Special Assessment only on *SOME* Units?

Hello, new member here. I can't find the answer to this question anywhere online.

Here's the short version: Can the board of our HOA levy a special assessment for repairs on only SOME of the units, because only those units will benefit? Here's the longer version:

My HOA is a 15-unit historic coop building in Champaign, IL. As a coop, our ownership is divided into shares of the corporation, with some units having more shares than others based on square footage. All 15 units share the same main, brick masonry building, but there are 3 units that have a special feature of a wood-constructed "sunroom" which is cantilevered off the back of the building (see photo here: https://drive.google.com/file/d/1Tq4kSDW94vvqkBcb4N8ENU4JS_hofONg/view?usp=sharing). ONLY these 3 units derive benefit from these sunrooms. Now, these three units do have extra share ownership, and thus pay extra HOA fees, but the extra they pay is insufficient to cover the additional maintenance these unique additions require. I expect that the extra share they own was sufficient when our building was built in 1920, but now, 102 years later, the unique construction of these rooms makes them require much more maintenance. We cannot let the individual owners of these units maintain the structure of the sunrooms independently, as this would be too risky and if, for instance, one collapsed, as the entire value of the building would be in jeopardy.

So, the next time these sunrooms require special maintenance, can our board assess just these three units for the repairs?

Thanks in advance.
-Flynn
The Glenn Building Corporation
Champaign, IL

Flynn,

Please read the posting rules (click the smiley face that says posting rules at the top of every page).
Mentioning of Association names are not allowed.

As Aug has pointed out, this will depend on the verbiage in your governing documents regarding special assessments.

My apologies about mentioning the association name.

So, what I'm hearing is that there's nothing against the law about assessing some units, I think. As a small association where everyone knows each other, modifying our bylaws is easily done, and they currently do not have any stipulation at all about special assessments.

What you should be hearing is that it depends on your governing documents.

Sometimes a special assessment has to be applied to all.
Sometimes a special assessment can be applied to a few.

It all depends on what your governing documents say regarding special assessments.

I appreciate you helping dig into this! Very interesting about changes to the bylaws not applying retroactively. In this case, there is no urgent maintenance on the horizon for these units; my question is only about putting our affairs in order in anticipation of future repairs. If I seem unconcerned with what the current bylaws say (and only concerned with applicable law), it is because changing bylaws and other governing documents will not be as difficult as it will be in larger HOAs, as our board (and all shareholders, in fact) is very level headed and friendly with each other. However, if changes won't apply retroactively to owners who purchased before the bylaw change, that would be a problem.

Here are the sections of our bylaws that might be relevant:

Article III—Directors
Sec.10. Power to pass By-Laws
The Board of Directors shall have full power to adopt, alter, amend, or repeal the
By-Laws.

Article V—Dividends and Finance
Sec.4. Assessment
The Directors may at any regular meeting, or at any special meeting where such action
has been duly announced in the call, approve dues to be charged the shareholders,
which dues shall be levied against shareholders on the basis of the number of shares
owned by each shareholder. Such dues shall be used to defray the costs of insurance,
taxes, maintenance of the building and such other expenses as may be necessary to the
proper operation of the Corporation. If a unit owner is in default in the monthly
payment of the aforesaid charges or assessments for thirty (30) days, the Board of
Directors may bring suit for and on behalf of themselves and as representatives of all
unit owners to enforce collection thereof or to foreclosure the lien therefore as
hereinafter provided; and there shall be added to the amount due the costs of said
suit, and other fees and expenses together with legal interest and reasonable
attorneys’ fees to be fixed by the Court. As a further and additional remedy in the
event of default in the monthly payment of charges and assessments, the Board of
Directors shall have the possessor rights.

I would think this would have been addressed in your reserve study - when was the last time your association did one (they should be done at least every five years)? If it's been longer - or you haven't had one at all, get it done - preferably before the year's out. Consider how this thing is set up, this may also require an engineer of some sort to look at the area to supplement what the reserve specialist finds, or the specialist can find someone to take a look.

Flynn

Not to play lawyer but your posting seems to say all shall pay based on the shares they hold and as of now the dues are higher on the 3 units with sun rooms as they own more shares.

Changes won't apply retroactively to certain "situations" that exist right now or existed in the past. Changes can be applied that apply to situations going forward.
Got it.

To repeat, see above. Your HOA/COA may amend the bylaws to address situations that arise in the future, regardless of who is the owner right now and who is the owner in the future, with some caveats. More below.

Thank you kindly for quoting this. Nationwide most of the time a HOA/COA board does not have the power to amend the bylaws. Instead, most of the time amendment of the bylaws may be done only by the owners en masse.

This is a co-op, so maybe the board having this power (to amend the bylaws) is more usual for co-ops.

What year was the co-op established as a corporation?

What is the date on the by-laws?

How many directors are there?

Where is the number of shares each owner has recorded? In the Bylaws? In the Declaration of CC&Rs? Somewhere else? Does the board have the lawful power to amend the number of shares each unit has?

I am going to snoop around Illinois statutes in a bit and see if there's some relevant discussion there.

For COAs/HOAs nationwide, it is a big deal for a minority (in this case, potentially the Board) to suddenly amend the governing documents (bylaws, Declaration of CC&Rs, Articles of Incorporation) such that some owners are paying more for the regular assessment than was originally specified when they bought. This hearkens back to my comments about retroactive-ness.

AugustinD, you are very thorough! Replies in line below:

Thank you kindly for quoting this. Nationwide most of the time a HOA/COA board does not have the power to amend the bylaws. Instead, most of the time amendment of the bylaws may be done only by the owners en masse.

>> Even though the bylaws technically allow us to, we would probably discuss this at an annual shareholders meeting and get approval to change the bylaws there by shareholder vote. Historically, our association has not really followed our own rules as written, but rather more like "whatever people vote on -- and whoever shows up to that vote -- is adopted". It's been very laissez-faire, and no one really complains about much.

What year was the co-op established as a corporation?

>> Established in 1920

What is the date on the by-laws?

>> Most recently amended in 2014

How many directors are there?

>> 5, but like all the other loose decision making here, directors meetings are "whoever shows up". We have 4 people who are technically "alternate" directors but, if they show up and vote, their votes weigh equally with the other 5, and the same if any other shareholder wants to attend a board meeting. My friends who are in larger HOAs find this bizarre, but it's the way its always worked here, as I understand it.

Where is the number of shares each owner has recorded? In the Bylaws? In the Declaration of CC&Rs? Somewhere else? Does the board have the lawful power to amend the number of shares each unit has?

>> The number of shares is recorded in our Articles of Incorporation, dated 1920. However, this document has been amended in 2017 with "Articles of Amendment" to extend the lifetime of the corporation (which was originally 99 years), and I expect we could file similar Articles of Amendment if we needed to issue new shares. On this matter, you are correct that the documents from the state are clear that we need a 2/3 shareholder vote, but again this would likely not be a problem to achieve given how the shareholders have worked together in the past.

By the way, the courts have at times called such scenarios, "the tyranny of the majority," going back over a century to the writings of a certain government philosopher and economist.