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AmandaA1 (Illinois)
Posts: 5
Posted:
Can the board of Directors hire a attorney to have the property taxes lowered and asses the attorneys fees back the homeowners with out a vote? It will exceed 5% of the annual budget and we are in IL. We have the IL Condo Act it is section 18.4. The way I read it is there has to be a vote? Does any one know what the proceedure is??
MaryA1 (Arizona)
Posts: 7,043
Posted:
Quote:
Posted By AmandaA1 on 04/03/2009 12:33 PM
Can the board of Directors hire a attorney to have the property taxes lowered and asses the attorneys fees back the homeowners with out a vote? It will exceed 5% of the annual budget and we are in IL. We have the IL Condo Act it is section 18.4. The way I read it is there has to be a vote? Does any one know what the proceedure is??

Amanda,

If the BOD is hiring an attorney, for whatever reason, he must be paid. Unless your gov docs explicitly state the board must obtain a vote of the members to pay attorney fees, the members would not be required to vote on this action. Ordinarily the BOD has the authority to pay all the expenses incurred in running the assn. w/o a vote of the members. They may be required to obtain a vote of the members to expend a certain amount of money; but I've never heard of a member vote being required to just pay the bills. Could you please quote -- word for word -- the section of the IL Condo Act you think pertains to this? Also I would like to know how you would propose the attorney be paid if not with assn funds.
SusanW1 (Michigan)
Posts: 5,202
Posted:
How much did attorney cost the HOA?

To save how much in newer assessment rate?

What was the plan to pay this attorney?
AmandaA1 (Illinois)
Posts: 5
Posted:
The letter that was sent to homeowners stated that it was section 18.4 of the IL Condo act

18.4. Powers and Duties of Board of Managers. The board of managers shall exercise for the association all powers, duties and authority vested in the association by law or the condominium instruments except for such powers, duties and authority reserved by law to the members of the association. The powers and duties of the board of managers shall include, but shall not be limited to, the following:

(a) To provide for the operation, care, upkeep, maintenance, replacement and improvement of the common elements. Nothing in this subsection (a) shall be deemed to invalidate any provision in a condominium instrument placing limits on expenditures for the common elements, provided, that such limits shall not be applicable to expenditures for repair, replacement, or restoration of existing portions of the common elements. The term "repair, replacement or restoration" means expenditures to deteriorated or damaged portions of the property related to the existing decorating, facilities, or structural or mechanical components, interior or exterior surfaces, or energy systems and equipment with the functional equivalent of the original portions of such areas. Replacement of the common elements may result in an improvement over the original quality of such elements or facilities; provided that, if the improvement results in a proposed expenditure exceeding 5% of the annual budget, the board of managers, upon written petition by unit owners with 20% of the votes of the association delivered to the board within 14 days of the board action to approve the expenditure, shall call a meeting of the unit owners within 30 days of the date of delivery of the petition to consider the expenditure. Unless a majority of the total votes of the unit owners are cast at the meeting to reject the expenditure, it is ratified.

(b) To prepare, adopt and distribute the annual budget for the property.

(c) To levy and expend assessments.

(d) To collect assessments from unit owners.

(e) To provide for the employment and dismissal of the personnel necessary or advisable for the maintenance and operation of the common elements.

(f) To obtain adequate and appropriate kinds of insurance.

(g) To own, convey, encumber, lease, and otherwise deal with units conveyed to or purchased by it.

(h) To adopt and amend rules and regulations covering the details of the operation and use of the property, after a meeting of the unit owners called for the specific purpose of discussing the proposed rules and regulations. Notice of the meeting shall contain the full text of the proposed rules and regulations, and the meeting shall conform to the requirements of Section 18(b) of this Act, except that no quorum is required at the meeting of the unit owners unless the declaration, bylaws or other condominium instrument expressly provides to the contrary. However, no rule or regulation may impair any rights guaranteed by the First Amendment to the Constitution of the United States or Section 4 of Article I of the Illinois Constitution, nor may any rules or regulations conflict with the provisions of this Act or the condominium instruments.

(i) To keep detailed, accurate records of the receipts and expenditures affecting the use and operation of the property.

(j) To have access to each unit from time to time as may be necessary for the maintenance, repair or replacement of any common elements or for making emergency repairs necessary to prevent damage to the common elements or to other units.

(k) To pay real property taxes, special assessments, and any other special taxes or charges of the State of Illinois or of any political subdivision thereof, or other lawful taxing or assessing body, which are authorized by law to be assessed and levied upon the real property of the condominium.

