CondoLifestyles

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july 2017 | volume 21 | number 2

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THE SOURCE FOR INFORMATION ON COMMUNITY ASSOCIATIONS, CONDOS, TOWNHOMES, CO-OPS & HOAS

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Pets, Parking & Play...

Summertime at Your Association FEATURES...

Construction Risks, Risk Shifting and Additional Insureds

Best Practices for Protecting Association Data from Hackers Alterations to Common Elements TA X R AT E S :

Out of (Our) Control The Continued Erosion of the Draconian Effects of Palm II Top 10 Ways to Drive Up Homeowner Engagement in Your Community Fiduciary Duty & the Business Judgement Rule

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table of contents

Tom Engblom CMCA, AMS, PCAM VP, Regional Account Executive 312-209-2623 Toll Free 866-800-4656, ext. 7498 tom.engblom@mutualofomahabank.com

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COVER STORY

03 Pets, Parking and Play... Summertime at Your Association

By Pamela Dittmer McKuen BOARD BASICS

Member FDIC Equal Housing Lender

AFN45462_0213

10 Construction Risks, Risk Shifting and Additional Insureds

By David Lewin S P E C I A L F E AT U R E

14 Best Practices for Protecting Association Data from Hackers

By Janelle Dixon 16 Industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 20 From the Editor 21 Directory Advertisements L E G A L U P D AT E

28 Alterations to Common Elements

By Gabriella R. Comstock and Jonathan D. Wassell M O N E Y M AT T E R S

32 TAX RATES: Out of (Our) Control

By Matt Panush L E G A L U P D AT E

34 The Continued Erosion of the Draconian Effects of Palm II

By Howard S. Dakoff, Esq. & Jason B. Hirsh, Esq. M A N A G E M E N T TA L K S

36 Top 10 Ways to Drive Up Homeowner Engagement in Your Community

By Salvatore Sciacca L E G A L U P D AT E

38 Fiduciary Duty & the Business Judgement Rule

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COvER STORY

by Pamela Dittmer McKuen

Pets, Parking & Play... Summertime at your Association “Summertime and the livin’ is easy,” are lyrics song stylist George Gershwin composed for the 1935 opera “Porgy and Bess.” For many, summer is an easier time, filled with sunshine and warmth and outdoor enticements. People are out and about--playing, working, traversing, driving and sporting, often accompanied by their children and animal companions.

F

or community associations, the season brings a host of challenges.

The objective, after all, is to keep everyone safe, having fun and livin’ easy.

We checked in with industry veterans in the Chicago area to learn how they are dealing with the summer’s hottest issues--pets, play and parking. Perhaps you can pick up ideas that will work for your own association:

A Welcome Mat For Animals--Maybe As much as people love being outdoors during the summer, so do their animals. most, but not all, associations are pet-friendly these days. If they are, they take steps to protect other residents in the community and to control both animals and their waste.

Doggie poo seems to be a never-ending problem. Cathy ryan, president and chief executive officer at Property Specialists Inc. in rolling meadows, claims she would be rich if

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07.17

she had a dime for every pet violation notice she has sent out. managers often rely on selfpolicing and neighbor complaints in attempts to keep the grounds clean. Doggie DnA, which matches waste to its producer, is attention-getting but not prevalent. yet. jennifer Stopka, a regional director with FirstService residential in Illinois, says most of the company’s suburban association clients allow pets. Those that do generally require owners register their pets with the association indicating the breed, size and color. “one location has utilized pet-waste stations that the professional landscape vendor disposes of,” she says.

In the city, the properties represented by linda King, a community association manager at Associa Chicagoland, are pet-friendly with well-trained owners. The issue these days

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is neighborhood dog-walkers whose canines relieve themselves on association lawns. The yellow stains are their calling cards. The associations have posted signs, which seem to be ignored.

“It’s easier when it’s one of your residents because all you have to do is reach out to them,” she says. “but it’s harder when they don’t live on the property.” one association recently installed signs at dog-height, a couple of feet off the ground.

The theory is dog-walkers are more likely to see them because they tend to look down when they walk.

“We’ll see if that’s true,” King says.

While many dogs enjoy each other’s company, some need to be left alone for varying reasons.

At least one FirstService residential client association is participating in the International Gulahund yellowdog Program to improve the safety of both residents and canines. Founded in Sweden and now widespread, the program encourages dog owners to tie a yellow ribbon or bandana on a dog that is sensitive and needs extra space for

whatever reason.

Dogs might be easily frightened, recovering from surgery, in season, in training or simply unsociable. The yellow signals others they should keep their distance. That way misunderstandings are prevented, and dogs have a better chance of overcoming their problems, thereby achieving a better standard of life.

For more information, go to www.yellowdog.se. opinions are divided on whether allowing pets helps or hurts resale values, but managers agree the answer depends on the association and its traditions.

“I believe resale value is not hurt by having pets in a building,” says Thomas Skweres, regional vice president at ACm Community management in Downers Grove. “Some people would rather give up their children than give up their pets. but along with pet ownership comes responsibility on the part of the owner. being a good neighbor and using common sense avoids potential problems.”

At 900/910 lake Shore Drive Condominium Association, a two-tower 1955 property designed by noted architect ludwig mies

van Der rohe, on-site manager natalie Drapac of Community Specialists believes the no-pet policy is an asset. one of ryan’s suburban associations is comprised of two mid-rise buildings. one is a pet building, and the other is a non-pet building.

“I think that is valuable,” she says. “People who don’t like dogs don’t want to listen to their neighbor’s dog bark all day.”

Non-Pet Animals: A Growing Concern While not strictly a summer issue, many pet-free associations find themselves besieged with requests for assistance animals for reason of physical or mental disability. The trend is frustrating boards and managers because of the low bar requesting owners need to hurdle and the suspicion that many requests are bogus.

“This seems to be the way that people are getting around the “no pet” rule,” Skweres says.

“All they need is a prescription from a doctor, in most cases, for the animal to be given a ‘reasonable accommodation.’ The number of ‘emotional support’ animals has grown considerably.”

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COvER STORY

Assistance animals are permitted under the Fair Housing Act and overseen by the u.S. Department of Housing and urban Development. no one wants to risk tangling with the feds.

“While the original intent was probably for a good reason, the regulations today all side with the owner,” ryan says. “People find loopholes in the system. one homeowner was granted a second support dog because the first support dog was depressed. The association had to let them have a second dog.”

“We absolutely consult the association’s attorney each and every time we get a request, mostly due to risk management,” says michael Carnahan, owner and community association manager at red brick Property management in lombard. “We follow fair housing guidelines, and we want to make sure we are not discriminating against any protected class.” on the other hand, requesting owners must provide more authentic documentation than an emotional support tag purchased online, he says.

Part of the challenge is for non-pet associations who must accept assistance animals

(or who have been deceived into accepting such animals) struggle for the first time to create reasonable rules for behavior, he says.

“The board member who thinks the homeowner got away with something may be tempted to put in a $500 fine when all the other fines are $50,” he says. “We have been cautioned not to do that. The board could be accused of discriminating against a person with a disability. Any new rules must be in line with the rest of the rules.”

According to HuD, associations may hold the owner of the assistance animal liable for any damage it causes. The animals must behave themselves, meaning they cannot bark all hours of the night or cause unreasonable disturbances. rules relating to nuisance and damage to a property apply just as they do to any other owner. Associations may not require the animal owner to pay a deposit, and they may not restrict breeds, animal sizes or weights.

Drapac’s association passed a set of rules for service and emotional support dogs.

Among them: Dogs must be licensed and vaccinated as required by the City of Chicago,

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07.17

and they cannot relieve themselves on common elements. owners must clean up after their dogs, maintain liability insurance and provide medical documentation annually.

Summer’s Here--Let’s Play!

Associations are vastly different in their attitudes toward facilities for recreation and relaxation for their residents. Some, perhaps taking a cue from the gleaming new urban apartment towers that offer robust amenity packages, are beefing up their sites with community spaces and fitness centers. others, in an effort to pare expenses, have eliminated pools, tennis courts and other recreational spaces. one of King’s properties on lake Shore Drive installed a landscaped garden with a children’s playground a few years ago. now the association is working on enhancing the exterior lighting. Another building is spending big dollars to upgrade its fitness room. The associations believe these improvements will help attract buyers and renters, and increase property values, she says. “millennials and Gen-Xers want more

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Y Shown here is an electric car charging station at a condominium parking garage run by SP Plus.

amenities and are drawn to these types of communities,” says ACm’s Thomas Skweres. “before investing in these areas and the equipment that goes with them, the board must consider the initial cash outlay and the upkeep moving forward.”

Among the most outdoor popular amenities are community spaces for cooking and socializing, roof decks and lap pools, he says. of Carnahan’s 40 client properties, one has added amenities and several others filled in their swimming pools. one property replaced its pool with a splash pad. Another created walking trails and a fitness park.

“For some associations, when they are adding up their expenses and liability and insurance rates to pay for an amenity, that’s a pretty big hurdle to cross,” he says. one of ryan’s associations recently removed its playground.

“It was cost-prohibitive for the five or six kids who live in the community,” she says. “In this day and age, the park districts are so much better than anything they can put in a common area.” on the other hand, ryan has some associations that have maintained exercise equipment for years. “It’s a big plus and a hot seller. you don’t have to go to the gym. you can exer-

Y Shown here is 900/910 Lake Shore Drive.

cise in the comfort of your own community.”

In her opinion, the fitness centers are more valuable than pools. outdoor amenities get heavy usage during the summer. Appropriate rules and sometimes extra supervision are needed to maintain peace and prevent injury.

“During the summer months, there is definitely an uptick in the number of visitors, especially if the building has nicer amenities and outdoor space,” says Daniel valdes, a regional director at FirstService residential in Illinois. ”We have a rooftop pool at one of our sites, and we’ve had to hire security guards for weekends to make sure everyone is following the rules.”

Those rules include no glass on the pool deck and only one visitor at a time, he added.

The same advice about not making rules that specifically apply to assistance animals and their owners applies to making rules governing the behavior of children. For example, instead of a rule that bans children from skateboarding in a certain area, the rule should ban everyone from doing so. “you want to be cautious about never making a rule about what kids can do because familial status is a protected class,” Carnahan says. one of the greatest joys of summer living

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is grilling food outdoors. because of the danger of fire, most associations and municipalities in both the city and suburbs have strict rules about the use of grills.

“Chicago city code says no charcoal,” valdes says. “you can have a gas grill but not charcoal. you can’t have an open flame over a living area--it’s a huge liability. many associations allow grills on balconies as long as you have a gas propane tank. If grilling on balconies is not allowed, FirstService residential provides a reminder notice at the beginning of the warm weather season to ensure safety standards are communicated and minimize risk for the entire community.”

In suburbs without restrictions, the issue of outdoor grilling is usually insurancerelated, Carnahan says.

“It depends on the type of construction when you bid out the insurance,” he says. “The insurance company comes out and does due diligence, and if they see you have wooden balconies but no rule about charcoal grills, it’s not good. So the board then makes whatever rule to get the most favorable rate with the insurance company.”

When one association asked ryan to find them an insurance company that would cover charcoal grilling, she did, at a premium increase of $25,000 a year.

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“That’s an expensive hamburger,” she says.

Too Many Cars, Not Enough Parking nearly every association, suburban and city, struggles with not enough parking spaces.

Some were built years ago, back in the day when families made do with a single car.

