Good news for board members of homeowners associations: Legislation effective January 1, 2017, makes it easier for association boards to hold closed (executive) sessions. What’s especially significant about the law is that it mitigates particular aspects of the First Appellate Court decision in Palm v. 2800 Lake Shore Drive that had left many board members frustrated.
The Impact of the Palm Decision
You’re probably familiar with the Palm decision, but in case you’re not, here’s a quick rundown. It started when a condominium unit owner filed a complaint against his condo association, the board and the board president. In his suit, he claimed that the board had violated the Illinois Condominium Property Act (ICPA) by discussing and voting on association business outside of open meetings and by making decisions via email. The court ruled in favor of the unit owner based on its interpretation of the ICPA, as well as the condo association’s governing documents.
One of the more troubling aspects of this decision was the burden it placed on condo boards regarding closed sessions. Normally, boards can hold closed sessions if they need to discuss topics pertaining to litigation, employment, rule violation or unpaid assessments. However, the ruling meant that board members were prohibited from discussing or voting on any association business outside of a scheduled, open board meeting—even if the discussion topic qualified for a closed session. A board could still hold a closed session, but it had to do so as part of a scheduled board meeting. Any related vote still had to be held at an open meeting.
Although intended to promote greater transparency, the decision prevented a quorum from gathering informally to discuss association business. In addition, it prohibited board members from eliciting decisions via email—either directly or through their property manager.
Public Act 99-0567 to the Rescue
The new law amends both ICPA and the Common Interest Community Association Act (CICAA), so it applies to all community associations, not just condo associations. These amendments allow boards to hold closed meetings either separately or as part of a noticed meeting to
  • Discuss probable, pending or imminent legislation
  • Discuss third-party contracts or information regarding appointment, employment, engagement or dismissal of an employee, independent contractor, agent or other provider of goods and services
  • Interview potential employees, independent contractors, agents or other providers of goods and services
  • Discuss violations of the association’s rules and regulations
  • Discuss an owner’s unpaid assessments
  • Consult with the association’s legal counsel
What this means for you is that, as of January 1, 2017, more topics qualify for closed sessions, and your board can discuss them in workshops without having to notify or invite owners. It even allows your board members to use email to discuss these topics. It is important to note, however, that no voting or decision making may occur during these closed discussions. For example, if a board interviews three potential employees they can discuss the candidates privately, but a decision cannot be finalized. The board needs to provide a recap to homeowners and call for a decision to be made at an open meeting. This achieves transparency and can eliminate lengthy discussions by providing an open, concise summary to homeowners.
The law can be complicated, so it’s always a good idea to speak with your association attorney before changing the way you handle your meetings. Your property manager can also assist you by planning and running your meetings and ensuring that homeowners in your community receive meeting notices in accordance with state laws and your governing documents.
Learn more about the benefits of working with a professional property management company to stay on top of your meetings. Contact FirstService Residential, the leading property management company in Illinois.
Monday December 12, 2016