(l) To impose charges for late payment of a unit owner's proportionate share of the common expenses, or any other expenses lawfully agreed upon, and after notice and an opportunity to be heard, to levy reasonable fines for violation of the declaration, by-laws, and rules and regulations of the association.

(m) Unless the condominium instruments expressly provide to the contrary, by a majority vote of the entire board of managers, to assign the right of the association to future income from common expenses or other sources, and to mortgage or pledge substantially all of the remaining assets of the association.

(n) To record the dedication of a portion of the common elements to a public body for use as, or in connection with, a street or utility where authorized by the unit owners under the provisions of Section 14.2.

(o) To record the granting of an easement for the laying of cable television cable where authorized by the unit owners under the provisions of Section 14.3.

(p) To seek relief on behalf of all unit owners when authorized pursuant to subsection (c) of Section 10 from or in connection with the assessment or levying of real property taxes, special assessments, and any other special taxes or changes of the State of Illinois or of any political subdivision thereof or of any lawful taxing or assessing body.

(q) To reasonably accommodate the needs of a handicapped unit owner as required by the federal Civil Rights Act of 1968, the Human Rights Act and any applicable local ordinances in the exercise of its powers with respect to the use of common elements or approval of modifications in an individual unit.

In the performance of their duties, the officers and members of the board, whether appointed by the developer or elected by the unit owners, shall exercise the care required of a fiduciary of the unit owners.

The collection of assessments from unit owners by an association, board of managers or their duly authorized agents shall not be considered acts constituting a collection agency for purposes of the Collection Agency Act.

The provisions of this Section are applicable to all condominium instruments recorded under this Act. Any portion of a condominium instrument which contains provisions contrary to these provisions shall be void as against public policy and ineffective. Any such instrument that fails to contain the provisions required by this Section shall be deemed to incorporate such provisions by operation of law.

The BOD is assessing each account with a portion of the attorney fee 1/3 of the savings will be assessed to each homeowner acct for attorneys fees for this expeniture. We are strickly a foreclosure market half the residents are unemployed! Not sure how they will get paid? Half the community does not pay as it is... So far the savings was 15k community wide. It has been moved to the PTAB for review of additional tax reductions meaning the fees will be more and we are not done yet it could be a 20k savings or a 30k savings we will not know till the next letter comes. Or the end of this tax year when a check appears from the assessors office giving us a reduction credt.

We have 7k in reserves and there is alot of builder defect issues being fixed and sucking money out of that account at one point last month there was 164 dollars in the opperating acct we barley make it month to month. Paying bills. We have other common attorney fees for general matters and collections that are currently getting out of control... LONG STORY SHORT THIS COA HAS BEEN BAD FROM JUMP STREET. We have had theft of funds and a dozen other things go wrong. Last management company royal screwed up homeowner accts. homeowners are being put in collection that might not even owe. The assessors office called me last night and asked what prodeedure was taken regarding this matter with the homeowners. I resigned from the board on Wednesday things are just getting out of control The management company does not do their job most of the time. They terminated our contract March 31st and my lawyer told me I was going to be left exposed!
BrianB (California)
Posts: 2,820
Posted:
I am sorry to say I can't follow everything you are asking. I don't understand how 1/3 of the lawyer fee can be assessed to every owner, unless there are only 3 owners. I don't understand why you would be upset with being assessed a savings (isn't that a good thing?). I do not understand how it is anyone but the board's responsibility/fault that half the owners are behind in assessments: the board is elected to run the business, failure to collect dues is poor management on their part. I also don't see anyone else to blame for allowing the theft of funds to occur, the management company to run wild, or the mgt company to end the contract without the board being prepared.

It does sound like your HOA is in a world of hurt. Every person who served on the board and failed to do their fiduciary duties is to blame, and it sounds like the painful part of the process to recovery is only beginning.
AmandaA1 (Illinois)
Posts: 5
Posted:
Brain if I save 150.00 bucks on assessments then ONE THIRD OF THAT GOES TO THE LAWYER. The Board was handed over to the new board in this state. The theft of funds came when the builder handed over then HOA to the homeowners. The builder did not hand over the operating account but he handed over the books. The previous board then noticed there was funds due to them. They hired a lawyer and got the money VIA a court order. Yes poor management on the previous management company and shame on the previous board for not paying attention to the management companies mistake and staying on top of things. We have a new management company and surprise surprise they do not do what they are suppose to either and we have been on top of it and the more we complained the worse it got the more we pointed out the mistakes the worse it got. They in turn decided we were too hard to manage and too much time. We sold ourselfs as a UGLY mess and they took the account. It took the lawyer 6 months to get her act together and we had to ride her like ZORRO and follow her every move regarding collections. I have several emails from her where she admits fault. Not every owner saved the same amount on assessments. Some saw a much larger reduction then others. The units were assessed wrong by the township and no, no one looked at everyones tax assessments why would they? I do not care what my neighbor pays and why would I?

