Condo Adviser: Community associations must enforce rules and regulations uniformly
A. Applicable case law in Illinois holds that rules and regulations must be reasonable and that board members have a fiduciary obligation to enforce the association's governing documents. The case law also stands for the proposition that uniform enforcement of the rules and regulations and governing documents is required.
When a community association selectively enforces rules and regulations against some units, but not other units, an owner can argue in an enforcement lawsuit that the association waived its ability to enforce a particular rule or regulation against any unit. Said another way, failing to uniformly enforce the rules and regulations will likely result in a court prohibiting the association from enforcing a particular rule or regulation against all units.
Q. I live in a condominium association with a fitness center with key fob access. The association has decided to switch the system to access to the fitness center from a key fob to a smart phone app, and stated that unit owners who prefer to keep a key fob to the fitness center would be required to pay a $250 deposit for a new key fob, notwithstanding the app does not require a deposit. This does not seem fair. Can the association set a deposit fee for a key fob but not charge a deposit for use of an app?
A. Section 18.4 of the Condominium Act grants the board of directors broad authority to administer the association and the common elements and adopt rules and regulations relating to the administration of the common elements. Pursuant to that broad authority, the board can set requirements for a deposit for common area keys or key fobs. In fact, deposits for key fobs are common in community associations.
Q. I live in a high-rise condominium in Chicago. Our operating expenses for the past year exceeded our budget. There is a section in our condominium bylaws that addresses an operating shortfall saying it needs to be charged to the unit ownership. However, our board of directors chose not to follow this requirement and instead transferred money out of the reserve fund to cover operating funds. Is this allowed?
A. It is common for condominium bylaws to address how to handle an operating surplus or an operating deficit. If the bylaws are very specific and state that an operating deficit shall be addressed by assessing the deficit to the unit owners through the next year's budget or by special assessment, then the bylaws must be followed. However, many times, certain expenditures that may have been charged to the operating fund actually qualify as a valid reserve expense item depending on the nature of expenditure.
Thus, if certain expenditures can be classified as a valid reserve expense, which were the cause of the operating deficit, then use of reserve funds may be proper. The nature of the expenditures should be closely reviewed to determine whether the use of reserve funds was appropriate.
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