Two Classes of Owner Concern

Thank you for having a place to post questions like this forum. In keeping with the guidelines, I will keep my request as generic as possible by keeping names and addresses anonymous.

I live in a highrise condominium in Chicago where we have common element pool, and 23 common element cabanas surrounding our pool. The cabanas, are a small room where you can have a refrigerator, store pool toys, and dishes, etc. Owners, who are allowed to rent the cabanas, may also have a grill at their cabana.

The problem is, that current cabana leasers are given automatic renewal each year to rent their cabana. There is a waiting list in excess of 20+ years with names of owners who would like to rent a cabana consisting of more than 40 owners (we have 465 units in our building).

The Association's attorney addressed a public complaint by writing to the board:

"The Board can consider a different method of assigning the cabanas to allow all unit owners an opportunity to the use of a cabana. Arguably, allowing the same owners exclusive use of the cabanas year after year creates two classes of owners which is prohibited under the Illinois Condominium Property Act. On the other hand, we understand the rationale that regular cabana users should be given the right to apply first for a cabana assignment. Again, the Board creates the Rules, and the Board can revise the Rules. The decision is one of exercising proper business judgment regarding cabana assignments."

Surprisingly, the Board read the letter at a meeting but omitted this paragraph. They also asked that this letter not be circulated to other unit owners, but provided it when I made a formal request in writing.

Thus, there is one class of owners - cabana leasers, created by this leasing policy.

And, a second class of owners on a wait list. With one cabana becoming available every 10 years, the 40th person can expect to wait 400 years before being allowed access to this common element.

In addition to two classes of owners, cabana leasers are violating House Rules by a) profiting from their cabana by subleasing to other owners who can then sidestep the wait list, and b) affixing permanent fixtures to a common element (remodeling interiors with new cabinets, etc.), which is strictly prohibited in the House Rules and the Illinois Condominium Property Act.

We have tried to again challenge this unfair and illegal policy in 2013 but the board has shut us down at every corner. We even tried to run for open positions on the board, and the election was contentious to say the least. Owners in possession of a cabana pulled out all of the stops to run smear campaigns and send out letters to all owners discrediting our candidacies.

We are looking for balanced next steps, and do not have the money, nor do we want to take our own Association to court, but there must be options. What recommendations do you have? We would consider going to the media, and also are seriously considering filing a complain with a website called www.peopleclaim.com. But I feel there may be more strategic options available.

Thank you for your assistance!

I second that, Recall 'em!

Here's a link to a 3yo article discussing the procedure.

"What to do with a Runaway Board"

http://www.ksnlaw.com/knowledge-center/articles/running-the-perfect-meeting.html

Hopefully it's still reflective of current IL law.

This is really good advice.

Would it interest you to know that we submitted a petition last September, with 150+ signatures (at least 20% unit owner interest), calling for:

a) immediate suspension of the current leasing cabana policy;
b) an immediate community meeting (really, this should state a special meeting) to develop an inclusive cabana rental policy;
c) Detailed and accurate records of all receipts and expenditures of the common elements specifically paid for cabana upkeep and maintenance.

Can we leverage this letter to call a special meeting related to the unfairness of the cabana policy, and put the policy to a vote? Or do we have to start from scratch?

Any other guidelines that you can provide around special meetings would be helpful.

Unfortunately, removing the board members would be an uphill battle. We have been branded 'team whipper snapper' and the old guard seems willing to do whatever it can to remain in power, and has a lot of support from our older residents.

Many thanks!

BR3,

Typically, how common elements are utilized are at the discretion of the Board.

The only way, unless your governing documents or State statutes provide another, to counter what a Board has done is by amending the governing documents or find others who are like minded, willing to serve and recall the Board.

It's always an uphill battle to remove members of the Board. You have to decide if the issue is worth the Battle.

How many directors' slots on your HOA's board, BR3? what size mgmt. team is at your HOA? Can they help in any way?

The article that Peter ciets looks like a fine resource in your state. It lays out pretty well what you and your fellow travelers can do. Your own bylaws very well may state he info about holding a special meeting of the members (not to be confused with a special meeting of the Board).

As Tim points out, it's difficult getting rid of a lousy board. And I agree with you that they need to be dumped! But it can be done. In our case, it took a year to get a majority of decent folk elected to our board, but we did not need to do a recall election. I know that Tim went through something similar.

What we did is similar to Peter's advice: We formed a coalition of 12-15, very cleverly called The Small Group. We studied our CC&Rs, bylaws and relevant state law. In about six months we fielded three candidates for the three openings on the Board of 7, sent a positive campaign letter to all owners, and won. A year later additional members of our group, which had grown a lot by then, won a majority on the Board.

Meantime, I see in the article Peter cited that your board must have open meetings. Attend--as many as you can muster.

BR,

While you are gathering support, I urge you to become familiar with your governing documents and applicable State laws (including corporate laws). Some of the problems you identified may only be perceived problems vs. actual problems.

For example: Being deceased will not invalidate a proxy. Therefore, it is possible, if a proxy was assigned prior to their death, for a deceased member to effectively cast a ballot.

HOA and Condo laws are civil laws. Civil laws are settled between the affected parties (i.e. the membership). There is typically no government agency that does enforcement of civil laws.

Sure the State corporation commission may fine for not filing the annual report on time. The IRS will certainly go after the Association for failing to file taxes. The District Attorney will prosecute if criminal laws are broken (example embezzlement). However if the Association doesn't comply with the Bylaws or a civil law, it's up to the membership to hold the Board accountable. The easiest way would be to recall the board or not reelect those same individuals. The more expensive option is to go through the court system.