Today, teens often have their own cars, and millennials live with mom and Dad much longer than baby boomers ever did. A townhouse occupied by four drivers and their vehicles is not unusual. And parking-challenged residents often invade guest parking areas.

To cope, associations have devised myriad parking systems and rules, but satisfaction is rare. The gamut includes assigned parking spaces, unassigned parking spaces, parking stickers for owners, parking stickers for guests--or some combination thereof. visitors are often out of luck. one of Stopka’s associations gives owners guest passes, one a week. one of ryan’s associations is contemplating laying more asphalt.

King manages a building that has no outside parking except for a few spaces intended for guests. residents are expected to park in

their garages or on the street, but they sometimes use the guest parking. board members try to make frequent rounds but as they rotate over the year, not everyone has the same schedule.

“It was kind of under control before,” she says. “What we are trying to do is re-design our rules, so they are clearer in terms of who can be towed. Hopefully, if we tow one or two cars, that will eradicate the problem because people will know what to expect.”

Skweres favors assigned parking whenever possible. Assigned parking provides better security because vehicles must be identified.

With unassigned parking, residents sometimes feel they can park any place and use their garages for storage or an extra living room.

“I think it is important for associations to have well-defined rules as to what can be parked on the property, whether there is assigned parking or non-assigned parking,” he says.

The Search For New Garage Solutions City residents are interested these days in improving existing amenities and even adding new ones, said valdes. one amenity increas-

8 C O n D O l I F E S T Y l E S 07.17

ingly in demand is electric charging stations.

“We are seeing a healthy amount of discussion going on,” he said. “As more people are asking questions, managing agents have to be prepared to answer about best practices, where in the garage the charging stations should be located, what kind of equipment to buy, who pays for the equipment and electricity and other issues.”

City garage operations have been forced to adapt to several unsettling trends. For one, many are struggling with reduced revenue. many residents have given up their cars because of the easy availability of car-sharing programs like ZipCar and uber. In addition, garages typically are configured to require staffing, and the cost of labor continues to go up. As a result, associations are looking for ways to make their garage operations more efficient and to provide better services. “one way that can be done is by making it easy for residents to inform the valet that they need their vehicle before they actually arrive in the garage,” says roger Walters, vice president at SP Plus Corp. in Chicago. “That gives the valet more time to retrieve the

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COvER STORY

vehicle and also reducing the time a resident must wait for their car in the garage.”

SP Plus operates about 3,700 parking facilities and over 2 million parking spaces in hundreds of cities across north America.

Among SP Plus’ solutions: 900/910 lake Shore Drive Condominium Association employs a device called “Zingle,” which allows residents to text their vehicle request to the garage. The request is printed in the garage, and the attendant retrieves the car, so it is ready when the resident arrives.

“At another property we use ‘Flashvalet,’ which performs a similar function but also helps with tracking usage and retrieval times,” says Don barnes, an SP Plus regional manager. “‘Flashvalet’ also allows us to take pictures and video of the vehicles to help with damage claim assessment.” yet another solution is ‘elimiwait,’ which is a touchscreen that allows residents to enter the next time they will need their car. The system automatically lists the vehicles on a screen in order, so the attendant knows which car is up next and how many are in the queue to be retrieved.

“Increasing criminal activity in the city has many associations considering additional security measures such as onsite guard services, adding controlled access to doors and/or installing camera systems,” Walters says.

Making The Most Of Summer The best way to stay on top of summer’s many issues is for managers and board members to make frequent property inspections and note various conditions and behaviors.

Then, follow up with messages and reminders. “obviously, every building is different,” King says. “Some buildings I go to a couple times a month because I know the board and other owners are always looking around. other buildings, I am the one who makes regular inspections” valdes’ advice for a safe, happy summer: Always be aware of your surroundings. be courteous to fellow neighbors. If you see something, say something.

“We always promote open lines of communication,” he says. “In our newsletters, we provide an avenue to communicate with the board of directors without management in

between. We always tell our residents how to reach us and the manager 24/7, and if they see something suspicious or concerning to call 911.”

Despite the seasonal challenges, summer is an ideal time to strengthen bonds among neighbors, boards and even management.

Those connections are sure to carry through the rest of the year.

“I applaud those who take time to do block parties and other outdoor events, so they can get to know their neighbors in a relaxed environment,” ryan says. “block parties build a sense of community.”

Stopka enthusiastically agrees. “During the summer, there are more community-organized events like pool parties, garage sales, block parties and movie nights. This is the part of the job most managers will agree is great and rewarding. running or being a part of these events can make a positive impact on the communities we manage!” Y

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COnDO lIFESTYlES

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by David M. Lewin, Lewin Law Group

Construction Risk, Risk Shifting and Additional Insureds Major renovation projects involve risks for a condominium association. A fall of a worker repairing a façade could cost the association millions. When faced with a façade repair or similar major renovation project, the manager must be aware of the potential grounds for liability as well as the basic concepts needed to shift the risk from the condominium association to the contractor and the contractor’s insurers.

Only by doing so can the financial resources of the association be protected.

W

hen contracting for construction or repairs, the most common risks are bodily injury and damage to property. Through contract provisions and insurance endorsements, those risks may be shifted “downstream” to the contractors and sub-contractors working on the project.

Too often, managers either fail to have contracts reviewed or they rely on counsel unfamiliar with construction law and risk shifting. The attorney who provides basic advice as to the

Illinois Condominium Property Act often lacks the training and experience to draft and review AIA contracts and ISO additional insured forms. Finally, renovation contracts often require the contractor to send Certificates of Insurance and Additional Insured Endorsements to the manager. As such, the manager should have some understanding of the use and details of those forms.

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I. The Basis for Liability Most bodily injury claims for renovation projects arise from injury of workers at the work site. When the injured party is a worker on the project, that worker has two avenues to recover. The first is the Illinois Workers’ Compensation Act, 820 IlCS 305/1 et seq. Under the Act, the employee has a claim against the employer. Condominium managers should make sure all contractors are covered by worker’s compensation insurance. If not, the Association’s policy may need to step up to cover an injured employee of the contractor.

The second avenue for recovery is against the condominium association. The majority of construction-related bodily injury claims are brought under a negligence theory. In most cases, there is an issue as to whether the defendant had a “duty” towards the injured worker.

Generally, a company has no duty for acts or omissions of independent contractors that it retains and as such, is not liable for their negligence.

Shaughnessy v. Skender Construction Co., 342 Ill. App. 3d 730 (1st Dist. 2003).

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BOARD BASICS

There are of course exceptions to the general rule.

The most common exception is for “retained control.” Illinois courts follow the Restatement (Second) Of Torts §414 (1965) to determine whether the defendant had enough control over construction to find that the defendant owed a duty of care to the plaintiff.

Finally, there is a potential for liability under a premise theory. Under a premises liability theory, an owner or a contractor may be held liable for injuries to a construction worker as a possessor of land. This typically is found in situations where the landowner knew of a defective condition but failed to warn of it.

Restatement (Second) §414, comment c, provides that an owner will be liable where the owner retained control over the work. Courts will look to whether the owner controlled the “means and methods” of the work. Where the owner merely has a general right of control, there will be no liability. Properly drafted construction contracts will require that contractors control the means and methods of the work. Competent counsel also should work with the manager and building engineer to make sure that neither takes steps that might cause the association to be liable based on control of the work.

The other risk is property damage. When it comes to property damage, the manager should be aware that there are two basic types of losses. The first is to the work itself. For example, consider a contract to replace the surface of a parking garage. If the contractor performs poorly and damages that surface, or simply does a terrible job, insurance policies are likely to exclude coverage.

The second exception is that Illinois courts have found that a party may owe a duty of care to an injured construction worker if it knew or should have known of the dangerous condition, and failed to take action. In such cases, the question for the court is whether the condition existed for such a period of time that the defendant knew or should have known. Cochran v. George Sollitt Construction Co., 358 Ill.App.3d 865, (1st Dist. 2005).

In contrast, returning to the façade example, assume a contractor drops materials off a scaffold and damages cars parked below. In that scenario, properly drafted construction clauses likely would lead to the loss being covered by the contractor’s insurer.

II.Additional Insured Issues and The Contract Requiring Coverage a. Introduction to the CGL Policy: The Basic Structure of the Policy The primary method by which risk is shifted in a major renovation contract is through insurance and indemnity provisions of the construction contract. To understand how those contractual provi-

sions work, the manager needs a working understanding of the policy forms and endorsements.

Commercial General liability [CGl] policies have a similar structure, whether the policy is a standard Insurance Services Organization (“ISO”) policy written by a major insurer or whether it is a nonstandard (“script”) policy written by a smaller insurer.

The policies all start with the Declarations. That document lists the named insured, the policy period, the policy limits, and lists the forms and endorsements.

The policy next has a “Commercial General liability Coverage Form.” That form starts with the “Insuring Agreement.” The insuring agreement sets forth the basics for coverage.

The next relevant section of the CGl Coverage Form will be the list of exclusions.

The next important section is commonly referred to as “Section II, Who Is An Insured.” That section identifies the insureds under the policy. Additional insured endorsements serve to modify and expand that section of the policy.

Following the Coverage Form, the policy has various endorsements, including the Additional Insured endorsements.

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c. The Language and Limitations of the Standard Forms

b. The Types of Additional Insured Forms: ISO v. Script, Blanket v. Schedule The Insurance Services Office produces widely used insurance forms, including the most commonly used Commercial General liability forms.

Each type of ISO form has a standard form number.

For ongoing operations additional insured forms, that number is “20 10.” Since the form is part of a commercial general liability policy, the policy form number starts with “CG.” Finally, the last numbers are the month and year the form was approved. As such, “CG 20 10 11 85” would be a commercial general liability additional insured form approved in november 1985.

In addition, additional insured forms – whether ISO or script – can be divided into “scheduled” endorsements and “blanket” endorsements. Scheduled Endorsements provide Additional Insured coverage to a designated party. Some insurers will change “scheduled endorsements” to “blanket” by scheduling “where required by written contract.”

Blanket Endorsements, in contrast, provide coverage to a range of entities that are not specifically listed. They nearly always require a written contract. The biggest single mistake that owners and insured make on additional insured issues is to rely on a blanket endorsement without having a written contract.

One of the terms we still see in construction contracts is reference to “Broad form” coverage. Unfortunately, it references policy language that is very difficult to obtain. It would be very difficult for a contractor to comply with a requirement for “broad form” additional insured coverage. Condo managers should note that if the contract requires “broad form” coverage, the contractor may not be able to produce such coverage.

The most common example of Board Form Coverage is endorsement CG 20 10 11 85. The form provides additional insured status to losses “arising out of” the work of the contractor. That form was excellent for owners, as it provided additional insured coverage even where the named insured’s fault was limited or non-existent. Finally, note that the form also included “completed operations” coverage. If a contractor is willing to produce “broad form” coverage, then the association should contractually require it.

The next significant changes to additional insured forms came in 2004, with form CG 20 10 07 04 (Intermediate Form). That form was designed to limit coverage. Rather than simply “arising out of” it added that the loss must have been caused by some act or omission of the named insured. In doing so, it excluded coverage for the additional

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BOARD BASICS

insured’s sole negligence.

Typically, an owner should not draft a contract requiring form CG 20 10 07 04. Overall, it is not a good form for an owner.

