Going by the Book The Importance of Following the Rules

Going by the Book
It happens in business, government, and industry every day: employees learn the rules of a new job, and very shortly thereafter, they start taking shortcuts to circumvent them. Rarely is this done with malicious intent. More often, it is simply a matter of achieving such a familiarity or shorthand with the rules that their specificities fade into the background and solving the problem at hand as quickly as possible becomes the priority.
The same can happen with co-op and condo boards, which may find themselves straying from the letter and spirit of the rules that govern the entity over which they have been given authority.  
In other instances, the lapse in governing 'by the book' could come from the fact that new members may or may not have fully familiarized themselves with those all-important documents. In these cases, ignorance rarely—if ever—leads to long-term bliss. Sooner or later, boards that fail to lead according to their co-op, condo or homeowner’s association governing documents will find themselves in a bind—the kind that may end up involving litigation.

Letter of the Law

For co-ops, condominiums and homeowner’s associations, there are documents and guidelines available to help a board efficiently, effectively, and legally lead its community.
The novice board member or first-time unit owner might feel intimidated by the governing documents and bylaws that establish the rules and regulations for each association. "All associations, no matter the type, have operating documents that control their operations," explains Karen Beverly, an attorney with the community association law firm of Penland & Hartwell, LLC in Chicago. In the case of a condo, the declaration is the law of the land; co-ops have proprietary leases and most associations have bylaws. Condos and co-ops are also beholden to the Illinois Condominium Property Act and the Common Interest Community Association Act.
With the law and people's most important investments in the balance, governing documents can have an air of intimidation, but those same documents can also act as guideposts for how to conduct a well-run association.  "It needs be remembered that most associations are incorporated as not-for-profit corporations, so general corporate mandates will apply, too," continues Beverly. "It may seem overwhelming for a board to read and understand all of these different authorities, but there are numerous online resources available to help them make sense of it all. A consultation with an association attorney is also recommended for new board orientation. And professional property managers are also a great source of guidance."
 Also, worth noting is the fact that, should a board betray the aforementioned documents and regulations, it risks more than alienating its constituents. A board has a fiduciary duty to represent owners in a way that most benefits the entirety of the community. By failing to do so, it sets itself up for potential lawsuits that can drag out and be a drain on everyone's money and time. As Sandy Albecker, the president of Enlan Condominium Property Management in Chicago puts it, running a community is like running a business, and should be treated as such. Good business judgment should advance the needs of the community in its entirety; not just the needs of a few select members.

Relax, Don’t Stress Out

Boards operate on a volunteer basis, and though most of them have the best intentions, having your heart in the right place doesn't excuse negligence or ignorance of the law.  It's not uncommon for boards to go about doing the right thing the wrong way. A board may find itself deviating from its bylaws and/or protocols, rarely (although there are exceptions) out of malicious intent, but more likely out of ignorance.
As Paul Houillon, president of Connected Property Management in Chicago, bluntly states, "Many boards just have no idea what the laws are; that's just the fact. As management, we cannot give legal advice; we're not attorneys. But we spend a lot of time guiding a board, 'This is the problem, this is what you want to do, here are the steps that you need to take to make sure that you're doing things appropriately."
Another hurdle towards staying on top of proper conduct is the fact that the Illinois Condominium Property Act changes quite frequently, to the extent that it can be difficult for a board to keep up. "Some changes just went into effect in 2015," continues Houillon, "and boards have no idea that this stuff is going on. These are volunteers who usually have full-time jobs. They might look to their bylaws in an effort to properly handle a situation, but due to a change in statute, that document now contains outdated language. Even if they endeavor to examine the laws, those are written by attorneys, and are oftentimes quite dense. The attorneys themselves occasionally battle over the interpretation of the laws, and even they struggle to determine the intent."
One additional factor that can cause board members to feel unwanted in their positions is that, in some associations, unit owners can be quite apathetic and non-participatory. "Too often, being a board member is a thankless job," says Albecker. "If they feel that no one in the community cares about the details of condo law, why should they be sticklers? It can get to a point where they feel that, as long as their motives are good, their specific methods don't matter."
A lack of experience among individual members, or the board as a collective, can also affect its enforcement of protocol and regulation. "Boards are comprised of volunteers from various backgrounds, many of whom have never served in this capacity before," says Beverly. "And not only that, but many of them have never even made business decisions, let alone interpreted statutes or operative documents. A new board typically comes in and takes over right where the last one left off, bad habits and all."
It needs be remembered that board members are not required to have any sort of formal licensing or training before taking a seat and actively shaping a community. "If you have a management company, then fine, you don't need extensive qualifications," says Houillon. As of 2010, community association managers are required to be licensed in Illinois but board members need not take any formal coursework or training.     
"If a self-managed board is dictating the fate, both financially and otherwise, of 40 or so other unit owners, and it doesn't know what it's doing—it's not following the laws, it has no idea how to formulate a spending plan or to make sure that it has the right amount of money reserved for certain expenses—it will run the association into the ground. And I've seen that over and over," Houillon says.
Again, this is why having qualified management and informed counsel in place can be a godsend. If a new board is in over its head, or a sitting board is adrift, a professional adviser who does nothing but deal with these types of situations can help right the ship.

