LawPulse

Among other proposed changes, the legislation would allow condominium boards to hold closed meetings in a wider set of circumstances.

In June, the General Assembly sent six bills to Governor Rauner that amend provisions of the Illinois Condominium Property Act. Five of the six bills, if signed by the governor, will take effect on January 1, 2017; the other, HB 4658, would take effect immediately. For more, see Jim Covington's Legislative Roundup in this issue (pp. 48-49).

Many of the changes are updates to existing portions of the Act. According to Joel Chupack of Heinrich & Kramer P.C., a large portion of the Act is antiquated - in 1979 when the original was enacted, condos were more like co-ops. The bills bring the Act in line with the current use of condos. The most interesting thing about the bills, he says, is that one bill seeks to override the holding in Palm v. 2008 Lake Shore Drive Condominium Ass'n, 2014 IL App (1st) 111290 ("Palm II"), which affirmed that board meetings, including discussions between board members, must be open to all community members.

Legislatively overturning Palm II

One of the main issues in Palm II was whether, under the Act, board members could meet to discuss issues without holding a board meeting. The condo board in Palm II argued that the Act did not prohibit board members from holding working sessions where issues relating to the association were discussed but not voted on. Their logic was that board meetings only occur when there is a quorum of the board to vote on board business.

The first district disagreed, finding that a "meeting" under the Act encompassed activities by the board in both workshop and executive sessions. It further noted that the Act provided three exceptions to the rule that board meetings must be open to all unit owners: 1) to discuss potential or pending litigation; 2) to consider information regarding hiring and firing of employees; and 3) to discuss rules violations or unpaid assessments. Any action taken on exempted discussions must still be voted on in an open meeting.

SB 2354 changes that. The bill, which was supported by the Association of Condominium Townhouse and Homeowners Associations, amends the Act to allow boards to close any portion of a noticed meeting or meet separately from a noticed meeting to conduct specific types of discussions. In addition to the exceptions already provided by the Act, the bill also allows boards to discuss the appointment, employment, engagement, or dismissal of an employee, independent contractor, agent, or other provider of goods and services. Boards would also be able to interview a potential employee, independent contractor, agent, or provider of goods and services without holding an open meeting. Consultation with legal counsel would also be exempt.

During these closed meetings, no votes would be taken. Discussions that take place without calling an open meeting will not require notice to the unit owners.

Chupack notes that some observers have voiced concerns about expanding the circumstances where closed sessions may be used. Their concern is that once a closed discussion is held, the board will have already solidified its opinion, making the open meeting and vote more of a rubber stamp. "The fear is that closed discussions take power and say-so away from homeowners," he says.

Administrative updates and improvements

Other bills seek to update the Act and make some administrative and logistical things simpler for boards and board members. SB 2359 would allow a condo association to borrow money with a simple majority vote. This bill would override existing condo declarations, which may provide for more than a simple majority vote.

SB 2741 streamlines administrative and housekeeping functions for boards, allowing a board to correct errors, omissions, or inconsistencies in community instruments with a two-thirds majority vote of the board. No member vote would be required. This allows boards to ensure that community instruments conform to the Act or other applicable laws.

HB 5696 redefines "acceptable technological means" to mean any generally available technology that, by rule of the association, is deemed to provide reasonable security, reliability, identification, and verifiability. It also provides for conducting association business via an acceptable technological means. Notices can be sent or received; signature, vote, consent, or approval required can be obtained; and the performance of obligations or exercise of rights may take place via these technological means.