Call Us: (312) 626-4535

      
 

What a Condo Association Board Needs to Know Before Responding to a Unit Owner’s Request to Inspect Books and Records

Under Section 19 of the Illinois Condominium Property Act (765 ILCS 605/19), the board of managers for a condo association is required to keep and maintain certain records, or copies of those records, at the association’s principal office. Under that section, most of those records must also be made available for inspection and copying by a unit owner of a condominium association or its agent. Section 19 also includes specific requirements for the unit owner to make a request, the time for a response by the condominium association and a mechanism for a unit owner to seek court intervention if a request is denied by the condo association.

More specifically, under Section 19 of the Condominium Property Act, a condominium association must keep and maintain the following 9 categories of documents:

      1. the condominium association’s declaration, bylaws, and plats of survey, and all amendments;
      2. the rules and regulations of the condominium association, if any;
      3. if the condominium association is incorporated as a corporation, the articles of incorporation of the association and all amendments to the articles of incorporation;
      4. minutes of all meetings of the condominium association and its board of managers for the immediately preceding 7 years;
      5. all current policies of insurance of the condominium association;
      6. all contracts, leases, and other agreements then in effect to which the condominium association is a party or under which the association or the unit owners have obligations or liabilities;
      7. a current listing of the names, addresses, email addresses, telephone numbers, and weighted vote of all unit owners entitled to vote;
      8. ballots and proxies related to ballots for all matters voted on by the unit owners of the condominium association during the immediately preceding 12 months, including, but not limited to, the election of unit owners of the board of managers; and
      9. the books and records for the condominium association’s current and 10 immediately preceding fiscal years, including, but not limited to, itemized and detailed records of all receipts, expenditures, and accounts.

The list above is exclusive, and a condo association is not required to maintain other records or documents. See, e.g., Glazer v. Priv. Residences at Ontario Place Condo. Ass’n, 2022 IL App (1st) 210156-U, ¶ 45.

Of the nine categories of documents on the above-referenced list, a unit owner has the right to “inspect, examine, and make copies” of the records from categories 1-6 and 9 at a “reasonable time or times” at the condo association’s principal office without any identification of a “purpose” or reason for the inspection. Importantly, on January 1, 2018, Section 19 of the Condominium Property Act was amended to remove the requirement that a unit owner provide a “proper purpose” in order to demand an inspection or examination of these records.

The unit owner is required to submit a written request to the condo association’s board of managers or its authorized agent, stating with particularity the records to be examined. If the condominium association fails to make available some, or all, of the records requested within 10 business days (this provision used to be 30 days before the January 1, 2018 amendment referenced above), it is deemed a denial of the request.  Additionally, the Chicago Municipal Code (Section 13–72–080) has a provision for inspection that mirrors the Condominium Property Act.  The condominium association can charge the actual cost of retrieving and making requested records available for inspection and examination, as well as the cost of reproduction if requested by the unit owner.

The unit owner may also demand the records contained in categories 7 and 8 above, but only if the demand is made for a purpose related to the condominium association. As a condition to the unit owner’s right to inspect or copy these types of records, the board of managers may require a written certification that the information contained in the records will not be used for a commercial purpose.

However, the condominium association does not need to make certain documents available for inspection, examination, or copying unless so ordered by a court.  More specifically, the following documents do not need to be made available without such an order:

(1) documents relating to the appointment, employment, discipline, or dismissal of association employees;

(2) documents relating to actions pending against or on behalf of the association or its board of managers in a court or administrative tribunal;

(3) documents relating to actions threatened against, or likely to be asserted on behalf of, the association or its board of managers in a court or administrative tribunal;

(4) documents relating to common expenses or other charges owed by a unit owner other than the requesting unit owner; and

(5) documents provided to an association in connection with the lease, sale, or other transfer of a unit by a unit owner other than the requesting unit owner.

