During the COVID-19 pandemic, officials at the federal, state, county and municipal levels have changed procedures, shifted resources and directed the public to change normal routines.
But for many in Illinois, there’s a another layer of rules and rule-makers closer to home: condominium associations.
A handbook published by the Illinois Department of Financial & Professional Regulation’s condominium and common-interest community ombudsperson Adrienne M. Levatino described the condo association as “a sort of highly-local mini-government” with its own declaration, bylaws and internal rules set under the framework of the Illinois Condominium Property Act.
The same booklet from Levatino estimated around 3.7 million people in Illinois — about 30% of the state’s population — resided in a condo development in the year 2015.
The Daily Law Bulletin spoke to condo attorneys and a state agency about the questions they’re fielding from condo unit owners and their boards during the COVID-19 pandemic.
‘Open’ includes online
The Condominium Property Act requires every meeting of a condo’s board of managers to be “open to any unit owner,” with a specific list of exceptions based on the subject matter to be discussed.
But the law also says board members may participate and act in meetings by “telephonic means” or by use of “acceptable technological means.”
As Gov. J.B. Pritzker and public health officials have restricted public or private gatherings larger than 10 people, conference calls or videoconferencing tools are a socially distant way for boards to comply.
Patrick T. Costello, a shareholder at Keay & Costello P.C. in Wheaton, was a co-chair of the Community Association Institute’s Illinois legislation committee in 2014 when the organization helped draft the electronic voting bill allowing condo boards to function remotely.
“It does have pretty expansive language,” Costello said.
He’s been pointing clients toward services like GoToMeeting or Zoom, which allow for people to participate in a meeting by video chat or through a dial-in telephone number.
In a separate interview, condo attorney Michael C. Kim, of Michael C. Kim & Associates, said most of his clients had also made the switch to virtual meetings.
“What you’re trying to do is get something as close as possible” to the in-person option, Kim said.
“I think the concept under both the Condominium Property Act and under the Palm II case is that unit owners must be able to attend and watch the board conduct its business,” Costello said.
By attending online or by phone, owners are “still getting an opportunity to see, hear what’s going on before the association.”
The case Costello referenced, Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2014 IL App (1st) 111290, was a 1st District Appellate Court decision that held any gathering or quorum of board members to conduct board business needed to follow the open-meeting requirement.
The Palm II precedent also means boards can’t collect votes on association business by phone or email unless the discussion is open to all unit owners.
A statement from IDFPR confirmed that virtual condo board meetings are acceptable as long as the board gives proper notice of a meeting — typically 48 hours in advance by mail or posting.
“That notice should include specific, detailed instructions on how unit owners can attend in those meetings in a virtual manner,” the written statement said.
Boards’ emergency powers
The condo act defines an “emergency” as “an immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners.”
“Those emergencies were probably thought of in terms of a burst pipe,” Kim said. But a dangerous, contagious pathogen certainly creates a health risk.
The law allows a condo board to respond quickly to an emergency, as long as the board ratifies the action at a subsequent open meeting. But the board must notify owners about its actions within a week of the emergency.
“For the most part, most practitioners would say you could follow that using the general emergency doctrine,” he said.
In its statement, the IDFPR said it’s observed that most association have ramped up cleaning measures, and many are now also encouraging residents to cover their faces when in common areas.
“Considering the fact that numerous associations, especially in Chicago and other large cities have populations larger than those in some Illinois municipalities, associations may want to emphasize the particular importance of sheltering in place and practicing responsible social distancing,” the statement reads. “Associations are also developing or updating lists of older residents and those otherwise at greater risk of susceptibility to COVID-19 in order to inform first responders should that be necessary.”
Many associations have closed shared amenities like pools, gyms and party rooms, and some are limiting how many people can ride elevators at once, the IDFPR said.
Costello said the actions taken by his client associations are being well received by owners.
“We really haven’t had much pushback about closures in those kind of places,” he said.
Kim said boards face the same standards as always: a fiduciary duty to operate the association in a prudent manner, and a duty of care not to engage in foreseeably harmful conduct.
Boards can only take reasonable action but can’t be expected to guarantee people’s personal safety, he said.
Costello said some boards have fielded requests for refunds from owners who can’t use the clubhouse facilities they paid for. But refunds are unlikely.
“The expenses still generally exist for that period of time,” he said, even if nobody’s allowed in.
No condo bailouts
While neighborly gestures are helpful while so many are facing sudden financial hardship, condo associations don’t have any leeway when it comes to assessments.
“The Condominium Property Act specifically prohibits boards from forbearing the collection of assessments, but it’s probably wise for them to consult with their attorneys to determine whether reasonable payment plans that are uniformly applied and will not cause harm to the financial stability of the association can be developed,” the IDFPR said.
Boards can choose to suspend or waive late fees, Costello said. But anything that limits cash flow creates its own management headaches, he said.
“Unlike a landlord or a commercial property owner, they’re a not-for-profit organization,” he said. “It becomes really difficult for an association to allow people to not pay assessments for months on months.”
In the 2007 foreclosure crisis, Costello said some smaller associations saw their delinquency rates climb from around 5% up to about 30%. For aging properties with lots of deferred maintenance, lax collection will push repairs further back, he said.
And while courts aren’t hearing eviction cases, collection actions can still be filed to start the process.
Kim said associations can consider drawing on lines of credit or delaying spending to reduce cash demand in the months ahead.
“They’re not getting any bailouts from governments.”