requires.
For this article, we will discuss when an association should seek legal counsel under three general categories of issues: governance, enforcement, and contractual. Last, we will discuss the concept of a legal audit and the benefits of such an examination for a self-managed association, particularly for those associations managed by inexperienced individuals.
Before discussing the categories of issues, it is crucial to keep in mind that time is of the essence. Attempting to address a problem without attorney guidance can create a more lengthy and costly experience for the self-managed association than had it consulted an attorney at the onset of any given issue. Consulting with an attorney can help prevent an issue from growing into a significant problem.
Governance – Legal issues related to governance can include disputed elections, adopting rules and regulations, amending the declaration or bylaws, levying a special assessment, or approving a capital expenditure. The board’s primary concern is to ensure the validity of any action it takes (meaning it must make sure the action is legally proper and enforceable). From a legal standpoint, the question is always whether the association will prevail if the action is challenged.
One example is voting and elections. The election of individuals to serve on the board typically takes place at the annual meeting. Ideally, the board gives notice of the date and time of the annual meeting, the association members attend
the meeting, cast their votes, and those individuals with the most votes are elected to the board. But what happens when things do not go as expected?
Recognizing when legal counsel should be consulted can make the difference between a validly elected board making valid decisions and an improperly-elected board making invalid decisions. An improperly-elected board can have a significant impact on association operations because any decision made by the improperly-elected board can be considered legally unenforceable.
As a hypothetical example, let’s consider the ABC Condo Association. For the past several years, two of the five board members of ABC have been tenants, not unit owners. Both the condominium declaration and the ILCPA expressly provide that only unit owners can serve on the board. The ABC board recently decided to obtain a loan to finance big capital projects to the building, with the loan debt serviced through a special assessment. After the board has closed on the loan and levied the special assessment, a small group of unit owners who dislike the idea of a special assessment challenge the board’s authority to obtain the loan and levy the special assessment on the basis that the board is invalid (since it has tenants serving). If the unit owners were to prevail, what would this mean for the association as a whole and the board members individually?
Declaration and bylaw amendments can be another area where consulting an attorney can be beneficial; specifically, it could mean the difference between an enforceable amendment and an unenforceable amendment. Different sections of the declaration or bylaws may have different requirements for amending. For example, some amendments may require an affirmative vote of a certain percentage of the association members, while other amendments also require mortgagee approval.
Enforcement – “Enforcement” refers to the association’s rights and remedies when an association member or occupant violates a provision of the declaration, bylaws, or rules and regulations. Nearly all declarations provide for legal remedies for a violation or breach of the association’s governing documents. Most boards understand that filing a lawsuit can be costly and time-consuming, even if the association is entitled to recover its legal fees and costs from the breaching member. To conserve funds, the board or manager may look to alternative means of enforcement, which can be fine unless the board proceeds with an unlawful enforcement method.
For example, some declarations provide that the board has the right to enter a unit to eliminate a continuing violation or breach of the
42 | COMMON INTEREST®
• Summer 2020 • A Publication of CAI-Illinois Chapter
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