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Condo association board fiduciary and managerial responsibilities

Posted on Fri, Jan 07, 2011 @ 01:11 PM
  
  
  
  
I live in a large unit condo complex in Illinois. The homeowners receive a monthly summary of income and expenditures as required by the Illinois Condo Act. There were a couple of issues that were brought up at our last homeowners meeting - bid procedures and requirements, and miscellaneous expenses. For the last 4-5 years our board of directors decided to manage our pool facility. They noted that by doing so, the condo association is saving a lot of money. However, they do not disclose how much money saved. To complicate matters, we have some board members and spouses of board members on the payroll. Our property management, indicated that board members are allowed to receive compensation for any other job responsibilities, other than the position as board director holds. I find this to be a gray area in the Illinois Condo Act. The Act doesn't go into much detail when it comes to compensation to board members. I would have hoped that the property management would have indicated to the board president and homeowners, that although this may be allowed, that they strongly recommend against it. My question is this - Doesn't the board have the fudiciary duty to go out for bids every year for large expenditure items such as pool management ($30-60,000 per year. This way, the homeowners would be notified that several bids were submitted (giving the bid amount to homeowners at the meeting)and the decision was made based on this information. At this point, homeowners have no idea what the savings are by having the pool managed by the board. Unfortunately, our by-laws do not specify anything about why, when, bids should be enforced. Is there any way to force the hand our board president to follow the bid process as they do for other large expenditures such as landscaping, snow removal, janitorial, etc.? Although, the board is doing a good job managing the pool, it is very clear that they have no intentions of getting bids for pool management. Is this even allowed? Second issue regarding Miscellaneous expenditures. For the last 3 years, miscellaneous category has been one of the top expenditures we incur. In 2009 it totaled $25,000, and in 2010 it totaled $38,000. It has been brought up at our homeowners meetings that this is absurd. Miscellaneous should be out-of-pocket or petty cash expenses. The board could very easily create new categories for repetitive expenses that come up every year. Again, our board seems to be content in doing things in their best interest. There is no disclosure at our meetings to explain the miscellaneous expenditures. The only time there is a discussion, is when a homeowner brings it up at the meeting. Are there any Disclosure Acts or Policies enacted for Miscellaneous Expenditures that other large condominium complexes have currently in their bylaws. How can our homeowners get the board to reveal miscellaneous spending habits, and make the attempt to reduce miscellaneous category by creating new categories? Would amending the bylaws help any? Or is this a dead issue.

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COMMENTS

Paying board members and spouses regardless of what jobs they might hold is totally unethical.Most sets of by laws prohibit such employemnt. Also most bylaws require competitiave bids fior anything costing above a specified amount. Obviously the Board has singled out the pool maintenance as an exception You have a right to demand an explanation. In so far as miscellaneous expenses I'd suggest you exercise your olegal right to inspect the financial records and determine what is accrued in this accouts files. With this knowledge you are in a position to demand an explanation for charges that you question. Bt your state law you have a ruight to inspect the books. Do so personally. 
 
All contracts costing abhove a pecified amount should be competed. This includes the management company contracxt which should be competed at least every other year.

posted @ Friday, January 07, 2011 1:46 PM by Scott


Setting aside legalities for a moment, take a step back and look at the bigger picture: yours is supposed to be a community of homeowners working together to enhance the enjoyment and value of your community. Is this what you are accomplishing? You are seeking legal solutions for every minor issue when you should be seeking open and candid dialogue about what is best for your community. 
 
 
 
My community is much smaller than yours, so financial and operational management is much easier. Each year, we ask one owner to tackle one expense category to determine if we are receiving fair value (not the lowest price) for each major category of service for which we contract: property management, trash, landscaping, janitorial, etc. The member then reports his/her findings at the next meeting, and by voice vote we decide to either retain the existing provider or seek a new one. Board members should not and cannot do everything. 
 
 
 
With regard to your financial questions, you are looking for legal solutions rather than communication. Every owner should have the right to inspect the books, so ask to see them, and then inspect a few supporting invoices. This will tell you if "miscellaneous" is too broad of a classification.

posted @ Friday, January 07, 2011 4:10 PM by Larry Davis


When we asked what our our $2,000 mis'l expense was, the sec'try could not answer right away. Said he,she, would get a copy to us and never did. Asked again and never got a copy. They know how to blow you off. When we asked why certain things were not being fixed, said """O""" we are working on it or it's been ordered. 
 
