Q&A: Shh...It's Confidential?

Q I reside in a medium-sized condominium complex in suburban Chicago. Our homeowners association voted to have their board members sign an acknowledgment of their duty of confidentiality, and any board member who refused to sign the affirmation or who violated confidentiality would be requested to resign by the board. I thought that all dealings of a board whether a condo association or a homeowners' board are to be open and not secret. Is it legal to require board members to sign a document of this type? If a board member refused to sign the form, he or she knew a request to resign would follow. Does the Illinois Condominium Property Act or Common Interest Community Association Act allow a board to take this type of action?

—Keeping Quiet

A “Section 18.4 of the Condominium Property Act states that in the performance of their duties, the officers and members of the board shall exercise the care required of a fiduciary of the unit owners,” explains attorney Gabriella R. Comstock of Keough & Moody P.C in Naperville. 765 ILCS 605/18.4. “This section codified the court's holding in Wolinsky v. Kadison, 114 Ill.App.3d 527, 449 N.E.2d 151 (1st Dist. 1983). In Wolinsky, the court held that “[a] fiduciary relationship exists when there is special confidence reposed in one who, in equity and good conscience, is bound to act in good faith with due regard to the interests of the other.” Wolinsky, 114 Ill.App.3d at 533. This means that when exercising the duties required of the board, the board member has a duty to always act in the best interest of the association. This fiduciary duty is also imposed upon the board of a non-condominium association. See, Seven Bridges Courts Ass’n v. Seven Bridges Development, Inc., 306 Ill.App.3d 697, 74 N.E.2d 601, 239 Ill.Dec. 682 (2d Dist. 1999).

“As part of a board member’s fiduciary duty, they must respect the terms of the Association’s governing documents and the law. Both the Condominium Property Act and the Common Interest Community Association Act provide that meetings of the board shall be open except those portions held to discuss (1) pending or potential litigation against the association; (2) employment or dismissal of employment; or (3) to discuss violations of the associations governing documents. 765 ILCS 605/18(a)(9) and 765 ILCS 160 1/1-40(b)(5). The Common Interest Community Association Act also prohibits the board from discussing in an open board meeting third party contracts. 765 ILCS 160 1/1-40(b)(5). Furthermore, both Acts limit the documents that the board must make available to an owner, upon request. See 765 ILCS 605/19 and 765 ILCS 160 1/1-30.

“For these reasons, even if a board does not require a confidentiality agreement to be signed by the board members, the board members still have this duty. The law is clear that such a duty exists for both condominium and non-condominium associations.

“A board has the duty to adopt reasonable rules and regulations. The rules and regulations adopted must be consistent with the other terms of the association’s governing documents and as noted, must be reasonable. A rule that is consistent with Illinois law would be consistent. Accordingly, a rule requiring a board member to sign a confidentiality agreement is a reasonable rule.”

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