Looking for Interpretation & Answers

We are an Illinois HOA. I apologize for this lengthy post but I welcome anyone's best interpretation on any or all of the following:

1) Our BOD plans to adopt '06 Proposed Budget at our 11/09 meeting; however, not one of the 250+ homeowners has received a Budget for review (as of this writing)let alone an [estimation] of income, expenditures and "health" of our reserves for this year. According to Condo Act notice must be given not less than 10 days nor more than 30 days. QUESTION: What recourse do we homeowners have at this point? Does the Board have the right to adopt a budget without homeowner input?

2) What is “pecking order” of all these contracts? Declarations and Bylaws, Illinois Condominium Act, Illinois Not For Profit Act?

3) According to our management agreement entered into by the Association it shall have a term of not more than one (1) year and shall be terminable by the Association for cause on thirty (30) days written notice, or without cause or payment of a termination fee by either party on ninety (90) days written notice. The preceding statement is verbatim from a copy of Management Contract; however, in all the years I have lived here it was communicated to homeowners that the BOD always signed a 2 year contract. What is wrong with this picture? Do the homeowners have any recourse on this?

4) This year’s budget the association incurred an increase in assessment fees. According to our CCCR’s, there is a formula that ties in with calculating just how much of an increase can be imposed. Can anyone tell me, in plain English, how this is figured? Following is description of formula….

Cost of Living Increase. If, as of the first day of any month after this Declaration is Recorded, the level of the most recently published Cost of Living Index - All items (1967=100) as published from time to time by the Bureau of Labor Statistics (the “Index”), is greater than the level of the most recently published Index as of the date of the Recording of this Declaration which is 276.4 (the “Index Base Level”), then, at the option of the Board, the Community Assessment payable by each Owner (other than Developer) for such month and months thereafter until next adjusted, shall be equal to the Basic Assessment then in effect multiplied by a fraction, the numerator of which shall be the level of the most recently published Index and the denominator of which shall be the Index Base Level. If the Index shall cease being published, such other standard or index selected by the Developer, in its discretion, as shall most nearly approximate the measurements theretofore made by the Index shall be used as the Index hereunder, and the Index Base Level shall be adjusted accordingly.

5) Late fees and attorney charges seem to be ad finitum…each year the attorney keeps piling “new” charges e.g., title search fees, etc. I don’t believe any delinquent homeowner in our complex will ever be able to get caught up. Years go by and I get this sinking feeling that this Association has never collected on back assessments, aka lien, when a unit is sold. Pretty much every year, the auditor recommends we "write off" these amounts. Following excerpt can be found in our Decs:

Each charge, together with interest and reasonable costs of collection, if any, as hereinafter provided, shall be a continuing lien upon the Dwelling Unit against which such Charge is made and also shall be the personal obligation of the Owner of the Dwelling Unit at the time when the Charge becomes due. The lien or personal obligation created under this Section shall be in favor of and shall be enforceable by the Association.

THANKS, IN ADVANCE, TO ANYONE WILLING TO OFFER ANY INSIGHT ON ABOVE--EITHER ALL OR PARTS OF--. -ReneeD

I know this is a single-family, attached townhome community with fee-simple rights. Not for profit, yes; but, because I am not being given full access to our financials I have no way knowing if we are in good standing. What is a 10 day/30 day rule?

Would the recent late fee changes apply to us as well? You are raising some interest points I have never been aware--what would qualify as tangible added expense? Interesting I read in our Decs/ByLaws late fees can be imposed; additionally interest charges but not to exceed 18% per annum. I can only assume BOD or mgmt company chooses not too (due to administrative handling/laziness?). If it is written in our Decs should they be doing this?

In regards to liens and not having full access to financial records--even if I did---where would this be posted say as an example an owner sold his unit and was $2700 in arrears. Based on your above comments I can only assume this to be entered somewhere under Income? Secondly, if this were so, I am trying to understand why the auditor would suggest "writing off" those amounts; obviously monies would never be collected because that delinquent owner is long gone. As I write this, I am getting that sinking feeling something about that is terribly wrong---meaning when unit is sold this mgmt company's accounting "arm" is not communicating with the "closing" department to collect those fees aka lien? I am aware of several "old" cases this taking place but because this would be considered proprietary and confidential information (Delinquency Report) only for BOD/Management Company knowledge, no one--like us homeowners--would even know this is happening! There is something terribly fishy here and I'm beginning to wonder if this law firm is milking profits from these delinquencies until they no longer can! If so, how would I even begin proving otherwise?n -ReneeD

Lisa, thanks for great info and now I'm overwhelmed a bit at how little I actually do know. What is making me more nervous is that I think our BOD "trusts" whatever management company is doing. Also, if they were filing liens and are able to collect, where would this show up as revenue? On our Income&Expense statement? Likewise, filing liens would be an expense. Also it appears standard practice for writeoffs to be based on outside auditor's recommendation? Files are turned over to attorney after 90 days but I can tell you for a fact that there are some h/o's that have been on the list over 3 years! What is wrong with that picture? And, each year I think the attorney files another tract search and whatever other charges. In my opinion, BOD chooses to have an auditor file any federal/state forms; seems as if these 'tax' writeoffs occur to lessen any chance of potential income with full knowledge that chances of collecting that amount are slim to none at all.