I just became the new Treasurer and was told that financial reports will be sent to me to look over. LOL that was 3 weeks ago. Said "letters" to go out to everyone about voting at next meeting, AGAIN LOL that was 3 weeks ago. 
 
 
 
 
 
Now you tell me who is the honest bunch of silly managers here? 
 
 
 
Good Luck if you really care, chip in and try and get together your troop and fight back and go get a laywer! I believe nothing they tell me anymore.............NOR DO I CARE! No use being on a board of wanna BEESSSSSSSSSS. 
 
You decide for yourself, all comments here keep telling you to read your by-laws. Well what good are they unless you pay a laywer to fight for what is right and the board knows this and will keep taking from the members until someone stops them. 
 
 
 
Good luck, I don't have anyone to help me fight back. They are all talk until it's time to write the check for their amount for a laywer. Sell out that's the only answer.

posted @ Friday, January 07, 2011 4:51 PM by unhappy camper


Not only is hiring board members and spouses unethical it is a conflict of interest. Your management company is giving you bad advice. Also you run into insurance issues. If they are not insured for any work they are doing on the property and get injured, your association is open for law suits. Make sure anyone hired to do work is licensed, insured and bondeable.

posted @ Saturday, January 08, 2011 12:33 AM by Jackie


How would you like to live in my complex of over 700 in NJ. The maintenance men are sons of the property manager (also an owner). The board president lives with the pool manager and another board member works at the pool in the summer. Talk about unethical!!!!! They get their hospitalization paid, raises and other benefits including bonuses. We're so far in debt FHA won't even come in here anymore.

posted @ Saturday, January 08, 2011 7:30 AM by J


There is a solution available to you that does not require you to hire a lawyer. Read your bylaws to discern what provisions apply to removing the board. If such are found then follow the direction given after having checked your state condominium law on this same subject. Failing to find such provisions start orgvanizing to elect acceptable board members at your next annuaol meeting. Either of these approaches will fix your problem. Sitting aroubnd bitching will simply make these illegal and unethical practices more egregous.;

posted @ Saturday, January 08, 2011 9:02 AM by Scott


Dear Scoot 
 
It is very easy to say read your by-laws. Next we did get a meeting together to hear everyones grip. I took the notes and I was not on the board. When a sec'try/treasurer argues with a managemnt firm and then cuts you off and gets nasty by telling you to kiss off (and I write this not as it went down) and storms off letting the president holding the bag and then quits with the books so mismanaged that even the management service couldn't figure it out, then what do you do. 
 
We signed up for a management and I volunteered to hold the sec/tres job until March of 2011. 
 
Now I was told 5 months ago  
 
I would get the financial reports for the year and and the annual meeting is to be held in March (our yearly) and voting for new board members would be elected. 
 
Now when you only have 3 or 4 people showing up for side meetings, what do you do then? 
 
It's not easy and we thought that management was the way to go and they have yet to full-fill any of the things people complained about back in April of 2010. 
 
I wash my hands and I am getting my place ready to sell in the spring. "Don't care just like the rest of the compaliners in this assoc. don't care. Condo Associations and HOA"s board members are just a bunch of thieves that can't account for the money and most of them get away with it. I don't care who you go to Attorney General never responded to my letter and the management never returns my phone calls. Unless I have everyone in our building standing up for me then it is a waste of time to even try. I am getting out while the getting is good and if I can't sell then I will rent it out until something turns around. 
 
One person in our building is a renter and has not paid rent in almost a year.....The owner dosen't pay his share of condo fees and nobody pushs for a solution including the management service which is friends of the president. 
 
We are $17,000 in the hole to people not paying, repairs not being done and many other violations being pushed aside. Why give me a job of receiving fin. reports and being sec/tres for 3 months if all they want me to do is sit here. I hate living here and this is why I am going to get out. 
 
So you see people don't just bitc@ they don't know what else to do! Have a good day!

posted @ Saturday, January 08, 2011 10:59 AM by unhappy camper


my husband & i bought a "free 
 
standing" condo in dennisport,ma 
 
{cape cod}1,000 sq. ft {detached} 
 
this used to be the office for the motel.lot #2 
 
in the rear of this property is lot #1 8 connected units{ one room 
 
unit} 
 
 
 
our cellar has some community 
 
issues{community alarm system,& water are used for all units} 
 
we have 2 seperate septick tanks & 
 
2 seperate leeching fields. 
 
how do i go about seperating, from this association?