In 2013, the ISO provided another significant revision to the standard additional insured form. The new form, CG 20 10 04 13, is known as “narrow form.” Despite the name, when it is provided pursuant to a properly drafted construction contract, it can be an excellent form for owners.

The intent of that form is to limit coverage to that required by contract. The form provides that coverage under the form will not be broader than that required by contract. As a result, to be effective for the owner, the construction contract must properly detail the coverages required. note that the endorsement does not cover completed operations. However, a parallel completed operations form is available and should be required by contract. d. Blanket Additional Insured Forms In addition to the forms listed above, managers should also be aware of “blanket” additional insured forms. Blanket forms nearly always require a written contract. The problem that most often arises is when the contract simply says “shall be named as additional insureds.” Courts will often find that sort of clause vague and unenforceable.

The clause must be specific as to the policies and coverage limits. Where there is no written contract

at all, a court is likely to find that that policy does not provide coverage. See Westfield Ins. Co. v. FCl Builders, 407 Ill. App. 3d 730 (Il App. 1st 2011).

Mt. Hawley Ins. Co. v. Robinette Demolition, Inc., 2013 Il App (1st) 112847, P54, (Ill. App. Ct. 1st Dist.

2013)

e. Non-Standard Forms: Potential Traps for the Owner or General

As a practical matter, contracts will often require that the parties to the contract produce a certificate of insurance. A far better policy is to require that the contractor produce both a certificate and a copy of the relevant additional insured endorsement. Only when a copy of that endorsement is produced can a party be relatively certain (although not fool proof – fraud does happen) that the proper additional insured endorsement has been made part of the policy.

Although some non-standard forms roughly track ISO forms, others present a very real danger to owners. Some of those forms limit coverage so substantially that they are unlikely to ever provide coverage to additional insureds. A properly drafted insurance clause would bar contractors from using any such endorsements. f. Certificates of Insurance? Are They Worth the Paper They Are Written on?

A standard insurance certificate is known as an ACORD certificate. Too often, certificates are mistaken for policy endorsements. They are not part of the policy. Each certificate includes a disclaimer stating that it is for information only and will not modify the policy. Where there is a conflict between the certificate and the policy, the policy rules. Importantly, that applies to things like policy limits and the existence of additional insured endorsements.

However, there may be some relevance in cases where there is a blanket additional insured endorsement but no formal contract. A court may find that the endorsement, combined with other documents, together form the written contract necessary to trigger the blanket endorsement. See

Finally, there is one more notation on the certificate that at times will cause confusion. Certificates at times reference “certificate holder.” However, a “certificate holder” is not necessarily an additional insured. The certificate should reference “additional insured.”

CONCLUSION Risk shifting is one of the biggest challenges of any complex contract. In order to protect the association, the manager must be familiar with basic rules as to liability as well as means of shifting risk. Only with that knowledge can the manager effectively protect the association. Y

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COnDO lIFESTYlES

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by Janelle Dixon, Kovitz Shifrin Nesbit

best Practices for Protecting Association Data from Hackers Hacking can be defined as the breach of a computer system in an attempt to exploit weaknesses in a network. As online commerce continues to grow and individuals search for ways to make bill paying more convenient, security threats are inevitable. Monetary transactions, including association assessment payments, have become increasingly more susceptible to the risks of cyber threats.

W

hether an Association allows members to make payments toward common area assessments online or an Association houses members’ personal information on a computer, hacking can become a real threat. If precautions are not taken, association members may be subject to fraud and/or unauthorized access to their accounts.

In order to keep online payments and

members safe from a security breach, entities should remain vigilant. The following are six best practices that property managers and Associations can implement to help safeguard members’ personal and financial information:

1. Caution employees against personal web browsing Since personal email accounts, social media accounts, and other forms of web

14 C O n D O l I F E S T Y l E S 07.17

surfing are notorious for security breaches, it is important to encourage employees to try to avoid these types of websites while at work. It may be helpful to discuss the difference between safe (secure) and unsafe (unsecure) websites. Discuss the danger of clicking on unfamiliar links or unsolicited messages.

These tools will not only benefit your employee personally, they can also aid and ensure that members’ personal and financial information is guarded against hackers looking for an easy target.

2. Beware of “phishing” schemes remind employees to avoid opening suspicious emails that may trick unsuspecting individuals into unknowingly downloading malware (software used to disable or damage computer systems) onto their computers.

Hackers can utilize the downloaded malware to identify passwords and other identification markers in order to steal money or engage in fraudulent transactions.

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S P E C I A l F E AT U R E

Since these phishing schemes are designed to look authentic, they may be more difficult to avoid. However, the key is awareness. remind employees that they may come across these types of emails and that they should be on the lookout. If an employee comes into contact with an email that looks authentic but turned out to be a scam, they should let the designated IT personnel know as soon as possible. A quick response may prevent damage.

4. Protect password confidentiality

3. Manage security updates Install security software and make sure that all computers have the most recent security updates. Security updates should be installed regularly in order to protect operating systems from hacking attempts. Some security software allows you to choose to install updates automatically which can be helpful.

HH

require employees to use passwords that contain numbers, letters, and special characters. This can make it difficult for hackers to guess passwords. remind employees that they should never share passwords or important account information. require employees to change their passwords regularly. Passwords used by employees on their work device should not be the same password they use on their personal devices or person email accounts.

5. Destroy traces of personal information on hardware that may be resold

many brands of software that can erase a hard drive and will, in turn, make it difficult for those looking to pillage your recycled devices in an effort to recover confidential information.

6. Encourage good practices amongst members making payments remind association members to engage in safe web practice. If members must log into a web pay system, remind them to protect their password information. remind members making payments that they should never use open Wi-Fi to make payments. open Wi-Fi can make it much easier for hackers to steal a connection and download files onto a device. by implementing these best practices, you may help mitigate the risk of hacking and ultimately assist in protecting members’ personal and financial information. Y

In the event that computers that have been used to store confidential information are ever sold, you should remove all traces of personal and financial information. There are

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industry happenings

Chicagoland Community Management Chicagoland Community Management was recently named managing agent for 1630 Sheridan Road Corp, a 104 unit community that was built by the Edward R. James company on prime land on Wilmette’s lakefront. The property has an interesting history as the area was called “no man’s land” prior to being annexed into Wilmette. Only 16 miles from downtown Chicago, the North Shore corporation units feature large windows to showcase spectacular views of Lake Michigan and are located across from the charming Plaza del Lago shopping center. 1630 Sheridan Corporation is a housing cooperative (co-op) with “everyone invested in maintaining a top notch and well-functioning building,” says property manager Tracy Meyer. “We are proud of the community spirit and dedication to the building by residents.”

The assistant manager is Cathy Wiseman. Most of the mainte-

nance staff and door staff have been at the building for over 10 years. The building has a 7 person Board of Directors that governs the community and has a number of committees and volunteers.

Unit owners are shareholders in the 1630 Sheridan Corporation with the number of shares owned depending on the particular unit and parking spaces owned. Monthly assessments paid by shareholders offer residents and guests a number of amenities including an exercise room, professional garden areas, lanai & grill area, party rooms/clubhouse, pool area.

Receiving room and a private beach. The building offers a unique lifestyle in a setting that provides a wide range of social, cultural and athletic opportunities.

RealManage & Rowell Rowell Incorporated has been in business since 1973, managing several of their accounts for over 30 years, and while our corporate location has changed a few times, we have been a small management firm with a big interest in the community association market. Kara Cermak has served as the Y Kara Cermak President of the CAI® Illinois Chapter, a member of the CAI® National APCM Board, chair of the CAI® National 2020 committee, and the CAI® National Nominating committee for the National Slate of Trustees for 4 years. Additionally, Kara has been a CAI® national instructor for 7 years, teaching managers throughout the country, as well as participating in as many local events with the Illinois Chapter as she can. Rowell has merged into the RealManage family, and the team endeavors to bring a small firm “feel” with the technology that a larger firm can offer, to the Illinois market. The Rowell corporate office will be the Illinois hub for the RealManage Illinois market, housing the local accounting with the staff already present, as well as new team members to serve their clients. Finally, banking will be done locally, and the team is excited to bring their communities a level of service that they’ve yet to see in our industry.

“We are proud to add 1630 Sheridan Road to the other distinctive properties that we manage next door at 1500 and 1616 Sheridan Road,” stated Tony Briskovic of Chicagoland Community Management.

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InDUSTRY HAPPEnInGS

FirstService Residential

ACTHA

FirstService Residential, has been selected to deliver property management solutions to Lincoln Park 2550 Condominium Association. With gorgeous bay windows, intricate details and high-end finishes, this Lincoln Park luxury residential complex includes 219 high-rise condominium units, 11 single family homes and a 3-story parking garage. FirstService Residential assumed management responsibilities on June 1, 2017.

ACTHA recently announced their 2017-18 Board of Directors and officers. Joe Fong of Westgate Terrace C.A. in Chicago was elected President. Ron Sirotzki of Spring Lake Farms HOA in Lake in the Hills was elected Vice President. Jacqueline Fanter of Wedgewood Commons Assn in Orland Park was elected Secretary. Y Joe Fong Salvatore Bondi of Edgewater Beach Apartment Corp. in Chicago was elected Treasurer. Directors are Tom Bordenkircher 1720 S Michigan Ave Condo Assn in Chicago, Beth Lloyd of Partridge Hill T.A. in Hoffman Estates, Nancy M. Moreno of Lotus Condo Assn in Morton Grove, Diane Pagoulatos of Whispering Lake T.A. in Lake Bluff and Myrna Santiago-Martinez of Flats of Old Irving Condo Assn in Chicago.

“The board was looking for a management company with superior accounting support, exceptional financial tools, and a proven history of quality engagement and effective followthrough,” said Asa Sherwood, president of FirstService Residential in Illinois. “Lincoln Park 2550 already has an outstanding team of onsite staff who will now benefit from our sophisticated technology, communication tools, internal resources and vast experience providing outstanding management solutions to luxury high-rise buildings throughout North America. We are looking forward to exceeding their needs with our exceptional localized service.”

Along the shores of Lake Michigan, this world-class, 39-story property features a stunning lobby, serene library and billiards room, indoor pool and spa, game room, club room and bar, children’s play lot, dog exercise area, fitness center, theatre and more.

FirstService Residential also announced that Jeff Leong has joined the FirstService team as Business Development Manager. Leong will cultivate relationships with new clients throughout Chicago and the suburbs. He is a licensed real estate broker who understands the gravity of selecting the right property management company. He is passionate about providing solutions that help improve residents’ lifestyles

and property values. “Jeff is a great addition to FirstService Residential’s exceptional team. He has a passion for the industry and being genuinely helpful,” said Asa Sherwood, president of FirstService Residential in Illinois. “We look forward to Jeff supporting and continuing our explosive growth throughout Illinois.”

FirstService Residential is a full-service community association management firm. For over 65 years, FirstService Residential has continued to provide best-in-class community management solutions to its more than 150 communities and 50,000 residents throughout Chicagoland. FirstService Residential is North America's largest manager of residential communities, community associations and strata corporations in the U.S. and Canada. FirstService Residential's managed communities include low-, mid- and high-rise condominiums and cooperatives, single-family homes, master-planned, lifestyle and active adult communities, and rental and commercial properties. FirstService Residential is a subsidiary of FirstService Corporation..

