Limits of Board Power Use vs. Abuse—and How to Tell the Difference

 Everybody sometimes disagrees with the decisions of their condo or HOA board.  Maybe the choice to rearrange the garbage receptacles out front seems  ridiculous, or the ongoing clattering of machinery on the roof is driving the  top-floor residents nuts and the board seems determined to let it fix itself.  These are the kinds of inevitable complaints that every board has to deal with  sooner or later, and most manage to handle such issues with prudence and  aplomb.  

 But what if the board does things that seem to be beyond the pale—perhaps even illegal? Where do boards’ powers end? While the board is the governing body of the association, there are  certain boundaries and limitations that they should operate within.  

 There are numerous examples across the country of alleged HOA abuse of power  from preventing owners to put up political signs or flags or changing the color  of their paint trim or window shades. Pets are also a sticking point as this  California woman found out: Pamela McMahan didn’t expect her cocker spaniel Ginger to become a problem at a historic condominium  building in Long Beach. But she was fined $25 each time she walked her dog  through the lobby because HOA rules required all dogs had to be carried.  McMahan, an elderly woman who walks with a cane, said she couldn’t carry the dog. She racked up $1,600 in fines and has since moved from the  building.  

 Overreaching?

 Overreaching boards may call to mind white-glove, old-money co-ops in  prestigious zipcodes, but the truth is that the issue is just as troublesome in  suburban condo developments as it is in ultra-exclusive urban high-rises. One  recent example of the turmoil caused by board stagnation and overreach is the  450-unit Shadowood condominium complex in Reston, Virginia. According to a  recent article in the Washington Post, “the Shadowood Condominium Association imposed fees for things like calling the  management office or having the wrong color blinds. It towed tenants’ cars for unpaid fees—on the day before Thanksgiving. It turned off the heat or air conditioning to  apartments of owners who were in arrears or in violation of its many rules.”  

 In 2011, a judge ruled that the association could not level fines and fees not  explicitly spelled out in the condo’s original master deed, and issued a legal injunction prohibiting the Shadowood  board from collecting any more such fines. The board appealed to the state  Supreme Court—and lost. Even with the most recent decision in favor of the condo’s residents however, the issue is far from settled. According to the Postcoverage, residents are still furious at the association board for allegedly  spending common funds on legal bills, failing to provide documentation for  contracting expenses, and fostering an antagonistic, “intimidating” atmosphere in the development. On the other hand, Shadowood administrators  argue that collecting fines and fees is the only effective tool they have to  enforce house rules and insure that residents and renters pay their fair share  of the complex’s operating expenses.  

 Regardless of which side of the board/resident divide one falls on, says Pia  Trigiani, an Alexandria-based lawyer with extensive expertise in community  association law who was quoted in the Postarticle, “Every association needs to evaluate what their governing documents grant them  the authority to do. And...they’re going to need to think of how this case impacts them.”  

 The Law Says

 How are the board's powers spelled out? How do boards know what they can and  can't do under law? Fortunately in Illinois, there are a plethora of laws that  serve as guideposts. “The Illinois Condominium Property Act spells out board requirements for  operation, but in terms of boards operating the building itself, Section 18.4  of the Illinois Condominium Property Act states that a condominium board must  'exercise the care required of a fiduciary of the unit owners',” explains attorney David R. Buetow of Fuchs & Roselli, Ltd in Chicago. “In doing so, the board’s decisions are protected by the “Business Judgment Rule” which protects board decisions so long as they are undertaken with due  diligence and good faith. The crooks and eddies of these doctrines are  questions for your association’s counsel.”  

 In addition to referring to the Illinois Condo Act, boards certainly need to  consult with their declaration and bylaws which may address issues such  amending documents and dealing with delinquent owners says attorney Steven D.  Welhouse of The Sterling Law Office LLC.  

 Attorney David Sugar of Arnstein & Lehr adds that boards can consult with the Illinois General Not for Profit  Corporation Act. Furthermore, “the board’s powers in certain special situations such as the power to rent a unit pursuant  to an Order for Possession obtained when an owner fails to pay assessments  arise under other laws. When in doubt, board members should consult an  experienced condominium law attorney,” he says.  

 Rules and Regulations

 Every association has a set of rules and regulations that are initially set in  place by the builder and developer and later by the board. As the community  matures, the board along with the residents may choose to alter or add rules as  the needs and circumstances of the association change. The board must make sure  that the proposed rules are fair and do not over step their powers, which can  be done with proper legal counsel. “The rules and regulations, along with the fine system imposed must be  reasonable. The boundaries for drafting are simply that they conform to the  governing documents and contain no illegal provisions. I hate to say it, but  they would have to consult counsel to make sure these boundaries are not  breached. For example, it would be difficult for a board to outright understand  whether their governing documents and the current state of the law allow it to  regulate smoking in units or limited common elements through its rules and  regulations. The best play here is to check some samples of other associations,  a bevy of which exist online, create categories of rules and fines, and forward  them to your attorney,” Sugar suggests.  