This is why it's imperative that the members remain active in the development and actually take an interest in how the Association is governed. If apathy sets in (and, unfortunately it does), it becomes that much more difficult to change things when issues are discovered. I applaud you for being active in your Association.

Some States do have an Ombudsman office to try and act as an intermediary before the issue is taken to the courts. IL has considered such an office but the bill appears to be sitting in the rules committee. see: IL HB 1293 for more information.

Simple internet search.

I searched for IL HOA Ombudsman which led me to the Chicago Tribune Article.
The Article provided the number of the bill
Searched for IL HB-1293 which provided the wrong bill but did provide the Leg. website
Entered HB-1293 on State Legislature website which provided the bill's status

The more you get into researching your State Statutes and understanding them, the easier it is to know what keywords to search for.

BTW: Here are some links that may prove helpful:

IL General Not For Profit Corporation Act of 1986 Applicable if your Association is incorporated as a non-profit (most are).

IL Condominium Property Act Since your in a COA

Community Associations Network IL page good free reference pertaining to IL.

Subject: How to read a statute (law) thread on this forum that discusses understanding legalize.

Subject: Reserve Studies/Funds 101 thread on this forum that discusses Reserve Funds and Studies. Info you will need if you start serving on the Board. Info you should know if you are simply a member.

Hope this helps,

Tim

Bruce,

I would expect that the individual who would be presenting the death certificate would be executor of the estate or the individual(s) who inherited the property so that they, as the new owners, could exercise their right to vote. This, in my perspective, would be the same as if the individual showed up in person and informed the Secretary that the proxy is repealed.

IL statutes simply says that a proxy is good for 11 months unless the proxy form provides a different time frame and does not address the death of the member.

Some States, like VA, has the same language you specified.

However, your point is taken. Check the applicable State statutes.

Thank you John. We will continue to run for the board, as that is the easiest solution.

Until then, our next step is to file a complaint with www.peopleclaim.com, this website is a problem resolution site that states your claim to the offending party and attempts to find a resolution without the need for legal representation.

Here is what I've come up with so far for the association's attorney, each board member will receive a tailored copy too.

Complaint
You were made aware of a formal complaint made by a unit owner regarding the non-compliance with the law of the “Rules Governing Cabana Occupancy,” on July 26, 2011, and again on August 22, 2011. The policy unfairly allows 21 unit owners out of 465, or 3% of unit owners, to enjoy exclusive use of the cabanas year after year, while other unit owners requesting access are relegated to a wait list dating back to 1998. In a letter of response on August 19th and 31st of 2011, you acknowledged that the rental policy was out of compliance with Sec. 18, (2), Illinois Condominium Property Act, as well as Exhibit D, Section 1, of the (Property Address) Condominium Association by-laws by stating in both letters: “Arguably, allowing the same owners exclusive use of the cabanas year after year creates two classes of owners which is prohibited under the Illinois Condominium Property Act.” You were again made aware of the non-compliance of the rental policy in 2013 when you were presented with a petition containing 170 resident signatures requesting a Special Meeting of the Board to change the cabana policy to one that was equitable for the other 424, or 97% of residents.

Claim
The “Rules Governing Cabana Occupancy” should be voided, and replaced with a fair rental policy. In 2011, a lottery was recommended, where 21 unit owner names would be drawn randomly and systematically assigned to a cabana. The next round of 21 names would have the option to share the cabana either by choosing a cabana or, if no choice could be made, by being assigned to one. In addition, those who leased a cabana should have to wait 2 years before reentering the annual draw, unless there is available room to be placed back in the lottery. A system like this would keep our building compliant with the law, and protected from lawsuits against our Association.

Please let me know if you have any feedback - or ways to strengthen the argument.

This is amazingly helpful.

Thank you, I've been reviewing and learning so much!

Law of supply and demand.

Clearly the demand for the cabanas greatly exceeds the supply. Thus, simple solution, raise the price of the cabanas until the demand better equals the supply.

Thank you for the kind words. I'm just trying to repay the help I received (and still receive) from this site when I was dealing with my HOA issue.

Seems to me that something like this would be covered in the covenants. I'm sure that even Illinois teaches basic math: 23 cabanas divided by 465 units means that even if a unit could only rent the cabana for one year at a time it would take 20.22 years for every unit to get a turn. Imagine being at the bottom of the list, what a selling point.

Oops, that came out a bit catty - rawr.

I'm assuming the basic math lesson was intended for the board, although, maybe not.

Tough love here but I think part of BR's issue is he cannot get a cabana so he wants to make it easier for himself to get such under the guise of better for all.

I think another issue is the auto renewal of those contracts.

Perhaps monthly contracts should be used or simply renting them on a daily basis (like many resorts do).

BR3,

Even if you are able to oust the current board and make changes, a future Board can undo the changes you made. If you want lasting change, you will need to amend your governing documents. I'd recommend an amendment to the Bylaws (as they are typically the easiest to amend).

Thank YOU for the update, BR3!

It's runs deeper than the identified 2 classes of owner problem. We are out of compliance with our election protocol - there is no approved owner list that should be provided to check ballots against; and everyone who voted in the last contested election (renter, deceased, illegible signature), had their ballot accepted, no questions. The board has appointed all replacements and elections, for the most part, go uncontested. No one will ever unseat the board this way, and they know it.

The Ombudsperson would help enforce the by-laws for both creating one class of owners and to ensure our elections follow the guidelines.

Onward!

I'm very thankful to have the expertise of very smart people's experiences and knowledge. I should reign in my expectations that and ombudsman will be the silver bullet here and keep my eye on the prize: replacing this crazy board.

In other news, the bill passed the house today!

Off to a community meeting (and had a couple glasses of wine, to help ease the nerves)

Are you not going into this meeting with your personal burning issue being the cabanas?