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ACTHA will hold a conference in Chicago on Saturday September 9 from 8:00 am –1:00 pm at University Center and another conference on Saturday, October 14 from 8:00am – 1:00 pm at the NIU Naperville Conference Center. For more information on ACTHA seminars and other upcoming events, visit: www.actha.org/event

industry happenings

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industry happenings Community Specialists Community Specialists recently announced that Rosemarie Wert, a co-founder of the firm, has retired from the property management business to refocus her life on family, fun and travel. A special event was held on May 5th at Marcello’s in Chicago. A group of over 100 consisting of Community Specialists employees, association board members and special guests celebrated her career and numerous contributions to the community management and condo industry.

Ron Hickman, President of Community Specialists, addressed those in attendance saying, “I would like to thank all those who have come here to honor Rosemarie and wish her an outstanding retirement that we can all agree is well deserved.

Some of you here have known Rosemarie since the early years of her great career, and some of you have only known her for much of your own careers. I know to each of us she has played a significant role: To some she worked with your Boards and guided and consulted and provided great management to your Associations, to others in the industry, she has been a role model and guide and dependable friend when needed; To another here (Gene Golub of Golub & Co.), she was an outstanding first employee who was there at the early years of his great career and to all in Community Specialists she has been a leader and mentor.

For me, she has been a wonderful business partner… stead-

fast… wise… compassionate at the right times and tough when needed. We have been together for a time that has covered four decades, going from the late 1980’s to today. Together Rosemarie and I founded Community Specialists. It goes without saying, but I will say it, Rosemarie you are very special to me and everyone here.”

Hickman continued, “Rosemarie has always been about giving to others. After a great deal of thought, it seemed that the best gift we could give would be to continually honor Rosemarie and at the same time have this be a recognition of the contribution of others. To accomplish this, Community Specialists has created an award that will be given annually. The Rosemarie Wert Legacy Award will be given to the Community Specialists professional that represents the values and ethics Rosemarie Wert epitomized in her long and iconic career in the community association management industry.”

Mr. Hickman then invited those in the audience to share comments about Rosemarie. A number of board presidents and directors, employees and special guests offered heart-felt stories, memories, and highlights of Rosemarie’s time in the management industry. Some of the career highlights included: • Rosemarie is a Certified Property Manager from the Institute of Real Estate Management with more than 50 years residential management experience in both rental and condominium properties.

• In her earlier career, Rosemarie helped lead the residential division of The Equity Group (owned by Sam Zell at

the time), where she developed and supervised the transition management teams for many major condominium properties nationwide including Olympia Center, one of Chicago’s most luxurious condominiums, and Four Lakes Village that included four individual associations and a master homeowner association.

• She is a past President of the Apartment Building Owners and Managers Association of Illinois.

• Rosemarie serves on the Illinois Legislative Action Committee.

Mr. Hickman concluded by stating, “We will all miss Rosemarie, her can-do spirit and her exceptionally keen set of management skills. But, we certainly wish her the very best of the comfortable years to come.”

Community Specialists recently made several additional announcements. At their corporate office, Judy Rowe has been named Senior Vice President, in addition to Director of Supervisors, and Andy Warner has been named the company’s Marketing Director as well as a Senior Supervisor for C.S. Audrey Hickman has joined the corporate office staff as an administrative assistant to Jim Friedrichsen.

Community Specialists has been named as managing agent for Plaza 440 Private Residences Condominiums at 440 N Wabash. Shirley Feldman has joined C.S. as the property manager for Plaza 440. She has many years of experience in property management as both a manager and a supervisor.

Jennifer Gorski is returning to C.S. in the role of Assistant Manager at the Plaza 440 Condominiums. Allison Holtz has been promoted to an Assistant Manager’s position at 4343 Clarendon Condominium Association.

ABOMA The Apartment Building Owners and Managers Association of Illinois held their Continuing Education Seminar at the East Bank Club in Chicago on Thursday, June 22, 2017. Subjects covered included • Employee progressive discipline (verbal warnings, write ups, suspensions and terminations) • Billing process and Benefits- Health, Pension and 401(k) funds • Mandatory employee training • Janitorial Labor Agreement coming negotiations

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A one hour networking session with wine, beer, soft drinks and light fare followed the program.

Program participants and presenters for the seminar were ABOMA President Tony Briskovic – Chicagoland Community Management, Steven H. Adelman - Locke Lord LLP , Maria Pizzaro – Wilson-McShane, Tom Dobry-SEIU Local 1 Training Fund and Jim Watts, and Bob Graff - Sudler – ABOMA Negotiating Committee Co-Chairs At the meeting ABOMA announced their events for the remainder of 2017: • An All-Star Manager’s Night Out Event will be held on Thursday, September 14, 2017 at the Chicago Sports Museum located at 835 N. Michigan Avenue, Chicago.

The ABOMA 80th Annual Meeting, will be held at The University Club of Chicago, on Friday, December 1st, 2017.

For more information visit www.aboma.com

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InDUSTRY HAPPEnInGS

Associa Chicagoland Associa Chicagoland recently announced that it has been chosen to manage The Towers Condominium Association located in Chicago’s prestigious Gold Coast. The branch began its management services on April 1.

Situated at 1221 North Dearborn Street, The Towers are conveniently located to Chicago’s famed North Michigan Avenue shopping, restaurants, theaters and museums and are just a short distance from downtown.

Built in 1974 and converted into condominiums in 1979, it consists of 199 bi-level units, 130 parking spaces and two commercial spaces. The condominium association recently upgraded its common elements with an elevator modernization project, a front walkway improvement project and a garage improvement project.

The Towers offers a host of amenities including a hospitality room, fitness center, bike room, indoor swimming pool, saunas, a sundeck, 24-hour laundry facilities, 24-hour emergency maintenance and 24-hour front door staff.

“We are extremely excited to add The Towers Condominium Association to our growing Chicagoland portfolio,” said Associa Chicagoland President Stephanie Vittas Skelley, CMCA, AMS. “This association offers great amenities for its residents and will allow us to showcase our unsurpassed management services. This addition also further establishes us as the community management leader in the Chicagoland area.”

casino-themed night of client application and fun. The event took place at the Meridian Banquet & Conference Center in Rolling Meadows, where gambling tables and dueling pianos were set up to entertain the guests, and a silent auction was held to raise money for the company’s charity, Associa Cares.

“It is always great to mingle with our board members and vendors especially when in a social and fun setting,” stated Stephanie Skelley, Associa Chicagoland president. “We look forward to this event every year; our team did a wonderful job organizing the event and making sure that all of our guests had an amazing time. The evening was spent enjoying music, laughter, games and an appreciation for being valued partners.”

CU STO M E R A P P R EC I AT I O N E V E N T

“This event allows us to have face-to-face time with our management partners and gives us the ability to build those relationships, all while having fun and giving back through Associa Cares,” explained Charlene Giampapa, Cove Landing Two board member. “I want to thank the Associa team for a wonderful experience, the event was top-notch and we look forward to participating again next year.”

Associa Chicagoland hosted more than 300 Associa employees, board members and vendors on June 16, 2017 for a

The annual fundraising event raised nearly $3,000 to benefit Associa Cares.

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Associa Cares is a national nonprofit 501(c)(3) organization created to assist families and communities in crisis as a result of natural and manmade disasters. Through donations raised at fundraising events across the country, Associa Cares is able to provide necessary goods and services to the families affected by these types of tragedies.

industry happenings

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From the Editor

W

e had a cool, wet spring that caused some down time for contractors and fast growing grass and weeds that were hard for landscape professionals to keep up with. Even-

tually summer arrived with plenty of warm, dry days that provided good weather

CondoLifestyles

®

Y Mike Davids

for work on exterior projects, according to the managers and contractors we spoke with. Eleven days into July, record rainfalls hit McHenry, lake and northern parts of Cook County, causing severe flooding. A number of associations experienced water damage and are still dealing with the restoration, repairs and insurance claims.

july 2017 | volume 21 | number 2 editor & Publisher Michael C. Davids vice President Sherri Iandolo Art Director Rick Dykhuis Special events Coordinator Mary Knoll Contributing Writers Pamela Dittmer McKuen, Jim Fizzell, David Mack, and Cathy Walker Circulation Arlene Wold Administration Cindy Jacob and Carol Iandolo Condo Lifestyles magazine is published quarterly by mCD media, a wholly owned subsidiary mCD marketing Associates, Inc. For editorial, advertising and subscription information contact: 935 Curtiss Street, Suite 1A, Downers Grove, Il 60515. 630-932-5551 or 630-202-3006.

Circulation: Condo Lifestyles is available for a single issue price of $8.95 or at a $30.00 annual subscription.

Distribution is direct mailing and delivery direct through authorized distributors to over 5,000 officers and directors of Common Interest Communities, 800 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 9,500.

Condo Lifestyles attempts to provide its readership with a wide range of information on community associations, and when appropriate, differing opinions on community association issues.

Our cover story in this issue provides some perspectives from several leading managers on pets, parking and play areas (pools, BBQs, playgrounds, etc). This story discusses solutions to some new challenges on each of these topics as well as ideas on the longstanding challenges in these areas that have faced community boards for many years.

Our second story covers the ongoing insurance issue of construction risks, risk shifting and additional insureds. With major renovation projects underway at many CA buildings across Chicagoland, it’s very important to understand the grounds for liability of workers at your property, the risks involved for the association and how to protect the financial resources of your association in this regard.

A special feature article offers advice and “Best Practices” for protecting association data from hackers.

Computers, tablets and mobile devices including smart phones are now commonly used by most everyone involved with associations including board members and residents. So it’s important to be knowledgeable in ways to keep your computer data safe from outside intrusions.

There has been a new court ruling that addresses board compliance with existing Palm II case law and legislation pertaining to open meetings. Inside this issue you’ll find an article that summarizes the new court case and its impact on association operations. .

We have two other legal update articles inside this edition that provide insight on some other timely issues facing community associations. Most major renovations are simple and straight forward, while other renovation projects actually change or alter the common elements at a property. We have an article on the commonly over looked aspects of altering your common elements that anyone undertaking a major project should find helpful. Another legal article in this issue is about the fiduciary duty of board members and the business judgement rule.

This edition also includes an article that discusses the recent property tax increase and what your association can do about it. Inside this issue we again offer our regular Industry Happenings column and highlights from a variety of special events.

Upcoming Special Events Upcoming MCD special events include a luncheon in the Million Room at Arlington International Racecourse on August 24 and our State of the Industry program on December 7th. If your association(s) has a special need or challenge, there will be a variety of experts specializing in community association issues including many members of our advisory board who will attend these events. MCD special events provide a

All material herein is copyrighted 2017. No part of the publication may be reproduced whatsoever without written consent from the publisher.

terrific forum for association leaders to get questions answered, meet new vendors, share a story idea, or so-

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is issued with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal advice is required, services should be sought.

thanks to the firms, associations and groups that are Authorized Distributors of Condo lifestyles. Those of

cialize with other volunteers and professionals.

Thanks to the many new subscribers that have found our publication useful and informative. Special you who are not current subscribers can find subscription information at www.condolifestyles.net We encourage you to take this opportunity to make your association and your community all it can be.

