April 24, 2014

Harold S. Dembo,  a Principal in the Real Estate Law practice group, discusses the guidance that the appellate court provided to the Condo Board Operations & Owner's Rights.

The Appellate Court of Illinois, First District, has recently ruled in the case known as Palm vs. 2800 Lake Shore Drive Condominium Association that meetings held by the Board of Directors of a condominium association, which were closed to unit owners, were a violation of the Illinois Condominium Property Act.  Such meetings require notice to the condominium owners with an opportunity to attend the Board meeting.  In essence, the Court held that discussing Association matters via email, or canvassing Board members by phone, and deciding matters in closed working sessions prior to the presentation of the matter for a vote at an open meeting were meetings in violation of the Illinois Condominium Property Act.  The Court specifically held that a "board meeting" encompasses the activities of the Board in a workshop and executive session.  Such meetings are to be open to any unit owners with the exception of meetings for the sole purpose of (i) discussing pending or potential litigation involving the Association, (ii) considering information regarding the hiring and firing of employees and (iii) discussing rules violations or unpaid assessments.  These are the only three exceptions listed in the Illinois Condominium Property Act.  Although the Board may discuss and consider matters falling within the three exceptions in closed meetings, it must vote on these matters at a meeting that is open to the unit owners. 

The Court did not agree with the defendants that Board discussions and meetings without a vote can occur in a closed meeting session.  It did not believe that it was the legislature's intent that Board discussions can occur in a closed meeting.  The Court found that "conducting board business" does not only mean "voting on board business".  To conduct business means to direct or take part in the operation or management of a business, which might encompass voting on business matters but is not limited to such voting matters.  Accordingly, it is recommended that condominium owners and the Board of Directors of Condominium Associations be cognizant of the fact that, except in very limited circumstances, all Board members' discussions should be part of an open meeting with all unit owners.

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