IL Condo HOA rules amended by property manager (not HOA Board)

7 Replies

I have an Illinois condo unit that I rent out and would like a second opinion about an issue that was debating with the HOA's property manager.

The gist is that after signing new tenants to a lease I was hit with a $150 fee that wasn't in the rules and regulations for the HOA when I bought the unit. The IL Condo Property Ace is quite clear about the process required in order to amend governing documents, of which rules and regs are one. For example, the HOA must vote in an open meeting, notification of that meeting must be provided to HOA members, and the notification must include the full text of the proposed changes. In my case, not only did none of that happen, the PM is actually suggesting that is was THEM who changed the rules and therefore the typical process didn't need to be followed. Has anyone ever heard of such a thing? It's only $150 but it seems clearly illegal not to mention it makes me seriously doubt the credibility of the PM if he has this poor of a grasp of the rules his business must adhere to.

what was the fee for?

I guess you could say in writing,, you require proper written notice period before you would pay the fee.. and verification the assessment fee was accepted by member vote.. 

@Deanna McCormick The fee covers the effort required of the PM to setup new tenants in their systems. I support the fee because it is actually more equitable than raising dues for everyone, including owner occupants. My issue is that because they didn't notify anyone or much less vote on these changes in a meeting, how can the previous governing documents have actually been amended introducing the new fee. From my point of view, this fee doesn't exist.

I'm having a hard time respecting the PM firm after they honestly suggested via email that they could legally introduce new fees at their own discretion, to be paid by Association members, without changes being voted on and passed by the Board! The PM firm has a contract with the HOA entity. I don't see any legal relationship between the PM firm and HOA members. Only the HOA can make changes that affect it's members, hence the IL Condo Property Act having such specific language about the process required to amend things.

I have but I think we're at an impasse with the PM firm because they believe they can legally amend rules on their own. Reaching out and grilling them for what's new or changed right before I sign new tenants will definitely be the plan but it's an extra step I shouldn't need to take. 

This really depends on how your governing documents are written.

For example:

The Articles of Incorporation generally are never amended as these are the original documents that started the business entity.  These are updated to include new contact info each year when the renewal is filed with the Secretary of State (or equivalent), but the underlying structure is generally not changed.

The By-Laws generally require a quorum of homeowners to change.  The By-Laws cover things like how the Board of Directors Form, what its duties are, how dues are assessed, etc.  It's a pretty big deal to change these, generally requiring not only the quorum of homeowners, but also specific notice requirements, a certain time period for discussion, etc.

The Covenants, Conditions and Restrictions (CC&Rs) also usually require a quorum of homeowners to change.  These are things like paint color schemes, keeping each property in good repair, pet restrictions, holiday decorations, rental caps and all that small minutae that goes into how you can use your property and what you have to abide by.

Rules and Regulations generally DO NOT require homeowner quorum/votes to change. These are things like how late the pool stays open, whether diapered children are allowed in the pool, the amount of a fine for leaving pet waste on the ground, the due date of HOA dues, the number of days needed to cure a violations and other things like that. Often times a board will change Rules and Regulations after input from homeowners, but it is not strictly required that they do so.

Lastly, you have Policies and Procedures.  This can include things like what day of the month late charges are assessed to accounts, how many days after a homeowner is late do they turn it over to the lawyer and probably something like the issue you're battling, which falls in line with whether or not they charge a move-in fee or a new resident processing fee.  This could be something that the Management Company said to the board "hey, we incur a bunch of extra work for this process.  We're either going to charge the Board or charge the Homeowner" and then the board said "Charge the Homeowner".  And 99 times out of 100 (again, depending on how your governing documents are written), this is perfectly legal and legit as it is a change to a Policy/Procedure, not a change to the By Laws. 

@Linda Weygant Thank you for such a detailed response. Agreed that this issue isn't related to Articles of Incorporation, By-Laws, or CC&R's. The new fee is a change to rules and regulations or policies & procedures, although I haven't seen the team "policies and procedures" mentioned in any documentation for this condo or my primary residence, which is nearby. 

I'm not a lawyer, but when I read the two relevant sections of the 2017 IL Condo Property Act, it seems clear that while quorum may not be necessary to amend the rules, notice of the meeting i required. Notice was not provided and it is this fact that makes me believe the change was not legal, and therefore I shouldn't be required to pay the fee for this tenant. Is this sound logic or am I missing something? 

** Section 18.4(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 including, but not limited to, the free exercise of religion, nor may any rules or regulations conflict with the provisions of this Act or the condominium instruments. No rule or regulation shall prohibit any reasonable accommodation for religious practices, including the attachment of religiously mandated objects to the front-door area of a condominium unit."

** Section 18(b)(6) "that written notice of any membership meeting shall be mailed or delivered giving members no less than 10 and no more than 30 days notice of the time, place and purpose of such meeting except that notice may be sent, to the extent the condominium instruments or rules adopted thereunder expressly so provide, by electronic transmission consented to by the unit owner to whom the notice is given, provided the director and officer or his agent certifies in writing to the delivery by electronic transmission;"

On the surface, your logic certainly seems sound and you may have a decent case for getting around this charge.  One thing I did notice in the document you linked is that many other paragraphs have the following...

Unless the condominium instrument expressly provides for a greater percentage or different procedures....

   Which clues me in that Illinois laws have some provisions that can be excluded within the governing documents.  While it's not clear to me that this specific issue is governed by that type of sentence, I think that it requires somebody with much more knowledge of these particular laws in Illinois to render a better opinion.  

I do think the key to solving this is going to be within your community's governing documents and not necessarily within the state document.

Here in Colorado, the laws governing community associations were completely rewritten.  The problem is that the new state laws will completely over ride some issues within a community's documents while in other scenarios, the community's documents overwrite what is written in the state law, so it's a real cluster**** and mish mash of interpretation and trying to figure out what paragraphs and sections really apply to any given situation.  Meanwhile, the lawyers get richer....