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 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.”
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.