Condo Association Management Blog

The most important item that I have found out in living at my condo group for 30 years is to insure that the board of directors be composed with a majority of well experienced business persons.  
 
My condo now has a board of directors with no hands on experience which has created many problems,none of the magnitude that yours have incurred.

You are right it is good practice to have a code of conduct in in place coverig the points raised. If the Board are not willing to adopt a voluntary code then you will need to incoroporate them intoyou Governing Documents the procedure ad voting required will stated in the Documents i.e. it wil state the procedure for putting a resolution to the annual meeting or for calling for an EGM  
 

For readers of this blog, the first place to start is understanding and using the correct description of the property. Most inquiries are for CONDOMINIUMS - very different ownership from properties located in homeowner associations. State laws are written specifically to address each form of homeownership. In larger developments, one or more condominiums may be located within a homeowner association.  
 
Focusing on this question as the project is described as a condominium - there are two forms of legal instruments:  
a) the Master Deed - Deed - Declaration (may also have some similar name) contains the legal description of the property. However, some attorneys writing these documents may be more familiar with homeowner associations and include items normally found in the condo bylaws. 
b) Bylaws - normally the primary document including sections addressing assessments, meetings of members and boards, rights and obligations of owners, powers delegated to the board, adoption of rules, method for amending the bylaws, etc.  
[There may be supplemental deeds annexing into the condo additional property or an amended deed that may even remove an unbuilt portion of the property from the original legal description of the property] 
[Bylaws may be amended originally by the developer, for instance to meet FHA or FannieMae requirements not stated in the original document, or by the members following the requirements of both state law (condo act) and/or as stated in the original bylaws.]  
 
For condominiums that are incorporated - that is a different document specifically to incorporate a business entity as a corporation and obtain rights permitted by state law for corporations. It is almost always filed with the agency that handles all corporate documentation.  
 
Rules and regulations or policies or guidelines - following state condo law and the bylaws, boards may adopt rules, regulations, policies or guidelines (names used interchangeably). The bylaws normally provide to the board the authority to adopt these for instance to control use of the common property, use of the elevators, move-in--move-out procedures, conduct by the board (ethics standards), etc. These documents are not recorded documents and are not incorporated into the bylaws. These rules are normally as enforceable as the legal instruments, unless the courts find that the board did not have the authority to adopt such policy.  
Very seldom does the state authorize owners to adopt rules, etc. However state law may provide a procedure for owners to object to proposed rules AND often may require notice to owners prior to the board adopting the rule.  
 
Depending upon the number of units located in a condo and the amenities that must be maintained, budgets range from minimal obligations to substantial funding (!M, 2M) The line item for miscellaneous can therefore be reasonable or not based on the total expenditures. Without very specific financial information, it is not possible to offer an opinion about a budget. Condos carry fidelity insurance and the insurance companies are active in looking for fraud or dishonesty vs poor business judgement. As was mentioned above, this is business and some condos are "Big Business" requiring owners to be very invested in the qualifications of the members that are elected to boards.  
 
A concerned owner should identify a potential director who has strong financial knowledge and enlist that person and other interested owners in supporting that person to seek a position on the board.  
A concerned owner should obtain and study the state condo act (usually online and may be found in local libraries) and also study the specific condo's bylaws.  
Ask questions until you have a clearer understanding. Those of us responding to this blog appreciate the statement you made that you follow the inquiries. It is a necessary, unfortunately slow, process of educating owners one at a time because good clear concise information is not made available to purchasers before they become condo owners. Good luck.  

It is hard to believe that an association does not have governing documents. They may be old and lost, but they probably existed at one point. As one of the largest underwriters of community association Directors and Officers liability coverage, we would not write a policy for an association that we knew did not have operative governing documents in place. What you as a unit owner should do is advise the board that it needs to have valid governing documents in place. If there are no governing documents in place, that does not mean that the board is not governed by rules and a fiduciary obligation. If there are no governing documents, the association is governed by the applicable Illinois statutory laws for the association. If the association is doing something specific that does not appear to be in the best interest of the association, you as an association member can consult a community association attorney (there are a number of them in Illinois). If they do not have them in place, you may want to consider advising the associations insurance carrier that no such documentation is in place. If the association can not obtain insurance, the board members would probably not sit on the board.

does the condo president have to reside on the condo property?

It is really hard to believe that your Condo has no governing documents. How can you and the Board know how to function? I would never put up with 25,000 of "misc" expenses! You should have a monthly update on finances and once a year be sent a complete financial picture of all expenses, who was paid, how much and why all money coming in (Including fines or late fees and interest) how much is in your reserve fund,etc. Without knowing this you could be headed for a disaster. 
 
You can go to your County to get the Purchasing agreement when the subdivision was first built, they have a copy. They may have all your documents too, if not, the City or Village you live in has copies. Everytime you change Board members you are supposed to notify the City or Village. You should be having at least 4 open meetings per year with Homeowners invited. All acts of business conducted by your board, including any money spent, has to be voted on in a public meeting and put in the minutes. You have a legal right to all the minutes directly after a meeting takes place. If there are no meetings then you have a Board run wild and you need to get them to follow the laws. 
 
Good luck and don't give up. it could mean your financial stability down the road.

If you live in Chicago under the City of Chicago Municipal Code Sect. 13-17-080: also known as the City of Chicago Condominium Ordinance-states in part " No person shall fail to allow unit owners to inspect the financial books and records of the condominium associastion within ten business days of the time written request for examination of the records is received." 
 
 
 
The Illinois appellate court has ruled this Chicago ordinance is a valid exercise of the City's home rule powers and illinois courts will enforce this ordinance. The appellate court also ruled that although the ordinance does not require a proper purpose it does not conflict with the State of illinois Condominium ordinance. 
 
 
 
Under this law every condo owner in the city of Chicago has been given the right to fully know the state of finances of their associations, which will allow them to act in the best interests of all owners. All Bank monthly statements showing checks cashed and to whom should be looked at in addition to receipts etc.

Are there any Michigan condominium owners interested in meeting to discuss options to make our legislators more aware of the problems we encounter with respect to Condo Association Boards, and management companies.  
 
 
 
Has our state government taken a look at the risk of corruption and lack of accountability in all condominiums. This should worry anyone who believes condominium boards are transparent and free of corruption. Of course, no condominium is without flaws. Unfortunately, nearly every state’s regulation of condominiums should give residents cause for concern. 
 
 
 
There is no accountability in most state government for condominiums, which includes disclosure, financing , internal auditing, open meetings, and ethics enforcement. A review of the boards by residents, and watchdog groups, is essential to encourage board integrity. One of the most widespread issues throughout these condominiums is the lack of public access to information, which, is key to preventing other kinds of corruption and conflicts of interest from occurring. When you think about it, that is really the root of transparency. If residents can’t see how their board does business and decision-making, that’s a real problem Condo boards risk corruption without powerful watchdog agencies. In many states, the existing laws intended to ensure ethical action by condo boards lack real power. What we need in terms of corruption risk, is a statewide ethics commission. I suggest the reason many states need watchdog organizations is that the elected boards consistently vote in favor of restricting resident information, and preserving their power. 
 
 
 
Not surprisingly, the way to make boards have high accountability is by watchdog groups. This would lead to strict enforcement measures that would keep boards honest, and make information readily available. We as individuals should not be forced to hire an attorney everytime we need help with a board’s actions. 
 
 
 
Leah Kulin Contact Email: leahannkulin@yahoo.com