Q–Would you please tell me if there is a state statute that governs co-op boards. Where can I find it?
Are boards of a cooperative obligated by law to record in the minutes all actions taken by the board members, including financial expenditures and bonuses?
We have a situation where our board refuses to tell the tenant shareholders what amounts were paid to employees as holiday bonuses.
I have, however, found out that the board withheld bonuses from several employees and rewarded management with a generous bonus. The behavior of the board gives us the impression of an irregularity.
A–There is no statute which governs the operations of cooperative boards. Unlike condominiums, which are governed by the Illinois Condominium Property Act, the operations of a co-op are governed by the provisions of the bylaws and proprietary lease.
Cooperatives are also subject to the provisions of Illinois corporation statutes. Because most cooperatives are not-for-profit corporations, the Illinois Not-For-Profit Corporation Act will apply.
A cooperative board is obligated to record actions taken in the minutes of its meetings. Because the Illinois General Not-For-Profit Corporation Act gives members the right to inspect the books and records of the corporation, board meeting minutes are the primary record of actions taken by the directors, including, as you suggest, financial expenditures.
There is no law which specifically requires a cooperative board to advise tenant shareholders of individual employee compensation. .
The board has the discretion to determine the award and amount paid as bonuses to employees. Shareholders elect directors to make these decisions.
The allocation of bonuses to employees and management was based upon the performance evaluation made by the board.
Q–I have endured a nightmare with my condominium board of directors. I have been constantly bullied and threatened with things like liens and foreclosures.
All decisions regarding the property have been made by the board, even when the majority of unit owners disagree. I feel as if I have no rights in my own home.
Recently I received a notice and demand for possession. This notice was due to a special assessment called by the board which I disagreed with and refuse to pay.
When the assessment was adopted, unit owners objected, because of the threat of litigation. The majority of my neighbors have paid the assessment. There was no vote taken and we had no emergency.
Can a board of directors legally take your property because of a special assessment?
How do you go about changing condominium law?
A–If a unit owner fails to pay a regular or special assessment, the condominium board can collect the delinquent amount by an eviction or foreclosure action. An eviction action will result in your removal from the unit, and a foreclosure will result in the forced sale of the residence.
Amendments to the Illinois Condominium Property Act are sponsored by members of the General Assembly. If you believe that a certain aspect of condominium law should be changed, discuss the matter with your state representative or state senator.
Having said all that, condominium unit owners elect the board to make spending decisions. When the board determines that there is a need for a special assessment, either because of unforeseen expenditures or emergencies, the directors can levy a special assessment.
Even if you disagree with the business decisions of the board, every owner is obligated to pay a special assessment that is properly adopted by the directors.
Q–Recently I moved into a 400-unit condominium in an unincorporated portion of a western suburb. New heating, ventilation and air conditioning units have been installed on the building.
When I came home several weeks ago, I turned up the heat. Suddenly, water spewed out of the pipes in my furnace room.
When I called the company that installed the new equipment, as suggested by management, I was told that the unit is suitable for outside drainage and no heat tape had been installed on the pipes. Previously, I had been informed that the furnace in my unit was not wired correctly.
Does this development negate the warranty on my new heating and air conditioning unit? Is there any recourse for me or the board?
A. It sounds like the board and you are getting the run-around.
For your unit, I would submit a written warranty claim to the installation company. Until the contractor is willing to explain, in writing, the reason for your unit failure, consider the matter to be a warranty claim.
If after careful review by the installer and an outside contractor chosen by the board, the pipes are the cause of the problem, the board is faced with repairs to a portion of the common elements.
If you reside in a new development, the board may have a separate warranty claim against the developer.
A better association
On Saturday, Feb. 17, the Community Associations Institute Illinois Chapter will present a one-day workshop entitled “Achieving Better Communities.” This course is part of the regular CAI curriculum and will include a discussion of subjects such as board control, income sources for an association, the association budget, problem solving, and alternate dispute resolution. The workshop from 8:30 a.m. to 4:30 p.m. will take place at the Westin O’Hare, 6100 River Rd., Rosemont. For further information, call the CAI Illinois Chapter at 630-980-0251.
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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, 4th floor, 435 N. Michigan Ave., Chicago, Ill., 60611. Sorry, he can’t make personal replies.
Note to readers: Columnist Lew Sichelman is taking the day off.
