Condominiums and being on the Board - What you need to know about your risks

Just bought that new condo? Taking advantage of the bubble being burst in the big city in order to snag a low price on a townhouse? While your price might be right, beware of your rights and responsibilities when you purchase a condo and accept (or try to get) a position on the association board. When a condominium association is formed (through the recordation of the Declaration of Condominium in the public records) the incoming purchasers become members of the association. The association is run by the board of managers, according to the rules set out in the Declaration. Each association's declaration is different - so always be sure to read your Declaration and the By-Laws before you purchase so that you know the rules and regulations. After a majority of unit owners is in place, there will (or should be) an election so that the unit owners can elect a board.

The board of managers is generally comprised of a president, treasurer and secretary. In most associations, the board of managers may vote on particular issues regarding the administration of the property, and there must be a majority vote of the board. People run for the board for a variety of reasons - some of them including being involved in decisions on various projects, or to promote personal agendas, maybe because no one else would step up, and sometimes just because they don't feel that others will do a good job. Regardless of the reasons, it is important to remember that the board has a major responsibility to those on the association.

This responsibility is known as a "fiduciary" responsibility. This "fiduciary" relationship means that the board member must be completely loyal, completely honest and act to advance the common interests - and not in furtherance of his or her own interests. This relationship is better explained in the Illinois Condominium Property Act, which is part of the Illinois statutes. What most people don't know when they take on these roles, is that they may subject themselves to personal liability if they make a decision which later results in legal action. While the condominium association usually is required to have insurance, the condominium insurance may not cover certain acts of a board member. Be sure to read your insurance policy for the association (and to make sure that the association has a director's and officer's liability or "errors and omissions" policy). Thus, it is important to research your responsibilities, and to get the advice of a trusted professional.

Some obligations of the board include accounting to all unit owners, quarterly or annual review of capital improvements, review of past-due accounts, review of all vendors (i.e. exterior landscaping, cable, snow removal, etc.), review of any commercial loans or credit lines, file taxes, among others. Also, the board on occasion needs to issue letters for incoming purchasers (i.e. exercising right of first refusal, paid assessment letters, etc.) and outgoing sellers. Also, the board needs to pay attention to common areas and ensure that the common areas are always maintained. Again, while the Declaration and By-Laws will spell this out, it is always advisable to get the right information at the right time: before there is a problem.

The main idea is that being on the board involves far more than just pushing an agenda, or keeping assessments low. Being on the condo association board involves risk and responsibility. Despite being risky at times, it can be a rewarding experience - for you are running your own "mini corporation" and you can be involved in many day-to-day decisions for your property. While not everything is a big deal, it's important to be informed. Every association should have (or know of) an attorney it trusts for questions, legal representation and information.

For more, feel free to email: alisalevin@yahoo.com, or call Alisa Levin at 312-720-0082. Your suggestions are always welcome!