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Three Things You Should Know
Published December 20, 2003 as
Associations should always be ready for legal challenges
The law is like the never-ending sea; bucking and roiling, foaming and shifting and sometimes destroying everything in its wake.
Recent legal decisions and developments must be brought to the attention of boards of directors of condominium and homeowners’ associations so they can do proper planning, as well as act appropriately when situations arise.
FACT - Local government does not proactively change the laws to make them better. Units of local government respond to crises and then change the codes and ordinances so they do not happen again.
Envision a street scene in the City of Chicago; a piece of a cornice falls off of a building and kills someone. No employee of the City had ever inspected that building exterior before. Now a life is lost and a new industry is born out of necessity; all high-rise buildings must have the exterior of the building examined by a qualified expert. A “critical exam” must be performed and a report drafted at great expense to all building owners and/or condominium associations. There are no exceptions and failure to comply will result in steep fine. Without this tragedy occurring, of course, the status quo would have remained.
After the BOCA code was changed several years ago, many suburban communities revised their health and safety codes and imposed sanctions on any condominium association that did not immediately bring the property into compliance. Such items as hard-wired smoke detectors and alarms, exit signs, sprinklers, etc. imposed financial hardship on some properties, but, because of the perceived delay in response time to a fire, the code was changed and a chain reaction began.
One could easily see where the recent tragedies in the City of Chicago will lead. The recent loss of life in a county building with locked escape doors will generate new laws and major physical changes. How will a large building cope where there is a large concentration of people at one time and how will the law be changed to address this? When several porches collapsed within a short period of time, new standards were generated which results in more frequent inspections and additional costs.
Perhaps associations need to consider that separate line items for a reserve account should also include life safety code charges. Most importantly, a board should never be caught off guard.
FACT - Recently, some associations have gotten some bad press about “abusive fees” which could result in harsher laws being imposed against associations for collecting delinquent assessments. This could lead to catastrophic results. It is always the sins of the few that are paid for by the many.
Recently, a homeowners association in another state made the news by charging back $1,000 in fees and costs to an owner who had a $25 balance. Cases like this make associations, managers and attorneys look bad and pave the way for an unfair decision when a serious case is before the court.
Everyone concerned with collecting a delinquent account must use common sense in these situations. A case should not be filed in court until the balance being collected at least equals the amount that will be spent to collect it. Smaller amounts should be carried on the delinquent owner’s account until they need a letter for a sale or re-financing of their mortgage. It can always be collected then. Some associations adopt rules to withhold privileges such as a pool pass or a ballot in an election until the account is paid. A lien can even be recorded, but in all instances, the rule of reason should prevail.
FACT – An association which unreasonably withholds financial records from inspection by an owner will pay that owner’s attorneys’ fees. Why withhold records when an owner asks for them? Recently, the Illinois Appellate Court sanctioned an association for unreasonably withholding financial records from an owner who made a written request. (Taghert v. Wesley, 1st District 9/30/03)
The court ruled that once an owner has established a proper purpose, and that would include any time there is “an honest motive,” is acting in good faith and not proceeding for “vexatious or speculative reasons,” the records should be copied and sent or made available for inspection. Unless the records requested can protected for reasons of confidentiality and/or privacy, a board of directors must cooperate. The exclusions include personnel records, confidential legal matters, etc. but routine financial and accounting information should always be available.
We have all seen situations where an unhappy owner demands all sorts of records, bordering on harassment. As ridiculous at it may seem, an association must be more open minded about honoring these requests, even if the owner has been difficult. In these types of cases, the statute provides for an award of attorneys fees to an owner who has been denied a reasonable request and it is just easier to cooperate than litigate.
Since the board is composed of laypeople, they need to be sure that changes in the law do not make existing procedures illegal. A call to the association attorney is the quickest way to avoid a problem, before it becomes an expensive one.