If you have an idea that would benefit other Community Associations, a success story to share, or some advice on how to avoid a problem or failure, please call our office at 630-932-5551. You can also send us an e-

Advertisers assume liability for all content of advertisements printed, and also assume personal liability for any claims arising therefrom against the publisher relating to advertising content. The publisher and editors reserve the right to reject advertising or editorial deemed inappropriate for the publication.

mail (mdavids@condolifestyles.net). Y

Michael C. Davids Editor and publisher

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Accounting Solutions for Management Companies & Self-Managed Associations Audit & Accounting Services Income Tax Reduction & Planning

FULL CIRCLE ARCHITECTS, LLC (847) 432-7114

CUKIERSKI & COCHRANE, LLC (847) 496-7180 A full-service accounting firm specializing in the unique needs of homeowners’ associations.

www.ckwcpa.com

www.fullcirclearchitects.com

ARCHITECTS/ENGINEERS

KELLERMEYER GODFRYT & HART, P.C. (847) 318-0033

BTL ARCHITECTS, INC. (312) 342-1858

Investigations and Repair Documents for: Exterior Walls, Windows, Roofs, and Parking Garages Condition Surveys and Reserve Studies www.kghpc.com

Bringing Buildings Back to life Contact Delph Gustitius www.btlarchitects.com

BUILDING TECHNOLOGY CONSULTANTS, INC. (847) 454-8800

ATTORNEYS

ROOFING I WATERPROOFING | FACADES I PARKING GARAGES WINDOWS I RESERVE STUDIES I TRANSITION STUDIES

LEVENFELD PEARLSTEIN, LLC (312) 476-7556 Howard Dakoff / hdakoff@lplegal.com www.lplegal.com

BALCONY REPAIR

24 HOURS

WALDMAN ENGINEERING CONSULTANTS (630) 922-3000

DICKLER, KAHN, SLOWIKOWSKI & ZAVELL, LTD. (847) 593-5595

www.waldmaneng.com

www.dicklerlaw.com

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2017©.

Advising and Consulting with Business Owners, Community Association law & Collection Services, Construction Defects, Real Estate Assessed valuation Reduction, litigation, Commercial Restructuring, Bankruptcy & Creditors' Rights, Real Estate, Business ,Estate Planning www.ksnlaw.com

Structural Repair Services Balcony Repair/Replacement Stair Tower Repair/Replacement Fire and Water Response/Restoration dwells@trgrestore.com www.trgrestore.com

"Matching legal Solutions to Real World Problems" Contact: Bob Prince www.ccpchicago.com

info@btc.expert

pcostello@keaycostello.com www.keaycostello.com

THE RESTORATION GROUP (630) 231-5700

CERVANTES, CHATT & PRINCE, P.C. (630) 326-4930 ext 202

Experts in Evaluating and Solving Building Problems

LAW OFFICES OF KEAY & COSTELLO (630) 690-6446

KOVITZ SHIFRIN NESBIT (855) 537-0500

Daniel Baigelman, AIA dan@fullcirclearchitects.com Capital Improvements • Reserve Studies Engineering Reports

CERTIFIED PUBLIC ACCOUNTANTS

www.frapc.com

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BANKING ALLIANCE ASSOCIATION BANK (888) 734-4567 Full service banking and lending solutions for management companies and associations. www.AllianceAssociationBank.com

COMMUNITY ADVANTAGE, A WINTRUST COMPANY (847) 304-5940 loans, Reserve Investments & lock Box Services www.communityadvantage.com

INLAND BANK & TRUST (630) 908-6708 Commercial lending and Community Association loan Program Contact: Timothy J. Haviland, CMCA www.inlandbank.com

BUILDING RESTORATIONS

CONCRETE RAISING

LMC CONSTRUCTION 708-714-4175

CRC CONCRETE RAISING & REPAIR (847) 336-3400

Masonry Concrete General Contracting Roofing www.LMCTeam.com

We Save Concrete, You Save Money! www.SaveConcrete.com

DAKOTA EVANS RESTORATION, INC. (847) 439-5367

DOORS WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

Tuckpointing ~ Masonry Repairs Waterproofing ~ Terra Cotta Repairs Caulking & Sealants ~ Structual Repairs Cleaning ~ Balcony Restoration Concrete Restoration www.dakotaevans.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

LS CONTRACTING GROUP, INC. T (773) 279-1122 F (773) 279-1133 Contact: Tom laird tlaird@lscontrtacting.com www.lscontracting.com

ELEVATORS/CONSULTANTS QUALITY RESTORATIONS (630) 595-0990

MUTUAL OF OMAHA BANK (866) 800-4656 HOA Banking • Internet Cash Management HOA loans • Online Payment Services www.mutualofomahabank.com

RIGGIO/BORON LTD. (847) 531-5700 A Total Exterior Facade Restoration Company www.RiggioBoron.net

SUBURBAN ELEVATOR CO. (847) 743-6200

W. J. MCGUIRE COMPANY (847) 272-3330

Simplifying vertical Transportation Contact: Max Molinaro www.suburbanelevator.com

Tuckpointing, Caulking, Masonry and Concrete Restoration

austinwerner@therealsealllc.com

Masonry and Concrete Restoration www.bralrestoration.com

HOLTON BROTHERS, INC. Masonry Repair Services, Tuckpointing, Caulking and Concrete Restoration

ENERGY SOLUTIONS

CONCRETE

BUILDING RESTORATIONS BRAL RESTORATION, LLC. (847) 839-1100

SMART ELEVATORS CO. (630) 544-6829 www.smartelevatorsco.com smartin@smartelevatorsco.com

BASEMENT WATERPROOFING THE REAL SEAL, LLC (847) 756-7987

PEDESTRIAN DOORS / REVOLVING DOORS SECTIONAL DOORS / STEEL ROLLUP DOORS / FIRE DOORS HIGH SPEED DOORS / DOCK LEVELERS

www.doorsystems.com

ITASCA BANK & TRUST (630) 773-0350 “Together We’ll Shape the Future” www.itascabank.com

DOOR SYSTEMS 1-800-THE-DOOR

SUNDEK OF ILLINOIS (847) 392-3939 We resurface concrete We remove & pour concrete Waterproof Membranes Pool Decks • Balconies • Rooftops Shower & llocker Rooms “The Only 1 Stop Service since 1967” jake@sundekofillinois.com www.Sundek.com

CENTERPOINT ENERGY SOLUTIONS (630) 795-2594 natural Gas & Electric Energy Reliable Service. People You Trust.

Contact: Vickie Farina Vickie.Farina@centerpointenergy.com www.CenterPointEnergy.com/CES

(847) 253-3886 TEL / (847) 253-3255 FAX John@holtonbrothers.com www.holtonbrothers.com

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006

22 C O n D O l I F E S T Y l E S 07.17

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SERvICE DIRECTORY

ENERGY USE/BENCHMARKING

FIRE SAFETY & PROTECTION

FLOORING

WESTSIDE MECHANICAL GROUP (630) 618-0608 / (630) 369-6690

CHICAGO FIRE PUMP TESTING (773) 609-1510

LEWIS FLOOR & HOME (847) 835-2400

www.chicagofirepumptest.com

www.Lewisfloorandhome.com

EMCOR SERVICES TEAM MECHANICAL FIRE PROTECTIOn DIvISIOn (847) 229-7600

GARBAGE CHUTE CLEANING

Serving the Tri-State Area Since 1970 Contact: Jackie Loftis * jloftis@wsmech.com www.wsmech.com

FACILITY MAINTENANCE

www.emcortmi.com

SP+ FACILITY MAINTENANCE (773) 847-6942

All types of environmental cleaning. www.BrouwerBrothers.com

CONTECH MSI CO. (847) 483-3803

Daily Cleaning Services / Power Sweeping and Washing Painting and General Repairs / Seasonal Services (Snow/Ice Removal) Parking Facility, Surface lot, PedestrianPlaza, large venue or Commercial Retail Building.

GOVERNING DOCUMENTS

Fire Detection & Signaling Systems Fire Alarm Systems Chicago life Safety Evaluation Solutions Security Systems/CCTv Card Access Systems www.contechco.com

Contact: Daniel W.Nicholson dnicholson@spplus.com www.spplus.com/FacilityMaintenance

FIRE/FLOOD RESTORATION NORTHERN ILLINOIS FIRE SPRINKLER ADVISORY BOARD (NIFSAB) 708-403-4468

BROUWER BROS. STEAMATIC (708) 396-1444 All types of environmental cleaning. www.BrouwerBrothers.com

www.genesisconstruction.com

J. C. RESTORATION, INC. (800) 956-8844

THE RESTORATION GROUP, LLC (630) 870-0658 www.trgrestore.com

HANDYMAN/MAINTENANCE

Construction / Maintenance / Painting Electrical / Snow Removal

Fire Alarm / Sprinkler Systems Fire Pumps / Extinguishers Fire Panel Monitoring Installation / Testing / Maintenance 24/7 Service: (630) 948-1200 www.simplexgrinnell.com

service@midproservice.com / www.midproservice.com

"No Job Too Big or Too Small"

Fire alarm / Sprinkler systems Fire pumps / Fire extinguishers Backflow prevention Fire panel / Monitoring INSTALLATION | INSPECTION | TESTING | MAINTEnance

24/7 EMERGENCY SERVICE: (847) 816-0050 www.usafireprotectioninc.com

"Restoring Happiness" www.skylinedki.com

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2017©.

Contact Karen Corral kcorral@homewisedocs.com www.homewisedocs.com

SIMPLEX GRINNELL (630) 948-1235

USA FIRE PROTECTION (224) 433-5724

SKYLINE DKI (708) 629-0563

HOMEWISE DOCS (773) 936-3270

MIDWEST PROPERTY SERVICES, INC. (630) 656-1000

www.firesprinklerassoc.org

GENESIS CONSTRUCTION, INC. (847) 895-4422

BROUWER BROS. STEAMATIC (708) 396-1444

HVAC AMS MECHANICAL SYSTEMS, INC. (800) 794-5033 24 Hour Service HvAC • Industrial Refrigeration Service/Maintenance • Systems Integration Energy Management • Electrical Process Piping • Plumbing www.amsmechanicalsystems.com

EMCOR SERVICES TEAM MECHANICAL (847) 229-7600 www.emcortmi.com

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HVAC PARAGON MECHANICAL, INC. (847) 321-9428 CHICAGOLAND’S HIGHEST RATED TECHNICIANS Heating | Cooling | Domestic Hot Water Refrigeration | Tankless | Boilers | RTUs | IAQ

SERVICE | INSTALLATION | MAINTENANCE www.pmcomfort.com

INTERNET TECHNOLOGY

LANDSCAPE CONTRACTORS

XFINITY COMMUNITIES 1 (800) XFINITY

SEMMER LANDSCAPE (708) 926-2304

For more information E-mail: xfinity_communities@cable.comcast.com www.comcast.com/xfinitycommunities

gsemmer@semmerlandscape.com

LAWN CARE LANDSCAPE CONTRACTORS ACRES GROUP (888) 231-1300 / (847) 526-4554

THE YMI GROUP, INC. (847) 258-4650

Professional landscaping and Snow Removal www.acresgroup.com

www.spring-green.com

ALAN HORTICULTURAL ENTERPRISES, INC. (630) 739-0205

NONSTOP LOCKSMITH (312) 929-2230

Mechanical - Plumbing Building Automation - Service www.theymigroup.com

WESTSIDE MECHANICAL GROUP (630) 618-0608 / (630) 369-6690 Serving the Tri-State Area Since 1970 Contact: Jackie Loftis * jloftis@wsmech.com www.wsmech.com

