declaration, bylaws, or rules and regulations. However, Illinois law does not favor “self-help remedies” if they involve a breach of the peace. In other words, just because a board may have the right, under the declaration, to enter a unit to stop a noise issue, that doesn’t mean the board can use a key or “kick in the door” to turn off the offending machinery or television. The board must first obtain a court order to enter the unit to address the violation.
Another example is imposing a fine on an owner for a violation or breach of the declaration, bylaws, or rules and regulations. While the board has the right to do so, it must follow basic due process procedures as they apply to associations, including sending notice and offering the owner the opportunity for a hearing before the board can levy the fine (which must be “reasonable”). If the board improperly levies the fine, it may be legally unable to collect it from the unit owner.
When addressing a violation or breach of the association’s governing documents, consulting with a knowledgeable attorney can assist a self-managed association with addressing the situation without exposing the association to liability.
Contract Issues – Contractual issues encompasses any situation in which the association enters a contract, including agreements for management, laundry room, cable TV, landscaping, construction, loans, among others. The complexity of any given contract will vary, and thus the association benefits from having a contract reviewed by an attorney before execution. Ideally, this includes all contracts, but recognizing that associations are cost- conscious, we recommend, at a minimum, attorney review for all contracts that involve a significant dollar amount or substantial risk of liability.
For example, façade restoration to an association building may involve multiple areas of construction. In such a situation, the association may hire a general contractor who will, in turn, hire subcontractors to perform certain aspects of the repair work. Not only can such repair work be costly, but construction work involves risk and liability concerns for all parties involved. The use of subcontractors can raise additional risk and liability concerns. The association should ensure that the contract provides the fullest amount of protection possible.
Often related to expensive building repair or maintenance is financing. Collateralization and other procedural requirements pursuant to the law or to the association’s governing documents can be hefty and comprehensive. Some banks may even require an opinion letter from an attorney as a condition of lending. A self-managed association is best served having an attorney not only review the loan
documents but also provide guidance regarding any procedural requirements.
Legal Audit – Finally, a legal audit can be a useful tool in setting a course for effective self-management, particularly for those associations whose board members perform all management duties. On a basic level, a legal audit involves an attorney performing a general review of the associations governing documents and operating procedures to ensure compliance with the law. The scope of the legal audit can depend on the association’s needs.
A board that performs management duties but has little to no experience could benefit from a “how-to” overview. For example, the board could engage an attorney to review the governing documents regarding the proper procedures for holding an annual meeting and election, then plan a phone call with the board to discuss such proper procedures, perhaps even providing a procedural memo in writing.
A legal audit can also determine whether any provisions of the association’s governing documents are “out of step” with regard to the law. Both the ILCPA and CICAA continue to change, generally on an annual basis. Provisions of an association’s governing documents that are inconsistent with either can be confusing for a board. The attorney performing the legal audit can inform the self-managed association whether any provisions of the governing documents are no longer valid.
A legal audit can also include the preparation of a basic operating manual for the manager or board to follow. Specifically, such a manual may set forth the proper procedures for noticing and holding a meeting, adopting a budget or special assessment, conducting hearings on violations, etc. The manual can help ensure regularity in the management of the association, especially as the board members change.
In summary, although it can be daunting and challenging, self-management is not impossible – in some cases, it is a practical necessity. Those in charge of managing the association (whether a direct employee or the board itself) need to recognize when governance, enforcement, or contractual issues involve a legal issue beyond the capability of the manager or board, requiring the assistance of knowledgeable legal counsel. Remember, it is best to consult an attorney before an issue grows into a major problem. Finding a trusted attorney to perform a legal audit or simply to whom the association can turn during troubled times can go a long way toward ensuring the functionality of the association and easing the uncertainty of routine aspects of management. A self-managed association can safely navigate the rough waters of legal issues by having a trusted attorney or other qualified professional on board for assistance at critical times.
www.cai-illinois.org • 847.301.7505 | 43
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