 Welhouse says that in his experience he hasn't had any residents or board  members complain of the association being over-legislated. “You do see now, a point of contention may be leasing restrictions especially if  an association has a lot of potential investors. People may want to rent out  their units and the board, through the membership at large, has expressed that  it is a bad idea because it could lead to a bad situation so they take step to  try to eliminate those situations. In Illinois, the law says that you can  restrict leases. Most of these rules against leasing are the same, they are  reasonable and they are trying to see who is in the unit and preserve a sense  of stability. I've haven't seen an association go too far with rules, they are  really trying to look out for the association at large.”  

 Safety and Security

 Security is a top priority for associations. Many choose to install security  cameras, have doormen or guards and may require guest sign in. These measures  are meant to protect residents and the property and for the most part, the  board has the right to make security decisions and they depend largely on the  particular community. “How much premises security is needed is a highly subjective proposition. The  security measures appropriate in a 500-unit condominium in a building with many  entrances and exits that includes retail space would certainly not be  appropriate in 6-unit condominium,” Sugar says. For example, a large high-rise would have more stringent measures  such as a 24/7 door person, electronic controls on all doors leading into the  core of the building that require an electronic key card, security cameras at  all building entrances and exits, procedures requiring residents to come to the  lobby to accept deliveries of food and similar items and procedures requiring  telephonic resident authorization before a visitor is allowed to pass through  the door leading to the core of the building he says. On the other hand, a  smaller, community would just have locks or maybe a buzzer system.  

 For most associations, boards have the right to decide on security measures  without vote from the unit owners, especially if it regards the common areas,  says Welhouse. “If the security measures are going to cost a certain amount, there may be  provisions in the condo docs that would require a vote on a expenditure. But it  is not likely that it is going to be of such an amount that it is going to  require a vote, so the board can go ahead and authorize the security system to  be set up. Given the circumstances that action may be necessary in order for  the board to fulfill its fiduciary duty to the association in making sure the  common areas are reasonably secure,” he says.  

 That being said, “The board should not engage in any action which it would disclose a private  fact, or intrude into someone’s seclusion. Situations in which this could happen depend on specific scenarios,  but restrictions on window coverings, publishing a list of visitors or  restricting visitors may fall into those categories. Since these issues delve  into tort law, it is recommended that the association consult its attorney,” Buetow says.  

 Access to Units

 Situations may arise in which the management or service provider may need access  to a resident's unit to fix a leak or check on a electrical problem. In what  situations does the owner have right to privacy and when can their unit be  accessed? “A condominium association's need to access a unit takes priority over unit  owners’ privacy expectations in such situations. ICPA Section 18.4(j) statutorily  authorizes access to units whenever necessary for maintenance, repair or  replacement of common elements, or for making emergency repairs to prevent  damage to the common elements or other units. The declarations of most  associations include similar provisions,” says Sugar.  

 Buetow adds, “This is a broad power insulated by the fiduciary duties and business judgment  rule noted above, but one that is not without boundaries among which are the  tort doctrines related to invasion of privacy. If the board believes in good  faith that an emergency exists, it is likely fine and should document its  decision in any way possible.”  

 Releasing Information

 The association has on hand many resident records such as personal information,  financial statements, delinquencies, complaints, comments, just to name a few.  While certain member of the board and management are able to view this  information, not all third parties have access to it. “Condominium associations should not be releasing information on residents or  owners to anyone, except as required by applicable law. In addition to  providing such information when required in pending court proceedings, Section  19 of the Illinois Condominium Property Act requires that an association allow  any unit owner—but not a non-owner—to see and copy the association's unit owner list (that is, a listing of the  name and address of each unit’s owner, and the unit’s percentage ownership interest) if the owner submits a written request that  specifies a proper purpose for the request. Phone numbers, email addresses and  other personal information are not subject to examination under ICPA Section  19,” Buetow explains.  

 Condo and HOA boards are put into place to make sure the association runs  smoothly. While board members have the power to make decisions regarding many  association operations, they have to make sure not overstep their boundaries  and intrude on the privacy or security of residents.   

 Maggie Puniewska is an editorial assistant at The Chicagoland Cooperator.

 

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4 Comments

  • Hello -- I am an officer of a condo board. We have an owner who has moved out (out of state), is 4-5 months in arrears on his assessments, and will not respond to our calls or emails. The board would like to call a locksmith and enter his unit to check the smoke or CO2 alarm which was beeping for several days but stopped. We suspect the batteries are dead. I know the ILCA allows us to enter (Section 18.4(j)), but is there a specific process we must follow?
  • Is Section 18.4 Of Thee Condominium Act A Florida Act As Well?
  • I am a board director in a 100 unit Condo in Illinois. We have a large backyard with 1/2 the units overlooking this yard from our 5 stories. The first floor balconies are only about 5-6 feet above ground and can hear and see into yard as if in the yard. We are a pet friendly building with approximately 15% of owners having dogs. About 1/2 those owners have been walking their dogs in this yard and it has recently become an issue, because they have set up a social venue in a non neutral area, which has brought disturbance to residents at some very early hours and much attention to the disgusting attraction of flies and damage to lawns from the residue left in this common area. Can we restrict walking the dogs in this area?
  • I live in a 16 unit condo bldg. in Illinois. It is an investor bldg. One investor owns 5 units. Is he entitled to have 5 votes? we are looking to do the parking lot and he wants his vendors doing it. He says he has 5 votes. He is on the board along with the president and the treasurer. Please advise. I can't find anything in the Illinois State Statute.