Publications

How To Stay Out of the Courthouse

"You’re out of order! You’re out of order! The whole trial is out of order!"
Arthur Kirkland character (Al Pacino)
And Justice For All, Columbia, 1979

Having attended thousands of turnover meetings over the years, and having held thousands of meetings with boards and homeowners about developer defects, the most common remark is, "Well, if they don’t give us what we want, we’ll just sue them.."

Boards of directors of co-ops, condominiums, townhomes, etc. are constantly bombarded with this throw away remark as the ultimate solution to any problem. Getting owners to take down a basketball hoop, pay their assessments on time, get rid of a dog and, of course, to recover what they’re entitled from the builder. A standard quote I usually use as a response is, "There are only two people that are going to benefit from this suit; me and the other lawyer!"

It is far easier to distance oneself from true problem resolution and just file a pleading in the circuit court. Yet, every year we hear consumer advocates, politicians and editorialists lambasting the legal profession for the proliferation of litigation and skyrocketing costs.

What most people do not realize is in the State of Illinois you can recover your attorneys fees in a lawsuit in only one of two instances; either there is a statute that allows you to or it is in the agreement between the parties. Most civil litigation results in the parties paying their own fees. Even the most simple case can result in the parties paying their lawyers more than the amount in dispute.

There are certain troublesome areas that require a pro-active board and creative solutions as opposed to hard-nosed policies or litigation offensives.

Fiduciary duties. Although a board that is usually sued is defended with its insurance carrier’s money, sometimes a board can be put in a situation where there is no insurance coverage, i.e., intentional acts, defending an injunction when only monetary damage claims are covered, violating someone’s civil rights when it is expressly excluded, etc. In the instance of defending suits the board must be familiar with the extent and scope of its coverage, meeting periodically with its insurance professional and consult with legal counsel. As far as policy making itself, keep lines of communication open, provide plenty of information and be open to owner input on controversial issues and at all times use sound business judgment even when it may be against your personal interests, if it is in the best interests of the association.
Collection of delinquencies. Some boards of directors and/or property management companies are deeply involved in the collection process. However, there is a difference between trying to work with people one on one to clear up a delinquent account versus practicing law. Once you get past the initial notices and discussions, you must commence legal proceedings. Although the courts are very strict about the technicalities of notices, the penalties are steep for violating even a delinquent’s rights. Improper or defective procedures constitutes a large percentage of suits or counter claims against associations. It is most important to keep meticulous records and allow the professionals to do their job.
Covenant enforcement. After maintenance requests, the second most complained about issue is rule violations. It is the board’s job to be the final arbiter and enforcer but they must proceed cautiously. Even when the illegal planter or day care center is next door to the board president, proper procedures must be followed. Specific notices, due process, hearings, documentation and sufficient evidence are all important components of making owners obey the covenants. Failure to enforce the rules, over-enforcement, sloppy procedures, lack of notice, etc. will result in an association being in court, not prevailing on the merits and paying its own attorneys fees. This is an area that must be carefully partnered with legal counsel.
Elections. Improper or late notices, outmoded forms, not following the bylaws, etc. will result in an emotional tidal wave from the community and probably a lawsuit. Each year at least 60 days prior to the election, forms should be reviewed and dates checked before proceeding.
Discrimination. The rights of the handicapped, disabled, elderly or other protected classes are problems many boards wrestle with at one time or another. These policies must be kept up to date and experts must be consulted from time to time to make sure procedures and amenities are in compliance. Sadly, this is the area where an association is often most vulnerable even when the board is attempting to operate in a non-discriminatory fashion because there are a few people who take advantage of a flaw or technical defect in procedures which are intended to benefit those most in need of protection, but only do so for their own economic benefit. A board needs to be aware of accessibility, parking and construction standards to avoid complaints in those areas.

By administering proactively, rather than defensively, and seeking both expertise as well as legal advice, a board can minimize its legal risks and liabilities. It is better to pay a little extra for consulting than a lot extra for costs of defense. As the man used to say, "Pay me now, or pay me later."