In May, 2014, the First District Court of Appeals, which encompasses Cook County, issued an opinion in Palm v. 2800 Lake Shore Drive Condominium Association (hereinafter “Palm”), which has had an impact on association governance.

The decision is binding upon all condominium associations within Cook County. However, as this is the first Appellate Court opinion addressing several condominium law issues, such as the propriety of “workshops” under the Illinois Condominium Property Act, the holdings in Palm should be followed by other condominium associations within the State. Similarly, as the statutory provisions addressed in the Palm case are nearly identical to those in the Common Interest Community Association Act, common interest community associations should also take heed of the decision.

The holdings in the Palm decision are not alarming. Essentially, they are good business practices, which have been advocated by association attorneys for some time. Now, they need to be followed.

This is a gathering of a quorum of the Board discussing Association business

What is a meeting, which must be properly noticed?

For years, association attorneys have debated whether Boards may hold “workshops” or gatherings where Board business is discussed, but not voted upon. The more liberal school of thought was that as long as action was not being taken at the gathering, it did not fall within the definition of a meeting. The Palm Court held that the liberal school of thought was incorrect and that a meeting, as defined under the terms of the Illinois Condominium Property Act, included workshops (as well as electronic communication) where association business was discussed. This determination does not mean that the Board must cease holding working sessions; however, it does mean that these working sessions must be properly noticed to the members and that they must be permitted to attend. This further means that Boards should not be using electronic communications to discuss Association business.

Moving forward, Boards must ensure that they are discussing association matters in an open forum, with the exception of those matters which statute authorizes to be discussed behind closed doors, and providing the membership with proper notice of its gatherings. For Board meetings, that requires providing notice to the membership at least 48 hours in advance (by mail/delivery, posting or in some instances, by both). As there is no limit on how far in advance written notice can be sent for a Board meeting, a

Board may mail a general meeting schedule at the beginning of the year to its membership and then, simply post signage at least 48 hours in advance. While some may consider this a hassle, it is good business practice to establish these dates annually in advance so as to avoid scheduling conflicts with the Board members and management. Further, Boards must remember that meetings do not always have to take place at an off-site meeting room. Board meetings can be held in the hallway, in the lobby or anywhere where the Board members can meet.

Even if it relates to executive session material, this must take place at an open meeting of the Board

What is a Board action?

The Palm decision makes it clear that but/for discussion related to executive session topics, such as litigation, rule violations, unpaid assessments and employment, association business must be conducted in the open. However, even for those topics that are discussed behind closed doors, the actual vote on how the Board intends to act must be taken in open session and recorded in the minutes. Therefore, for any action taken by the Board, there should be a corresponding note in the minutes (or a duly adopted resolution) that such action was agreed to by the required majority.

This action should be taken by the Board to streamline its governance

What is the delegation of authority?

The common refrain that we have heard in response to the Palm decision is that Board members do not simply have the time to call and hold a meeting (even in the hallway) every time that a decision needs to be made. There is an easy solution to that dilemma--the delegation of certain authority. For those associations that are professionally managed, the Board already has a full time agent who is ready, willing and able to help carry out the directives of the Board. Boards should be determining how general day to day association business should be conducted and (assuming that this is consistent with the association’s governing documents) delegate the authority to carry out that business to its managing agent (or another Board member). This can be done through collection policies,

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