Condominium associations seek to minimize their legal expenses.
This is an admirable goal. However, associations incur more legal fees for disputes between the board of directors and unit owners, than for disputes between the association and third parties.
Expensive disputes arise because of a lack of communication between the board and association members. By enhancing communication, the board will develop a better relationship with its constituents. Each side will understand the other’s positions, and minimize litigation.
A case in point is the developer board/association relationship.
Many developers do not communicate with their new owners until notice of the turnover meeting. Given the fact that the condo association’s relationship with the developer is inherently suspect, poor communication only increases this suspicion.
Developer boards rarely hold open meetings, even though these board members are bound to the same legal standards as unit owner directors. Consequently, new owners are not aware of the decisions made by the prior board.
While developer board decisions may have been made in the best interests of the association, they are often presumed to be wrong because they were not communicated to the ownership.
Developer boards often fail to distribute the annual statement of income and expenses so the first unit owner board takes office not knowing what was spent, whether assessments were collected and, if so, whether these funds were used for management and not for the development of the association property.
Experienced developers recognize the value of owner involvement before turnover. Thus, developers who form and work with owner committees, hold open meetings, issue construction updates, and even grant minority board participation to owners, are less likely to encounter a difficult transition period from the first unit owner board.
There are a number of requirements in the Illinois Condominium Property Act which, if properly followed, will enhance the communication between the unit owner board of directors and association members.
The board meeting is the focus of the association governing structure, and the basis for which decisions are made. By statute, board meetings must be open except for certain portions dealing with specific issues.
However, the more frequently the board meets in closed session or gathers for an executive session, the more likely the owners will perceive the board to be a secret body making decisions behind closed doors.
Notice of the board meetings must be distributed by mail or through hand delivery, and posted in prominent areas of the association.
While the board meeting itself is a discussion among directors, given the fact that the association is the home for its members, owners should have the opportunity to express their views personally to the board.
It is prudent for directors to hold an owners’ forum either before or after the formal board meeting so owners may express their views on pending matters of concern.
State condominium law requires the board to distribute a budget 30 days before adoption. With the budget, the board should include a detailed explanation of the line items and major spending changes.
An annual statement of income and expenses must also be distributed to the unit owners. Too many association boards ignore this requirement. Owners have the basic right to know how their money is spent.
The board should also specifically communicate by separate letter certain decisions relating to management, personnel changes, and problems created by pets or leasing.
Pets and leasing often give rise to significant rule changes or amendments to eliminate one or both items.
Amendments are proposed to solve problems. If owners were made aware of these issues, perhaps board proposals to eliminate them would be unnecessary.
The biggest source of disputes between condominium directors and unit owners is money. The last piece of news owners want to hear is a forthcoming special assessment or a dramatic increase in regular assessments.
Unfortunately, but by necessity, significant expenditures arise from major building components, such as windows and roofs, that begin to exceed their useful life.
Mention the words “windows” or “roof” in a larger building and the response often is a seven figure expenditure. Deferred maintenance eventually results in a major repair expense. All major components must be repaired and, eventually, replaced.
Owners don’t like surprises. The board members must explain to their neighbors the reason for the sudden increase in spending. Directors must tell the full story that led to the decision.
The saga of a major roof or window replacement starts with reports of water infiltration; investigation and report by an outside engineer; and the identification and recommendation of a course of action.
In deciding whether to repair or replace a major component, the board must explain to the unit owners whether a short-term solution of repairs will extend the useful life of the windows or the roof or whether replacement is inevitably the best long-term solution. The board must also explain to the owners that it has considered payment and financing alternatives to lessen the financial hardship of a major assessment.
Given the fact that owners are not generally in a position to write a large lump sum assessment check, the board must provide alternatives such as installment payments and a bank loan to minimize, what is for many, a financial hardship.
While not legally required, certain communication techniques will promote an open and trusting board/owner relationship. These steps include:
– Creating an association Web site that contains both the governing documents, rules, minutes and sales information.
– Maximizing the use of the association cable channel for meetings and announcements.
– Publishing a monthly newsletter.
– Holding “extra” owners’ meetings, other than the annual meeting, where board members simply listen to the ownership.
Frequent communication between association boards and members creates the necessary understanding that removes the distrust and acrimony which leads to litigation.
Or, to put it more simply, it’s cheaper to communicate than to litigate.