H V A C CLEANING BROUWER BROS. STEAMATIC (708) 396-1444

BALANCED ENVIRONMENTS, INC. (847) 395-7120 | (630) 916-8830 www.BalancedEnvironmentsInc.com

CHRISTY WEBBER LANDSCAPES (773) 533-0477 Info@christywebber.com www.christywebber.com

LOCKSMITH locksmith Services, Intercom & Access Control Systems, CCTv, Overhead Garage Doors www.nonstoplocksmith.com

www.alanhorticultural.com

MAILBOXES MAILBOX WORKS (630) 355-9989/(773) 528-3111 large variety of Commercial and Residential Mailboxes Intercoms and Tele-Entry Address Signage & Engraved nameplates Installation Services Since 1989

www.MailboxWorks.com

PAINTERS

All types of environmental cleaning. www.BrouwerBrothers.com

ILT VIGNOCCHI (847) 487-5200

INSURANCE

www.iltvignocchi.com

HOLLINGER SERVICES, INC. (847) 437-2184

AAA PAINTING CONTRACTORS, INC. (630) 231-8350 www.aaapaintco.com

Property Casualty • Employee Benefits Workers Compensation www.HollingerInsurance.com

ALLIANT/MESIROW INSURANCE SERVICES (312) 595-8135

SPRING-GREEN LAWN CARE (800) 830-5914

LANDSCAPE CONCEPTS MANAGEMENT, INC. (847) 223-3800

ABC DECO (773) 701-1143

www.landscapeconcepts.com

info@abcdecoonline.com www.abcdecoonline.com

SEBERT LANDSCAPING, INC. (630) 497-1000

nancy Ayers www.condorisk.com

www.sebert.com

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006

24 C O n D O l I F E S T Y l E S 07.17

ABBOTT PAINTING, INC. (312) 636-8400 (773) 725-9800 Quality Painting & Decorating since 1973 Our Mission: Guaranteed Committment to Quality now offering Parking lot Painting www.Abbottpainting.com

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All material herein is copyrighted 2017©.

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SERvICE DIRECTORY

PAINTERS

PEST CONTROL

PROPERTY MANAGEMENT

CERTAPRO PAINTERS OF THE NORTH SHORE (847) 989-4791

ALL-OVER PEST SOLUTIONS (773) 697-1100

CHICAGO PROPERTY SERVICES, INC. (312) 455-0107 X102

Interior & Exterior Painting Wallcoverings • Decorating • Remodeling Drywall Repair • Decks & Staining Tile Installation • Metal & Iron Painting www.certacommercial.com rmuldoon@certapro.com

Bed Bug Specialists. Results Guaranteed! www.all-overpest.com

SMITHEREEN PEST MANAGEMENT SERVICES (847) 647-0010 / (800) 336-3500 www.smithereen.com

HOMETOWN PAINTERS, INC. (847) 870-1600

Plumbing - Heating & Air Conditioning Water Heaters - Sewer Cleaning & Repair Hot Water Drain Jetting www.INEEDLIFELINE.com

Contact Ian Novak

www.draperandkramer.com

PROPERTY MANAGEMENT

FIRST COMMUNITY MANAGEMENT (312) 829-8900

ACM COMMUNITY MANAGEMENT (630) 620-1133

Guiding board members since 1988 www.condomanagement.com

"No Job Too Big or Too Small"

service@midproservice.com / www.midproservice.com

Contact Tom Skweres

www.ppdpainting.com

www.acmweb.com

PARKING GARAGE CLEANING

ADVOCATE PROPERTY MANAGEMENT (630) 748-8310

SP+ (773) 847-6942

FIRSTSERVICE RESIDENTIAL (312) 335-1950 Contact Asa Sherwood

www.fsresidential.com

Managing in the Chicago Suburbs since 1988 www.advocatepm.com

dnicholson@spplus.com www.spplus.com/facilityMaintenance

G&D PROPERTY MANAGEMENT (630) 812-6400 www.gd-pm.com

ASSOCIA CHICAGOLAND (312) 944-2611 / (847) 490-3833 www.associachicagoland.com

THE HABITAT COMPANY (312) 527-5400 Contact Diane White

info@duboispaving.com www.duboispaving.com

www.habitat.com

BAUM PROPERTY MANAGEMENT, AAMC (630) 897-0500 Contact Mike Baum MikeB@BaumProp.com

HILLCREST MANAGEMENT (630) 627-3303 / (312) 379-0692

www.BaumProp.com

www.hillcrestmgmt.com

CHICAGOLAND COMMUNITY MANAGEMENT (312) 729-1300

LIEBERMAN MANAGEMENT SERVICES (847) 459-0000

www.chicagoland-inc.com

www.liebermanmanagement.com

SP+ (773) 847-6942 dnicholson@spplus.com www.spplus.com/facilityMaintenance

TWIN BROS. PAVING & CONCRETE (630) 372-9817

DRAPER AND KRAMER INC. (312) 346-8600

LIFELINE PLUMBING (847) 468-0069

Construction / Maintenance / Painting Electrical / Snow Removal

DUBOIS PAVING CO. (847) 634-6089

COMMUNITY SPECIALISTS (312) 337-8691

PLUMBING

MIDWEST PROPERTY SERVICES, INC. 630-656-1000

PAVING

MORE LIVING. LESS WORRYING.

www.communityspecialists.net

www.hometownpainters.com

PRECISION PAINTING AND DECORATING CORP. (630) 688-9423

www.chicagopropertyservices.com

Asphalt Paving & Sealcoating / Concrete www.TwinBrosPaving.com No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2017©.

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PROPERTY MANAGEMENT

PROPERTY MANAGEMENT

ROOFING

KANE PROPERTY MANAGEMENT CORP. (773) 472-2300

WERK MANAGEMENT (630) 241-0001

ACTIVE ROOFING CO., INC. (773) 238-0338/(708) 430-8080

For All Your Property needs www.werkmanagement.com

KaneManagement.com

REAL ESTATE TAX ATTORNEY

Established 1965 Maintenance & Repairs Roofing/Sheet Metal/Tuckpointing www.activeroofing.com

MCGILL MANAGEMENT, INC. (847) 259-1331

ELLIOTT & ASSOCIATES (847) 298-8300

ALL AMERICAN EXTERIOR SOLUTIONS (847) 438-4131

Professional Property Management. Affordable Rate.

Contact: Dennis R. Kane; DKane@KanePM.com

www.elliottlaw.com

Roofing, Siding & Windows www.aaexs.com

www.mcgillmanagement.com

KSN TAX (847) 537-0500

NIMROD REALTY GROUP, INC. (847) 724-7850

www.KSNLaw.com

www.nimrodrealty.com

PROPERTY SPECIALISTS INC. (847) 806-6121

ADAMS ROOFING PROFESSIONALS INC. (847) 364-7663

MCCRACKEN MCCRACKEN BEHRENS (312) 263-4308 Concentrating in Property Tax Appeals since 1976

ROLLING MEADOWS OFFICE

AMERICAN BUILDING CONTRACTORS, INC. (847) 670-1887

www.mmbtaxlaw.com

(630) 633-5450 WOODRIDGE OFFICE

www.psimanagement.net

WORSEK & VIHON LLP (312) 368-0091

TAIRRE MANAGEMENT SERVICES (847) 299-5740

COMMUNITY ASSOCIATION MANAGEMENT

773-989-8000 1509 W Berwyn Chicago Il 60640 Contact: Hugh Rider www.RealtyMortgageCo.com

SUDLER PROPERTY MANAGEMENT (312) 751-0900

Roofing • Siding • Windows • Gutters Maintenance • Capital Budget Projects A+ BBB Rating www.abc-usa.com

www.wvproptax.com

RESERVE STUDIES

tsutton@tairremgmt.com

REALTY & MORTGAGE CO.

Roofing / Siding / Gutters / Insulation www.adamsroofing.com

BUILDING RESERVES INC. 1 (877) 514-8256

CSR ROOFING CONTRACTORS (708) 848-9119

Easy-to-Read, Customized Reserve Studies created

by Reserve Specialists & Engineers www.BuildingReserves.com

All Types of Roofing Installation, Repairs & Maintenance www.csr-roofing.com

SUPERIOR RESERVE ENGINEERING & CONSULTING (888) 688-4560 www.superiorreserve.com

D-WING CONSTRUCTION (630) 397-8889 Your Home, Our Reputation A+ BBB Rating www.DWingConstruction.com

www.sudlerchicago.com

VILLA MANAGEMENT 847-367-4808 Complete Association Management Since 1976.

7370 n lincoln Ave., Suit A, lincolnwood, Il 60712

www.villamgt.com

Our Reserve Studies now Include ForeSite™

MI CONSTRUCTION AND ROOFING (630) 241-0001

(312) 625-4958

www.mancioneinc.com

RESERVE ADVISORS, INC.

Custom, Comprehensive Studies Conducted by Professional Engineers www.reserveadvisors.com long-term Thinking.

Everyday Commitment.

26 C O n D O l I F E S T Y l E S 07.17

No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2017©.

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SERvICE DIRECTORY

ROOFING

SIDING / RENOVATIONS

TREE CARE

PROHTOP ROOFING (847) 559-9119

INSIDE-OUT PAINTING CONSTRUCTION & ROOFING (630) 406-3000

ACRES GROUP (888) 231-1300 / (847) 526-4554

We’re Here When You need Us! www.protoproofing.com

www.insideoutcompany.com

MIDWEST PROPERTY SERVICES, INC. 630-656-1000

M&T EXTERIORS INC. (331) 248-0447

TV-BULK CABLE & SATELLITE

Siding & Gutters / Wood Replacement Welding & Railings / Snow Removal

Roofing Siding Windows and Service. www.mt-exteriors.com

"No Job Too Big or Too Small"

service@midproservice.com / www.midproservice.com

WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

SITE MAINTENANCE, INC. (847) 697-1077 www.sitemaintinc.com

www.accessmedia3.com

(312) 955-2322 rcnchicagoapts@rcn.net www.rcn.com

XFINITY COMMUNITIES 1 (800) XFINITY

SNOW REMOVAL

250,000 roofs installed since 1963 TEAR OFFS • SHINGLES • FLAT Multi-Family ROOFING Specialist Our experience & technical know-how gets the job done right the first time! www.sdroofing.com sales@sdroofing.com

UPSTREAM MEDIA 630-230-0555

RCN

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

S&D ROOFING SERVICE (630) 279-6600

Certified Arborists & Certified Tree Care Safety Professionals www.acresgroup.com

For more information E-mail: xfinity_communities@cable.comcast.com www.comcast.com/xfinitycommunities

SP+ (773) 847-6942 dnicholson@spplus.com www.spplus.com/facilityMaintenance

WASTE SERVICES

VAN DOORN ROOFING, INC. (847) 228-5800

THE WINTER WERKS (630) 241-0001

LAKESHORE RECYCLING SYSTEMS (773) 685-8811

A Respected name in Commercial Roofing For Over Three Decades Roofing/Sheet Metal/Maintenance/Repairs www.vandoornroofing.com

www.mancioneinc.com

www.LakeshoreRecyclingSystems.com

WINDOWS/REPLACEMENTS

TRICON GROUP, INC. (847) 410-2846

SECURITY SERVICES

Snow Removal, Pressure Washing, Parking lot Sweeping/Maintenance, Concrete, Irrigation www.triconsnow.com

ADMIRAL SECURITY DOOR STAFF SOLUTIONS (847) 588-0888

SWIMMING POOLS

D-WING CONSTRUCTION (630) 397-8889 Your Home, Our Reputation A+ BBB Rating www.DWingConstruction.com

Your Home, Our Reputation A+ BBB Rating www.DWingConstruction.com

WOODLAND WINDOWS & DOORS (630) 529-DOOR (3667)

www.admiralsecuritychicago.com

SPMS (630) 692-1500

SIDING / RENOVATIONS

D-WING CONSTRUCTION (630) 397-8889

Heaters Pumps • Repairs • Chemicals Pool Maintenance • Complete Water Analysis Pool Guards, Inc. ross@spmspools.com

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

FOR DISPLAY OR PROFESSIONAL SERVICES DIRECTORY ADVERTISING INFO, CALL (630) 202-3006 No part of the publication may be reproduced whatsoever without written consent from the publisher.