Truth and Consequence

Should a board continuously fail to uphold one of its tenets, there are consequences in both the short and long terms that it stands to face. These range from simple inconveniences in the day-to-day management of the association, to legitimate fines and legal action.
As Beverly points out, whether a board is simply lazy and sloppy in its conduct, or outright deceitful and nefarious in its dealings, the association owners are unlikely to lend their trust to a flailing leadership for very long. "Decisions made by a board that don't follow the necessary written procedures—take, for example, open meeting requirements—will be subject to challenge by owners," she says. This type of friction can cause blatant mistrust and upheaval within a community.
In cases where fiduciary duty is clearly breached, owners may have no recourse but to hire an attorney at their own expense and take the board, or an individual board member, to court. Of course, this should be a last resort, as the risk and potential expense for all parties involved starts high, and can grow exponentially so as litigation becomes more and more drawn out.
In lieu of a prolonged legal battle, Houillon recommends that active and knowledgeable owners who disapprove of a board's conduct do what they can to get themselves elected to that board. "That's your most powerful move," he says. "Because then you have a voice, and you can try to fix things from within. It's really no different from any other political sphere. You can complain from the sidelines all you want, but only those in positions of authority can truly influence change. That said, depending on the association, sometimes a noisy unit owner, granted he or she is in the right, can persuade a board through sheer resiliency."
And while it may seem like a no-brainer, Beverly strongly recommends that owners who are interested about the direction in which their communities find themselves become involved and attend board meetings. As both she and Houillon have noted, this obvious approach is too often neglected. "It's imperative that owners show their interest and voice their concerns," says Beverly. "Boards often operate under the misapprehension that residents don't appreciate what they are doing, so laziness, informality, and bad ideas take over. All residents should attempt some level of concern for both the property and its administration."
And, to reiterate Houillon's comments above, she notes that, because long-serving, 'lifetime' board members routinely lose interest in vigilance and decrease their efforts over time, "fresh faces and new ideas are a great way to inject new enthusiasm into a board, which typically comes with a renewed effort to follow protocols and formalities."
While not mandatory, if, when and where training is available, both active and future board members should be encouraged to consider it. If they are committed enough to serve in an advisory capacity, it only takes a little additional effort to become more skillful. Board members should also study the bylaws from cover to cover but also be aware that, as statute evolves, any standard rules and regulations may be subject to change. And above all, they need to acknowledge their own fallibility. Being open with fellow owners, admitting any lack of expertise, and advocating for an open and transparent exchange of ideas will allow a community to flourish together, rather than splinter apart.    
Michael Odenthal is a staff writer at The Chicagoland Cooperator. Freelance writer Liz Lent contributed to this article.

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