Recently I spoke at a seminar regarding decision making for Boards of Directors. In preparing for the seminar, I was reminded of an association that our firm represents. Shortly after being sworn in as an attorney, I was asked by one of my partners to attend a meeting at this association. This was my first meeting that I attended on my own. An issue arose regarding whether realtors should be able to place lock boxes on units that are for sale in the association. Although this does not seem like an enormous issue confronting the association, there were a number of pros and cons that were discussed by the board members. After a lively discussion, the meeting adjourned and I left.
I was proud that I had completed my first meeting. Then it dawned on me that the board failed to make a decision as to whether to permit the lock boxes.
A year and one-half later I attended another meeting of this association. In reviewing the agenda I noticed that the realtor lock box issue was still on the agenda. It had been a year and one-half that this board had still not made a final decision.
The failure to make decisions has become one of the most common problems for boards of directors. Boards tend to rehash issues over and over without making a decision. The worst decision that a board of directors can make is no decision at all. Board members are elected to administer the affairs of the association on behalf of all owners. In doing so, the board must make a number of decisions on behalf of the owners. Some decisions will have little if any bearing on the quality of life within the community while others can have a substantial impact on the owners’ financial investment.
In order to fulfill its fiduciary duty to the owners, the board should engage in the following prior to making a decision:
Illinois law requires that all decisions for condominium associations and common interest communities, which are most townhome and homeowner’s associations throughout the State of Illinois, be made at an open board meeting. This permits the homeowners to see how its elected board of directors are voting on an issue. Once the vote has been cast, the decision should be properly recorded in the board meeting minutes. Review all necessary documentation, contracts, bids, etc. prior to the meeting. Obviously, the more information that is provided to and reviewed by the board will assist the board in making the best decision. Once a decision is made, do not dwell on it. Obviously, if circumstances change, the board members may need to reconvene and re-evaluate the decision. However, if circumstances do not change, then the Board should stick with the decision that has been made. Consider owner input in rendering a decision. However, it is generally the board that has the ultimate decision making responsibility. In having this responsibility, it is sometimes necessary for the board to make a decision which may not be the most popular, but is in the best interest of the association.
The most important part of the decision making process for a board member is to realize that if the proper research is performed and a decision has been made which is believed to be in the best interest of the association, then the board decision should be upheld.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We have four office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin. Our attorneys are also licensed in Arizona, Florida, and Missouri.
If our law firm can be of assistance, please call 855-537-0500 or visit www.ksnlaw.com.