It is important for a condominium board to appropriately respond to a demand to inspect under the Condominium Property Act. If an inspection request is denied, and a unit owner brings an action to compel the examination against the board, that unit owner may be entitled to attorneys’ fees and costs from the association if ultimately successful in that action. If the request is denied as to the documents in categories 1-6 and 9 above, an attorneys’ fee award is mandatory. If a request is denied as to the documents in categories 7 and 8 above, a fee award is only allowed if the court finds that the board acted in bad faith when it denied the request made by the unit owner.

unit owner of a condominium association may also make a request to inspect documents under Illinois’ General Not For Profit Corporation Act, 805 ILCS 105/101.01 et seq. Under Section 107.75 of that Act:

Any voting unit owner shall have the right to examine, in person or by agent, at any reasonable time or times, the corporation’s books and records of account and minutes, and to make extracts therefrom, but only for a proper purpose. In order to exercise this right, a voting unit owner must make written demand upon the corporation, stating with particularity the records sought to be examined and the purpose therefor. If the corporation refuses examination, the voting unit owner may file suit in the circuit court of the county in which either the registered agent or principal office of the corporation is located to compel by mandamus or otherwise such examination as may be proper. If a voting unit owner seeks to examine books or records of account the burden of proof is upon the voting unit owner to establish a proper purpose. If the purpose is to examine minutes, the burden of proof is upon the corporation to establish that the voting unit owner does not have a proper purpose.

As one might expect, many demands given to a board are not explicitly clear in what exactly is being requested, and if required, the reason is for the request. If the request is properly served on the board, is clear in what is being requested, and pertains to documents squarely within categories 1-6 and 9 of Section 19(a) of the Condominium Property Act, the board should immediately identify that it is making those documents available to the unit owner and discuss possible days, times and the place for the inspection or examination, as well as any potential costs attributable to the request.

A situation where a unit owner made a request that did not comply with the Condominium Property Act was at issue in the case of Oviedo v. 1270 S. Blue Island Condo. Ass’n, 2014 IL App (1st) 133460, ¶¶ 12-15.  In the Oviedo case, the plaintiff was a unit owner of a three-unit condominium and was only sporadically paying assessments. After receiving a demand letter from association counsel, the plaintiff wrote a letter back demanding that the president of the association provide various documents and records and that they be delivered to his office within 15 days of the request. In response, the association stated that it was not required to copy documents and that the documents were available for review and could be copied at the unit owner’s expense. After receipt of the letter, the plaintiff never scheduled a time to inspect the records. In that case, the Court of Appeals found that the demand made by the unit owner was improper for a handful of reasons, including that the unit owner could not require copies be produced. Even further, the Court held that the association did not actually deny the unit owner’s request so there was no basis to afford him any relief, and summary judgment should have been granted to the association.

The Oviedo case was decided before the amendments to the Condominium Property Act, which, for most unit owner requests, removed the requirement that the unit owner provide a “proper purpose” for the request. Therefore, and because the time frame for making nearly all the condominium’s documents available for inspection is now reduced from 30 days to 10 business days, it is imperative that a condominium board move quickly in analyzing any demand or request to inspect and respond timely to same. Community association counsel can assist the board in responding to any request to inspect made by unit owners to confirm that the requests are responded to properly and timely.

Adam Toosley is a member at Hirzel Law, PLC and focuses his practice on real estate litigation, zoning and land use, construction, and financial services litigation. Over the course of his career, he has represented property owners, landlords, condominium associations, lenders and all parties in the construction chain, handling all aspects of real estate-related disputes, including construction defect cases, payment and landlord-tenant disputes as well as real estate foreclosures, mechanic’s lien cases and fraud and business tort claims in state and federal court as well as in mediations and arbitrations throughout the United States. He is licensed in both Michigan and Illinois. He can be reached at (312) 626-4535 or at atoosley@hirzellaw.com.

Print Friendly, PDF & Email
Share Post
Written by

atoosley@hirzellaw.com

No comments

Sorry, the comment form is closed at this time.

%d bloggers like this:

Hi

Ask us anything, or share you feedback