Q–Two of the seven directors on our board are Realtors who do not live in the building. These directors and the other board members passed a rule banning dogs from the building. Owners advised the board that this rule was illegal, because our condominium declaration states that common household pets are allowed.
After failing to receive an opinion from association counsel for three months, the board hired a second attorney who advised them that the vote was illegal and they had to rescind the rule.
The board has received a substantial bill from the first attorney. Can we make the board members who voted to impose this illegal rule responsible for the attorneys’ fees because they failed to consult counsel before adopting the rule?
Also, if someone lost a sale to a pet owner and then was forced to sell their unit at a lower price, can that owner sue for the difference he or she would have received?
When a unit with a parking space came before the board on a foreclosure sale, the board declined to purchase this space even though we have a substantial reserve fund.
These two director/Realtors then purchased the unit for a modest sum over the foreclosure price and are now renting the parking space. Isn’t that illegal?
A–The individual directors are not responsible for legal fees; nor are they responsible for a lost sale to a prospective owner with a pet.
Further, the directors had the right to purchase the parking unit at the foreclosure sale, because the board first waived its option to purchase the space.
Directors are not personally responsible for any contractual expense unless they incur a specific obligation without board approval. Because the directors did not hire the first attorney, they are not liable for the fees.
The entire board may question the fee, because the opinion was sent too late to be of any value.
Apparently, the second attorney advised the board of the obvious answer that it cannot adopt a rule that expressly conflicts with the language of the declaration.
Directors have a fiduciary duty to the association. This duty requires, in part, that directors must be loyal to the association, and cannot take a business opportunity that would belong to the association unless it has waived or declined to engage in the transaction.
To purchase a unit for the association, the board must exercise its option and obtain the consent of at least two-thirds of the unit owners.
Because the board declined to exercise this option and call for the vote of the ownership, the directors were free to purchase the parking unit.
Q–I live in a condominium association of 78 units. The bylaws say nothing about renters, but we do not want renters in the building.
What do the owners have to do to prepare an amendment that does not allow renters? How many condo owners have to place their signatures on this amendment?
We would also like to change management of the building, because the agent is a friend of the builder who still resides in our association.
How can the owners go about getting new management?
A–The owners can amend the declaration or the board can adopt a rule to prohibit leasing. The first choice is preferable, because amendments are presumed to be valid.
If the declaration does not mention the subject, unit owners currently have the right to lease and must amend the document to prohibit owners from leasing in the future.
Generally, owners must approve the amendment by the number of votes required in your documents. Most declarations require approval by two-thirds to three-fourths of the unit ownership to pass an amendment.
The amendment must also be recorded with the County Recorder of Deeds.
The board has the sole authority to hire or terminate the managing agent. Owners can advise the board of their opinion or preferences regarding the managing agent.
However, the major consideration for this decision is not the relationship between the agent and the builder, but the quality of management services you are getting for the building.
If the agent is doing a good job of maintaining the property, why change?
Getting the legislative signal
The Community Associations Institute has long been an advocate for associations on matters that affect its membership. Last fall, legislation, designated HR-3487, was introduced in the House of Representatives that would require occupied multi-tenant buildings, including condominium associations, to grant telecommunication providers ready access to install their equipment throughout the building.
Designated as the Competitive Broadband Telecommunications Rooftop Access Act,” this “forced-entry legislation” would substantially limit the ability of associations to control the placement of telecommunications equipment on their properties.
CAI is seeking to defeat this legislation.
Last year, the Federal Communications Commission also denied the challenge of CAI to a prior decision that would allow tenants in community associations to install a satellite dish on property they lease.
CAI had asked the commission to reverse the decision on the basis that owners should have the sole authority, where permissible, to install this equipment on their own property.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law. Write to him c/o Condominiums, Real Estate News Section, 4th floor, Chicago Tribune, 435 N. Michigan Ave., Chicago, IL 60611. Sorry, he can’t make personal replies.