All material herein is copyrighted 2017©.

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by Gabriella R. Comstock and Jonathan D. Wassell, Keough & Moody, P.C.

Alterations to Common elements Summer is fully upon us in the Chicagoland area. With the change to warmer weather, many condominium associations will come out of hibernation to start or complete projects with regards to condominium property.

M

any of these projects may be as simple as freshening up buildings with a new coat of paint or installing new landscaping, while others may be more involved by altering or changing Association common areas. understandably, most condominium association boards will not consider whether or not projects will need owner approval. However, whenever a condominium association is considering a change or alteration, however small, to the common areas or common elements, the board should consider what effect it may have on the interest of the owners.

Typically, a condominium association’s declaration will define common elements as all portions of the property except the units.

Included in the common elements are the limited common elements of an association, which are those portions of the common elements reserved for certain units. These definitions are also contained in the Illinois Condominium Property Act. most declarations, along with the Illinois Condominium Property Act, also provide that each owner of a unit in a condominium association is entitled to a percentage of ownership in the common

28 C O n D O l I F E S T Y l E S 07.17

elements. This percentage of ownership must remain constant, in other words a unit owner’s percentage of ownership may not be decreased, without 100% of the unit owners agreeing to change the percentages of ownership. See 765 IlCS 605/4(e).

Illinois law is clear that the board of Directors has broad authority to manage and administer the property, including the common and limited common elements.

Carney v. Donley, 261 Ill.App.3d 1002, 633 n.e.2d 1015 (2nd Dist. 1994). However, as mentioned above, this authority does not extend to the board approving a diminution of an owner’s interest in the common elements. Id. Illinois courts have held where a percentage of common ownership remains the same, the granting of a nonexclusive use or

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l E G A l U P D AT E

easement over common element areas did not diminish the unit owner’s undivided interest in the common elements. Schaumburg State bank v. bank of Wheaton, 197 Ill.App.3d 713, 555 n.e.2d 48 (2nd Dist. 1990). The Schaumburg State bank court case went on to note that a unit owner’s undivided interest would be diminished if the use or easement was exclusive and, as a result the unit owner was precluded from using a portion of the common elements to which he previously had access. Id. Put another way, the board would need unanimous approval if the use or easement was exclusive and also, as a result, a unit owner was precluded from using that part of the common elements they previously had access.

Generally, a change or alteration in the common elements will not require owner approval. Therefore, the key for boards to consider and determine is whether or not it is denying access to all or some of the common elements. In other words, when an Association

changes or alters the common elements, a majority of the time the change or alteration will not diminish an owner’s use or easement, while simultaneously precluding that owner from the use of the common area they previously had access. In the event this is the case, however, unanimous 100% owner approval must be obtained prior to proceeding with any such change or alteration.

Finally, even if the change or alteration does not require unanimous owner approval, the board may still be required to obtain owner approval for the actual expense incurred related to the change or alteration may require certain owner approval. Specifically, section 18(a)(8) of the Illinois Condominium Property Act provides that assess-

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All material herein is copyrighted 2017©.

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ments for additions or alterations to the common elements not included in the adopted annual budget, shall be separately assessed and subject to the approval of two-thirds (2/3rd) of the owners. See 765 IlCS 605/18(a)(8).

Therefore, as each project considered by the board must be viewed on a case by case basis, if there is any doubt regarding whether or not unanimous owner approval is needed, rather than simple board approval, or if owner approval is necessary for the expense related to the addition or alteration, the Association should contact its legal representative for an opinion regarding its ability to proceed with the change or alteration prior to undertaking such a project. Y

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EvEnT HIGHlIGHTS

mCD Golf & bocce Invitational JULY 14, 2017 AT EAGLEWOOD RESORT

he 21st annual MCD Golf & Bocce Invitational was held on July 14, 2017 at Eaglewood Resort in Itasca. Over 200 participants played golf or bocce and enjoyed industry networking at a special reception.

Special thanks to Tim Conway of Golub & Co. and Mydraine Janvier who served as co-chairs. Major sponsors of the event were Suburban Elevator, Xfinity Communities, Alliance Association Bank, Beverly Companies, FirstService Residential, Inside Out Painting, Construction & Roofing, RCN, USA Fire Protection, Contech MSI Co., CertaPro Northshore and Midwest Property Services.

T

Y Shown here (from LtoR) is the 3rd place foursome from All-American Exterior Solutions: Mike Pearce, Katie Lawson - Lieberman Management, Valerie George - Hillcrest Management, and Richard Music.

Y Pictured above is the second place foursome (from LtoR); Brian Horndasch –Prestige Painting & Decorating, Adam Tecza –Balanced Environments, Erica Horndasch – Associa Chicagoland and Tom Kelly – Balanced Environments. Sean Horndasch also pictured.

Y Shown here is the first place golf foursome from Chicagoland Community Management; Peter Kolovic, Tony Briskovic, Rudy Karastanovic and Stan Niketic.

Y Pictured above are winners of the Bocce Tournament; Stuart Fullett & Jeff Swanson – Fullett, Rosenlund Anderson, PC, Mike Chinte –ABC Deco & Felicia Nyda – Admiral Security, and Gidget Curtis –CertaPro of Evanston & Salvatore Sciacca –Chicago Property Services.

We Manage Your Property as if it was Our Own.™ You shouldn’t accept anything less than

excellence, attention to detail, experience and a commitment level unsurpassed by any other firm.

312 729 1300 www.Chicagoland-inc.com 111 E. Wacker Drive | Suite 1412 | Chicago, IL 60601-4501

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |

| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT | No part of the publication may be reproduced whatsoever without written consent from the publisher.

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by Matt Panush, Worsek & Vihon LLP

TAX RATES: Out of (Our) Control July is usually such a nice month. Summer is in full swing. The kids are out of school. Parades and fireworks on the 4th. vacations planned. 2nd installment tax bills are received. Whoa!!

T

hings were going nicely along until that last one. This will be the sixth year in a row that the tax bills were sent out on-time, which is a great benefit to all taxing districts. However, the 2016 tax bills for most city of Chicago property owners are almost 10% more than the 2015 tax bills.

Despite no increase in the assessed value, the other two components of the tax formula saw increases for 2016. The local city of Chicago tax rate jumped to 7.145%, up 4.05% from the 2015 Chicago tax rate of 6.867%.

This is due to the city of Chicago’s $500 million four-year plan of property tax increases

and the state’s approval of a $272 million levy increase to pay for Chicago Public School teacher pensions. The state equalization factor also rose in 2016, up from 2.6685 to 2.8032 for a 5.05% increase. Together, Chicago property owners will see a 9.3% hike in their tax bills. unfortunately, there really is no recourse for property owners when it comes to the tax rate and equalization factor. The one and only component of the tax bill equation that can and should be challenged is the assessed value.

For those property owners in Chicago, the best opportunity to appeal will come in 2018, when all city properties will be

32 C O n D O l I F E S T Y l E S 07.17

reassessed by the Cook County Assessor. A successful appeal in 2018 would maximize the tax savings over the three year reassessment period (2018-2020). For those owners in the west and southern suburbs of Cook County, your properties are currently being reassessed in 2017. There is still plenty of time to appeal those reassessment values in hopes of maximizing a potential three year tax savings.

Don’t let these out-of-our-control tax rate hikes spoil your summer block parties and barbeques. leave that to the rain and mosquitoes. be diligent about reading your tax bill, making sure you are receiving any exemptions you are entitled to, and be informed on when and how to challenge your assessed value. you do have a fighting chance to lower your taxes. Y

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l E G A l U P D AT E

No part of the publication may be reproduced whatsoever without written consent from the publisher.

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by Howard S. Dakoff, Esq. & Jason B. Hirsh, Esq. – Levenfeld Pearlstein, LLC T H E CO N T I N U E D E R O S I O N O F T H E D R ACO N I A N E F F E C T S O F PA L M I I :

Illinois Appellate Continues... rejects Palm II-based Defense in eviction Action Background By way of context, back in May, 2014, the Illinois Appellate Court published its Palm II opinion, which in essence prohibited board workshops, email voting or canvassing of board members, delegation of powers by less than the entire board and the fact an exculpation provision in the bylaws may not save directors from liability depending on the facts.

In 2015, the Illinois Condominium Property Act (“Condominium Act”) was amended to allow emergency expenditure decisions outside of a board meeting if a board follows certain procedures, which was needed due to a strict interpretation of Palm II prohibiting a condominium board from even making a decision outside of a meeting

in an emergency (like hiring a plumber to stop a water leak, for instance, until a properly noticed board meeting has been called - 48 hours).

Then in July, 2016, Governor Rauner signed Public Act 99-0567, which became effective on January 1, 2017, and allows board members of both condominium associations and common interest community associations to meet and discuss six (6) categories of association business outside of open meetings and in executive session (i.e. in private gatherings, workshops or even via phone or e-mail).

And now, on June 28, 2017, the Illinois appellate court reversed a trial court decision dismissing an eviction lawsuit for allegedly failing to comply with Palm II.

This is an important victory for all condominium associations as it will prevent defendants from citing the Palm II decision in an effort to challenge an eviction lawsuit to avoid liability for unpaid assessments.

New Court Ruling In lake Point Tower Condominium Association v. Diane Waller, 2017 Il App (1st) 162072, the First District Appellate Court held that: (1) alleging that the “board voted at an open meeting to initiate litigation” is not an essential element of a plaintiff’s prima facie case in an eviction lawsuit and (2) Palm II does not preclude an association’s Board of Directors (“BODs”) from delegating authority to initiate collection/eviction lawsuits to the managing agent.

In lake Point Tower, the plaintiff condominium association brought a simple eviction lawsuit against a unit owner that had failed to timely pay

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assessments. The association filed the lawsuit based upon an earlier adopted rule that provided “when any portion of the Unit Owner's account becomes forty-five (45) days past due, the Board shall forward that account to an attorney to initiate legal proceedings to collect…”

In defense of the lawsuit, the defendant argued: (1) the association was required to plead as an essential element of its prima facie case that it held a BODs meeting open to all unit owners that voted in favor of initiating the litigation and (2) the lawsuit was barred because the plaintiff association had not complied with Palm II and Section 18(a)(9)(A) of the Condominium Act by holding an open meeting voting in favor of initiating the specific eviction lawsuit. The circuit court accepted these arguments, dismissed the case with prejudice, and later refused to allow the association to amend the complaint based upon a subsequent open meeting of the BODs specifically authorizing this lawsuit.

