Q–Our North Side condominium building includes 500 owners. Last month our building manager resigned. Before leaving, he complained to the board of directors about one of its members.
This member spends hours a day in the office interfering and directing the daily operations of the building. She constantly insults the management staff and instructs them on hiring policies that are against civil rights laws.
She also heads several key committees, including admissions, where she has made racial comments about prospective applicants.
This board member is out of control and many residents know this. The board has taken no action because her husband is the president of the association, which I find questionable. Both own units in the building.
I feel that I have a responsibility to protect my interests and liability as an owner. We cannot keep staff. Everyone, including the other board members, are intimidated by this woman and legitimately afraid she will make our lives miserable. What can I do? Elections are this month and she is running again.
A–If your facts are accurate, this is the classic case of a species known as the condo commando who, if not controlled, will get the association into trouble. While she and her husband have the right to serve on the board as owners of separate units, she is exceeding her legal authority as a sole director.
Verify the information from other sources, including members of the building staff. Organize a group of candidates to run a slate with persons who are dedicated to changing past board practices.
No director has a right to act unilaterally. Both the Illinois Condominium Property Act and the Illinois General Not-For-Profit Corporation Act clearly state that decisions are made by the board collectively.
Assuming that your managing agent has a contract with the association, the behavior of the director probably violates the provisions of this agreement by preventing management from performing its function. Most association contracts provide that one director, usually the president, has the authority to interact with management. The agent cannot manage if a director camps out in the management office.
The most serious charges relate to the activities of this individual on employment and admissions matters. Civil rights claims under federal, state or local law are frequent legal problems for associations. In these cases, the burden of proof is effectively on the association to prove the discriminatory acts did not occur.
If the board permits the individual to exercise substantial control over management and other building employees, the association will pay the price by higher legal fees or management turnover.
The only solution, in the near term, is to elect a majority to the board who will either replace or control this director. After the election, owners can remove the board member by a two-thirds vote.
Q–I am a member of a condominium association and would like to know if property managers have to be licensed in the State of Illinois? Are managers allowed to have access to the association bank accounts where they can write checks or sign contracts to which the association is bound?
Our current property manager has access to all of our financial records and compiles expense reports for the association. There is no evidence of any oversight for his work, because he also owns his own management company. Apparently, there is no specific law requiring an audit or other review by an accountant.
A–Illinois law does not require condominium association managers to have a license. Professional organizations such as the Community Associations Institute and the Institute for Real Estate Management have certification programs for professional designations.
Condominium managers are routinely given access to association bank accounts. To fulfill their responsibilities under a management contract, such managers need to have the power to write checks and execute contracts for agreements approved by the board of directors.
In exercising their fiduciary responsibility, members of a condominium board should have certain controls to verify the financial activities of the manager. These controls include a spending limit in the management contract, verification of bank statements and checks at each board meeting or separately by the association treasurer, and periodic accounting reports.
The Illinois Condominium Property Act does not specifically require an audit or review. Associations are required by Section 18(a)(7) of the Illinois Condominium Property Act to provide an annual statement of income and expenses to the owners. To fulfill this duty, most condominium boards will request some type of annual report by an independent accounting firm.
Q–I am a condominium owner who is trying to obtain information regarding my real estate taxes. My taxes are higher than other units that were built from the identical plan. The original selling prices only varied because of the increase in price with each floor.
Although I have contacted the office of the Cook County Assessor, I have not been given permission to review my real estate tax records. I do not want to hire an attorney because of the expense. I just want to see if my real estate taxes are justified. What can I do?
A–Look at your condominium declaration; get the real estate tax numbers for the property; order tax bills for neighboring units from the County Treasurer; and compare your real estate taxes with your neighbors.
If the purchase price of other units varied by their location, real estate taxes will also vary accordingly. Location of condominium units on higher floors will mean higher prices and real estate taxes for these units.
Help for owners
The Illinois Chapter of the Community Associations Institute will present a special two-part program on The Challenges Facing Self-Managed Associations and the Special Needs of Homeowner and Townhome Associations. The program will be held from 9 a.m. to 3 p.m. Sept. 27 at the Marriott Hotel in Schaumburg. For further information, call the chapter office, 630-372-7510.
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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.