The question was not that the savings was a bad thing the question was did the BOD handle it according to the law. Yes some of homeowners are pisst. They do not want to pay for the lawyer. It was not brought to a vote. Everyone is hanging on by a thread over here. Half the community is not working they have no JOBS. They can not pay their assessments let alone and SPEICAL ONE. Why would the township call to talk to me about it? If it"s no big thing? Did I mention our dues are only 103.00 yeah thats right... CHEAP most of the 20k in back monies owed was lost due to the last board not doing anything the units went into foreclosure and so the story goes. This is a new community and the homeowners are learning on the job with no direction what so ever. I could not even tell you the last time I got a report with out asking for it and getting it 3-6 weeks past the due date. We do not even have a community manager there are several people handing the account and new people all the time. IT'S A CLUSTER...
SusanW1 (Michigan)
Posts: 5,202
Posted:
If this is a one time payment of 1/3 to the lawyer - then take it and enjoy the savings in the future.

SusanW1 (Michigan)
Posts: 5,202
Posted:
If this is a one time payment of 1/3 to the lawyer - then take it and enjoy the savings in the future.

BonnieE (Illinois)
Posts: 338
Posted:
Hi Amanda,

I am truly sorry to hear of all of the problems you have had/are having in your HOA.

If I understand you correctly, your Board hired an attorney to look into reducing all of the HOs personal property taxes. The agreement was that if the attorney was able to obtain a property tax reduction s/he would be paid a one-time fee which would be paid by each HO by adding it to their monthly assessment (I assume you pay monthly and that the fee would be added to one month’s assessment). Although you did not mention this, I suspect that if the tax appeal did not result in a property tax reduction, nothing would be owed to the attorney (or so I would hope!).

We were offered this service by our attorney shortly after the HOA took over from the developer (we are an IL townhouse style condo HOA) and as it turned out, we (BOD) declined after doing some research on our own. I have cut & paste part of an article written by an IL HOA attorney that pertains to this situation (use link for entire article).

http://www.ksnlaw.com/publications/pioneerpress/AssociationsTaxes.html

copied from the article linked above:

The other taxes that have a direct and indirect consequence to a community association and its Board of Directors are property taxes. Property taxes apply to individual residential units as well as common areas of the property.

As you are aware, every unit owner in the Association should receive a tax bill for their property. If the owners believe that the taxes are too high, the Board of a Condominium Association has the right to appeal the taxes on behalf of all owners. If you are on the Board of a Townhome or Homeowners Association, your Declaration may set forth the Board’s right to file a tax appeal on behalf of all homeowners. Most attorneys who concentrate on condominium, townhome and homeowner association law can file an appeal. This is done on a contingent fee basis. As such, if there is no reduction to the Association members, the attorney does not receive a fee. If there is a reduction, the Board may pay the fee out of the common expenses or charge the cost back to the owners, depending on each owner’s tax savings.
*****************

As for your question, can your Board take this action – IMO, “yes”. Can your Board charge the attorney back to the HOs – IMO, “yes”.

It is my understanding that para. 18.4(a) of the IL Condo Act is specific to the “operation, care, upkeep, maintenance, replacement and improvement of the common elements”. I do not believe that a one-time legal fee related to a tax appeal for O property tax appeal would fall within that category.

But I have a question: how much is the legal fee – is it really in excess of 5% of the total annual budget? (i.e., what is the total fee and what is your total annual budget?)

Also, I do not understand your statement (which relates to my prior question):

“Brain if I save 150.00 bucks on assessments then ONE THIRD OF THAT GOES TO THE LAWYER.”

Did the attorney’s action result in a decrease in property taxes? If so, the attorney fee is well worth it (IMO). Over the long run, the overall cost to each HO to live in their condo will be less with a lower property tax bill. As was noted, the savings will more than make up for the one attorney fee.

Good luck in resolving your other issues! Perhaps you will want to pursue them individually here to learn from the experiences of others posting here.

Bonnie
MaryA1 (Arizona)
Posts: 7,043
Posted:
Amanda,

I read the section of the IL Condo Act you posted and really don't see how paying an attorney for his services violates anything. As I said earlier, if the attorney was hired to perform a service then he needs to be paid. Frankly, I'm at a loss as to what your problem is. Apparently you don't think the attorney should have been hired to perform this particular bit of legal work; however, he was and now he needs to be paid. How would you propose the board pay him if not through the use of assn funds?

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