On appeal, at the outset of the opinion, citing north Spaulding Condominium Ass'n v. Cavanaugh, 2017 Il App (1st) 160870, ¶22, the First District made clear that “an association's complaint is not required to allege as an element of a forcible entry and detainer action that the association's board

voted at an open meeting to initiate litigation.”

With respect to the association’s authority to delegate the initiation of litigation to the management company, the First District turned to Palm II, which has received little treatment since its publication two years ago. The Court stated: While the board in Palm had delegated the responsibility of handling unit owner delinquencies and collection activities to the management company, Palm involved the defense of litigation, rather than collection activities. Thus, the reviewing court was not called upon to directly address whether the board's purported delegation of the authority to initiate collections was valid.

Additionally, Palm did not indicate that the delegation occurred through a vote of the board, as was the case here, let alone hold that this specific means of delegation would be ineffective. Furthermore, Palm did not address whether either of the defects considered were cognizable defenses to an association's forcible detainer action. Cf. Spanish Court Two Condominium Ass'n v. Carlson, 2014 IL 115342, ¶32 (recognizing in a forcible detainer and entry action that a unit owner could challenge "the manner in which the assessment was adopted" (emphasis added)).

This, of course, makes clear that the First Dis-

trict did not believe Palm II precludes the type of delegation at issue here.

Ultimately, however, the First District held that the circuit court abused its discretion by denying the association leave to amend. Moreover, the Court held that any perceived issues with the association’s capacity to sue would have been cured by amendment and that amendment would “further the ends of justice.”

Summary While not always occurring, from time-totime, unit owners in violation of governing documents, or sometimes just to harass a condominium board, cite the Palm II decision in support of their tactics. However, the ability to continue to do so carte blanche has been, and continues to be, eroded over time.

Since its initial ruling in 2014, the legislature has amended the Condominium Act several times to mitigate the draconian effects of Palm II and now the courts are rendering decisions in favor of condominium associations when defendants are attempting to use an expanded interpretation of Palm II to avoid responsibility or liability for complying with the governing documents. Y

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Top Ten Ways to Drive uP Homeowner en ga Why do people choose a community association such as a condo, townhome or homeowner association? Is it because they want a maintenance-free living experience and chances to meet and mingle with neighbors?

Or, are they looking to feud with people about noise issues such as barking dogs, revving motorcycles and upstairs neighbors walking in high heels on hardwood floors at 5am?

N

o matter the motivation to buy into community associations, which now number over 338,000 in the u.S., a bigger issue emerges: how to get homeowners engaged in association administration and operation, as well as involved in beneficial relationships with other association homeowners. Today, so many people seek attention and connections through social media.

Wouldn’t it also make sense to relate in person with people who live right next door?

unfortunately, the current reality is that most homeowners don’t want to be concerned with association matters, nor do they want to serve on the board. If they have served, they want nothing else to do with it. other homeowners might have once attended a board meeting and decided never to do it again because they saw only a dysfunctional mess.

People yelled and complained, few decisions were made and little action was taken.

It begs the question: What can we do

36 C O n D O l I F E S T Y l E S 07.17

about this state of affairs? Do we simply accept it as all community living now has to offer? or do we proactively reshape community-association living to build greater expectations?

I believe we should take bold steps toward improvement. Here are my suggestions for creating a new, higher standard for community living: 10. Highly functional board. everything starts at the top. A community must have an effective board of directors. more important, the board president must show presidential (pre-2017) leadership. This sets the tone of the community and determines how homeowners live within in it.

For example, if the board is action oriented, the homeowners will experience a well-run and -maintained community, which will lead to greater satisfaction with community living. on the other hand, if

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en gagement in your Community Association you have a passive board that doesn’t raise assessments, keeps the reserve account low and puts off capital projects, the homeowners will say and believe nothing ever gets done, which will lead to much lower satisfaction.

9. Board meetings that are both effective and FUN. How in the world can a board meeting ever be fun? It can be.

It starts with a pre-meeting meet and greet at a proper location. That doesn’t include a cold and damp basement, a loud bar or a vacant condo unit without chairs and electricity. meet somewhere such as a library’s community room or a quiet, suitable space with business-meeting amenities. We want the homeowners to attend the meetings and have chances to interact. We also want the board to conduct focused, proactive meetings that result in great business decisions that enhance the homeowners’ communityliving experience.

8. Social events. Social events are crucial.

They gather the homeowners in a relaxed setting so they can get to know one another.

If you’ve tried arranging a social event and no one showed, try a different venue or bring in other attractions such as music and food. If you have children in the community, you could invite a magician or include a water slide or bounce house.

Holding the annual election at a restaurant or having a board meeting catered can help boost attendance as well.

7. Contests/Recognition. Want to supercharge homeowner engagement? Consider creating community contests. For example, homeowners who attend the most board meetings, stay the entire time and behave appropriately are entered for a chance to win a prize. Also recognize board members for their service, as well as homeowners

who volunteer at the annual election meeting before the voting takes place. Ideally, the annual election meeting will attract the most attendees.

6. Rules and regulations. The association must have clear, well-written rules and regulations. They allow the board to set fair legal boundaries within the community.

The rules and regulations also need to be enforced. This lets homeowners know the board takes its role seriously and the association supports good, friendly behavior among neighbors. Consider reviewing your association’s current rules and regulations to see if they could use a tune-up.

5. Training. How do board members know how to act as board members? What are the best practices for the president, secretary and treasurer? board members should concern themselves with how they act and

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focus their actions on what’s best for the association. Ideally, they should also seek and receive some type of board-member training. While Illinois law doesn’t require it (even though I think it should), the board may consider attending a training session held by the Community Associations Institute (CAI) or the Association of Condominium, Townhouse, and Homeowners Associations (ACTHA). board members might also look to their management company for training.

4. Welcoming committee. The association should make any new community homeowners feel welcome from the start.

The management company and an association welcoming committee should greet them, give them a personal tour of the association, explain the rules and regulations and encourage them to attend upcoming board meetings.

3. Communication. Frequent, detailed communication is critical to the association’s success and well-being. A quarterly newsletter is a great start. An online portal that provides homeowners with updates and information is even more important.

Homeowners want to feel like they’re a part of the community; your communication will help ensure that they do.

2. Quality vendors. A strong association has access to responsible and trustworthy vendors. maintaining relationships with the same vendors further benefits the association because they know the building and, over time, the homeowners and board members. When choosing vendors for any capital project, focus on quality and accountability more than price. you can’t have a comfortable living environment if your vendors are not serving the association with reliable professionalism.

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1. Highly effective management company. yes, it is true: An essential component of enjoyable community living is having the right management company, one that takes action and cares about quality.

The right company knows how to help the board ensure things are done correctly the first time to avoid more problems. A good management company will further provide board-member training and an efficient online portal for the board members and homeowners. It will have a meeting space designed for fun and productive board meetings as well.

SUMMARY Don’t settle for status-quo community living – strive for great community living.

Whether you’re a board member, a vendor, a property manager or a homeowner who might volunteer for the association, commit to making a difference. Together, we can reshape and redefine community living. Y

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by Ben Rooney, Keay & Costello, P.C.

Fiduciary Duty & the Business Judgement Rule

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ost of us know that directors on the board of a community association have a fiduciary duty to the community association’s members. Unfortunately, that is where most director’s analysis, and understanding, end. A fiduciary duty is defined as “a duty of utmost good faith, trust, confidence, and candor.” In short, a director is obligated to act in the best interest of the association, and the membership as a whole, as opposed to acting in the director’s interest. In the event a board or director acts in a manner contrary to best interests of the association, the board or the individual director could be found to have breached this fiduciary duty, and be liable for any damages caused by this act.

subjected to liability from honest mistakes of judgment. While the application of this business judgment rule is broad, and will protect an association’s board of directors from liability most of their

decisions, even wrong ones, it is not absolute.

Obey Governing Documents & Laws The business judgment rule will be of the most use to a board when it comes to defending discre-

Common Fiduciary Decisions It is rather intuitive that overt, criminal acts are also breaches of a director’s fiduciary duty.

Stealing money from the association’s funds comes to mind. But what about acts that, in hind sight, turn out to damage the association? Almost every board has made a decision that they look back on and have regrets. A different contractor should have been selected. A different policy or rule adopted, or should have been enforced more vigorously. An increase to the regular assessments sure would have been ideal to avoid the special assessment that is now needed to address unforeseen maintenance issues. Even if a board does not revisit their past decisions, most of the time there is a vocal member or two that will do this for them!

When a decision proves to be the wrong one, and harms the association, does this mean the board has breached its fiduciary duty? Is the board, or even an individual director, liable to the membership for any damages of these decisions?

Business Judgement Rule Not Absolute The answer largely depends on the nature of the action, as well as the events and circumstances surrounding the board’s decision-making process before taking the action. Illinois courts have held that “absent evidence of bad faith, fraud, illegality or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors.” This concept is often simply referred to as the “business judgment rule.”

The purpose and effect of this business judgment rule is to protect directors who have been diligent and careful in performing their duties from being

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tionary decisions. If a decision was within the discretion of the board, and it was a reasonable decision at the time it was made, a court will likely defer to the board’s judgment. For decisions where the board is not permitted to use its discretion, it will be much more difficult for the board to claim the mistake is still protected by the business judgment rule. The most obvious example of when the business judgment rule will not shield the board from liability is when a board fails to comply with its governing documents, or applicable laws. Courts have

held that where there is a violation of a statute or of organizational bylaws, and that violation causes harm to the organization, that also constitutes a breach of fiduciary duty. The provisions in an association’s governing documents are important, and must be followed. While some requirements allow a board to use its discretion (i.e., should assessments become due monthly, quarterly, or annually), others choices are not (i.e., notices of member meetings must be sent out at least 10, but no more than 30 days prior to the meeting).

Fiduciary Challenges Although complying with an association’s governing documents sounds like a straight-forward and easy proposition, it can sometimes prove to be more difficult than one might expect. These governing documents tend to be lengthy, confusing, and jam-packed of legalese. Adding to the challenge, an association’s governing documents may be overridden by any laws applicable to the association… laws that have most likely changed since the governing documents were drafted and recorded. This is precisely why attorneys spend a great deal of time reviewing these documents and advising boards as to their contents, and why a board with doubts as to whether the governing documents are being complied with should consult their legal counsel.

This also leads into the other scenario in which boards may not be able to claim that the business judgment rule protects it from being liable for a “wrong” decision, even if that decision was a discretionary one. This is when a board fails to conduct its due care before making a decision and taking action.

While the type of due care required before a board makes a decision will vary depending on the situation, one thing is consistent: boards are required to become sufficiently informed to make an independent business decision if they expect to be protected by the business judgment rule.

Sometimes, this is as simple as getting three bids for landscaping to make sure the contract is competitively priced. Other times, this can include hiring professionals such as accountants, attorneys, reserve analyists, or even environmental consultants. The court’s decision in the now infamous case of Palm v. 2800 lake Shore Drive Condominium Ass'n, summed it up rather plainly, by holding that “One component of due care is that directors must inform themselves of material facts necessary for them to properly exercise their business judgment.

If a board seeks legal advice before reaching its decision and relied on that advice in reaching its decision, it will be found to have properly exercised its business judgment.”

Exercise Due Care The thing that boards need to take away from this is that while they have a duty to be honest and make decisions in the best interest of the association, a court will likely defer to the boards judgment, even for wrong decisions, when a board can show that it exercised its due care in making this decision. Y

40 C O n D O l I F E S T Y l E S 07.17

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