posted @ Sunday, January 09, 2011 10:01 AM by kim


Illinois should have Laws on the Books to govern Condos. Seek them out and try to find the answers for your concerns, Your concerns are VERY VALID. It sound to me like some illegal activity is afoot. Certainly conflict of interests are. I would suggest a Board recall, you'll need to research to find out what the procedure is in IL. Here in FL it is a simple procedure, but it does cause hard feelings. RUN FOR THE BOARD (as you did), get together others of the same mind set as yours and boot out the existing Board. Then boot out that Management company, they sound as if they're useless. Get legal counsel for your new Board and do a complete financial study, don't worry about cost here as you may find that legal issues are to be discovered and suits may need to be pursued. Also person may need to be jailed. The Association will foot the bill as a result of these actions but it most likely will end the problems you have. Also have your new lawyer send notice to all the Association deadbeats and demand payment of fees or lien their property which will afford your association protection to collect those fees. If your laws provide, evict renters who don't pay fees or fines. A note and bout Jackie's advice - heed it! She's right. The last thing you should do is run or quit. You'll only be selling out to the bad Board and putting an unsuspecting new owner into a bad situation. FIGHT, FIGHT, FIGHT be the SOB that won't go away, get other SOB'S to fight with you and protect yourselves at those who sit by complacently.

posted @ Sunday, January 09, 2011 11:14 AM by cebo


Mosy every state has a condominium act. Included in these state laws is a requirement that unit owners have the right to inspect the financial records of the association. In exercising this right do not be deterred if the reply to your demand offers to provide such recordsd a you wish if only you can define your interest. This is a common ploy used to prevent a unit owner from accessing the records directly. You never know what you might stumble across if you do your own inspection of the records. Further, be sure to have a second owner along with you when you make your visit tothe records depository.

posted @ Saturday, March 19, 2011 10:41 AM by Scott


Scott, I'm in NJ. Yes you are allowed to see the records and receipts. You are also allowed a list of delinquent owners. Problem is with my community when you ask to see the records and receipts, you get the general ledger. I've looked at it. Lots of blank spaces, it's a joke. I'm sure not every community is like ours, but in our case, the board is run by the property manager, not the other way around. Our board is clueless. Hah, I have been running for the board for the past 4 years. They don't even do their elections correctly. I had to bring that to their attention with the threat of a civil action. Forget about bringing another owner with you. That's not allowed, AND we have to sign a confidentiality agreement. What does that tell you about our association. I'm thankful though they did the last election incorrectly with regard to their proxies and not informing the community of a change in the date of their annual election. I've written a letter to the State Attorney General since they are the ones that oversea the non-profit corporation act and how these things have to be handled. Our community is so far in debt and our Board refuses to do anything about it. Oh they do give us an emergency assessment EVERY year for the past 6 years and the sad part is I'm one of the homeowners that pays their bills on time so I'm the one that punished. I really wish the state had more control over the HOA's in NJ but they don't. Judi

posted @ Saturday, March 19, 2011 12:34 PM by Judi Pawiak


Judy  
 
The NJ State Condominium Act requires that access to all an associations redcords must be made available to a member of the association. Legally you are permitted to demand to see opurchase orders, receipts, contracvts and any other financial or other document in the files. Failure of the Board to permit this unfettered acces is a violation of your state's law and could subject the Board, or pertinent members thereof, to possible legal penalties. If you look at your bylaws in regard to board immunity I'll wager you'll see the phrase Unless unlawful"' Do not allow a dictatorial board to dominate you.

posted @ Saturday, March 19, 2011 3:04 PM by Scott


I resigned by email to the personal email of the association president here in illinois. Was the email considered delivered, as it was not the official address of record of the board?

posted @ Monday, August 01, 2011 4:14 PM by serola


I am the president of this association and I have gone through a lot as the president. It really kills me to see people talking but not getting involved or talking none cense.  
 
Right to the point, get involved then you'll see where the money is going, post yourself in the elections. Also I have found out that the ones that talk are the ones whom feel as they are not getting a pice of the pie, as if there were a pie. So every one know it is very hard to run a corporation, especially when the president is, like in my case doing everything. Look let's face it, nowadays the condos are not doing well, people are not paying there dues, so as hard as it is, it is even harder now when there is no fund to run your corporation. I have had very hard time with mine I know, I have had to make a decision to in the bad economic times either go up with our dues or work payment plans with venders, I did just that and we made it. 
 
So, for whomever is thinking that stilling money from the association is ease, you got another thing coming, and remember most board members do not want to end up on the other side of the law. 
 
Most board members are honest people that want the best and that is way they got involved in the first place, so before pointing at someone make sure you have evidence.

posted @ Tuesday, August 07, 2012 12:25 PM by angel


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