Q–Our small association, located in northwestern Illinois, has a problem with rule enforcement. Currently, we have a couple of homeowners who are conducting businesses out of their homes. We also have a problem with overnight parking of commercial vehicles.
The business operations and the parking of commercial vehicles are direct violations of the bylaws.
Some homeowners feel that these violations should be overlooked. They believe that the board is being too rigid when it enforces the bylaws.
How important is strict enforcement in retaining property values? Should the board permit owners to violate the bylaws? Would it be better to have these bylaws changed?
A–The board of directors has a fiduciary obligation to enforce the provisions of the declaration and bylaws. The purpose of the restrictions is to maintain the residential nature of the community and preserve its operation and appearance.
If owners are allowed to operate businesses or park commercial vehicles, the residential character of the association changes into a commercial street.
If the board fails to enforce the declaration and bylaws, it may waive its right to enforce these regulations in the future. As courts have repeatedly noted, people make a conscious decision to buy in a homeowners association under a set of rules.
Although property owners can purchase a home anywhere within their economic means, by agreeing to buy a residence in an organized community, they are bound by the restrictions in the declaration and bylaws.
There is no point in amending the bylaws on these key issues. If owners are unwilling to have the board enforce restrictions in their documents, they should not have purchased a home in the association.
By allowing the association to deteriorate through the operation of businesses and the parking of commercial vehicles, property values are likely to decrease. Real estate brokers and salespersons are qualified to advise the board regarding the likely effect on market values.
Q–I am writing to determine the proper procedure a condo board must follow to change the rules.
Recently, our board notified the owners through written communication regarding proposed changes to the rules. The owners received pages of the original rules that included revisions, plus a notice of a meeting to discuss the rules.
This was the first time that the members were notified of these revised rules. A committee of the members developed the changes. None of the committee meetings was open to association members or advertised in any manner. The meetings were held in board members’ apartments.
In reviewing the package from the board, I cannot distinguish between the old rules and the new rules. There is no method, short of reading the entire text, to identify the changes.
Is this the correct and proper way to add or change present rules in a condominium association?
A–Not quite. The board followed proper legal guidelines by sending the owners a notice of the meeting to discuss the rules, along with a copy of the rules.
The one error that appears to exist, if you are correct, is the lack of identification for the rule changes. The changes should be underlined or highlighted in some other fashion to tell the owners what the board proposes to revise.
Members of the committee may consist only of directors. Under the Illinois Not-For-Profit Corporation Act, which also applies to condominium associations, a true committee consists of a majority of directors who have authority to act for the board.
Condominium committee meetings do not have to be open to the unit owners. However, a meeting of the board to vote on the recommendations of the committee, namely to submit the rules to a meeting of the ownership, must be done at an open meeting.
Although the actions of the board may have been technically correct, the methods followed by the directors create suspicion and raise questions.
From a practical standpoint, there is no reason the directors could not have solicited unit owner involvement for the rules committee. When board members change their status from a formal board to a committee, and do not meet in open session, owners inquire about their secret meetings.
Given the nature of a condominium community, closed matters should be kept to a minimum.
Q–Are there any state condominium statutes that allow for penalties to be imposed on a board member who divulges information from discussions regarding the termination of an employee at a closed meeting?
A–No. Neither the Illinois Not-For-Profit Corporation Act nor the Illinois Condominium Property Act contain penalties for this conduct.
If a board member isn’t willing to honor the confidential nature of matters properly discussed at a closed session of the condominium board, the individual has no business acting as a director.
Although the directors can censure the director for his breach of confidentiality, only unit owners may remove an individual from the board.
Bills become law
Gov. Jim Edgar has signed into law Senate Bill 358 and Senate Bill 844. Senate Bill 358 amends Section 31 of the Condominium Act to specify the method to combine condominium units. Senate Bill 844 now permits master associations and other homeowner associations to levy fines.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law. Write to him c/o Condominiums, Real Estate Section, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611. Sorry, he can’t make personal replies.
