It's a truism that's been phrased many ways by many wise people: “A lack of transparency results in distrust and a deep sense of insecurity.” That's the case in any number of situations, but it's especially applicable to the administration of a condo, HOA or co-op community.
Lack of clear, forthright communication between boards, managers and unit owners is one of the top perennial complaints association members have about living in their communities, whether they're small, self-managed buildings or sprawling suburban developments. As far as residents are concerned. being transparent means having a board that’s open and honest, not secretive.
While some states (like New York, for example) don’t have any specific requirements for residential associations to be transparent with their owners regarding the community’s operations, Illinois state law does. Recently, a new court ruling, Palm v. 2800 Lake Shore Drive Condominium, shed new light on the Illinois Condominium Property Act (ICPA) in regard to the responsibilities of the board. James R. Stevens, an attorney and senior counsel at the law firm of Tressler LLP in Chicago, says the new interpretation doesn't change anything fundamentally, but there are some important clarifications.
“It still hammers home the key principles, which are, you operate with the general protection of a business judgment rule, that you should rely on qualified sources for information in order to make decisions as a board. Such as, if you have a plumbing question, obtain the advice of a plumber, for example. That meetings are open unless they are subject to the narrow three exceptions; being termination or hiring of an employee, dealing with pending legal concerns, and also unit-owner violations and collections,” he says.
Open meetings and are common practice for many associations, but that was one of the major issues with Palm v. Lake Shore Drive. “Instead of conducting and discussing all of its business at meetings open to unit owners, the board was instead discussing and conducting a lot of business behind closed doors if you will. And to a certain extent the board president was making decisions without even involving other members of the board of directors,” says attorney David Hartwell, founding partner of the community association law firm of Penland & Hartwell LLC in Chicago.