Transparency begins with following law on board duties

  • Pin It

When owners in a community association believe their boards are operating in secrecy, they become suspicious and mistrustful. Too often the result is bitter arguments or even costly, time-consuming litigation.

"Transparency is critical to building the sense of trust and awareness that make a community great," said Carl McElroy, operations manager at Cornerstone Management Group in Wheeling.

Adds Sara Benson, a condominium owner and president of Benson Stanley Realty in Chicago: "Boards are running nonprofit corporations and spending money that owners have contributed to the coffers. They have a duty to be accountable for their actions."

Among the nontransparency tactics boards employ are making decisions in private meetings or via electronic communication media; levying stiff assessment increases without explanation; stalling or refusing to produce documents that owners are entitled to; and charging exorbitant prices for copies of those documents.

Boards are secretive about their actions for a variety of reasons, including an exaggerated sense of authority, fear of criticism for their decisions and to cover up misdeeds, Benson said.

"Some boards simply do not understand their legal obligations, but ignorance is no excuse," she said. "They need adequate training."

Illinois law includes a number of provisions that mandate transparent actions. For example, Section 18.5(d) of the Illinois Condominium Property Act requires boards to keep copies of documents such as common-area expenditures, meeting minutes, election ballots and proxies for prescribed lengths of time. These records must be available for unit owner inspection and copying upon written request.

Other laws require boards to distribute copies of the proposed annual budget; disclose contracts in which board members and their families have ownership interest; notify owners of board meetings; and allow owners to attend, tape and film those meetings.

The law allows discussions about litigation, contract negotiation and personnel matters to be held in closed sessions. But any votes on these issues must be taken during an open meeting.

Although some activists assert that all aspects of association operations should be open to the owners, total transparency can hamper the board's ability to do its work, said association attorney Charles VanderVennet, of Arlington Heights.

"If someone is sitting in an open meeting talking about what the attorney said were the pros and cons of a possible lawsuit against the painting contractor, information could be leaked and the strength of the litigation could be jeopardized," he said.

Too much transparency also clouds the roles of board members and nonboard members, he said.

"As an owner, I have an important duty to elect board members, and I have the rights of observation, meeting notices and record access, but I don't have the entitlement to participate," he said.

McElroy recommends creating an annual management plan that details the association's goals, capital projects, contract renewals, deadlines and other major activities or changes for the coming year. The budget is drawn up to carry out that plan, and both are distributed to the owners.

"The management plan lays out the inner workings and motivations of the board a year in advance," he said. "There are no secrets. There is no favoritism as to which gutters will be replaced first because the management plan says we decided to prioritize it into thirds."

Another tip from McElroy: Creating a written policy on why and when the board will go into a closed session will help demystify the process.

Benson offered a few more suggestions: Attach a cover letter to the annual proposed budget that explains large increases and new expenditures; approve expenditures and contracts at open meetings, and record the votes in the minutes; and post governing documents, minutes, budgets and other information on a secure website.

"It's really best to do what the law says, no more and no less, to protect yourself as a board member," VanderVennet said.

ctc-realestate@tribune.com

  • Pin It