765 ILCS 160/1-40: What Every Homeowners Association Needs to Know About Owner Meetings

765 ILCS 160/1-40: What Every Homeowners Association Needs to Know About Owner Meetings

Community associations play a crucial role in managing community living, ensuring that shared spaces are maintained and that residents abide by community rules. Effective governance hinges on active participation from homeowners, particularly during owner meetings. ILCS 160/1-40 of the Common Interest Community Association Act provides guidance with respect to owner meetings. This article will address important items common interest community associations should know about owner meetings.

Who types of Homeowners Associations are subject to the Common Interest Community Association Act?

765 ILCS 160/1-5 of the Common Interest Community Association Act defines a common interest community as follows:

“Common interest community” means real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. “Common interest community” may include, but not be limited to, an attached or detached townhome, villa, or single-family home. A “common interest community” does not include a master association.

765 ILCS 160/1-75(a) contains the following exemption for associations with respect to complying with the Illinois Common Interest Community Association Act:

(a) A common interest community association organized under the General Not for Profit Corporation Act of 1986 and having either (i) 10 units or less or (ii) annual budgeted assessments of $100,000 or less shall be exempt from this Act unless the association affirmatively elects to be covered by this Act by a majority of its directors or members.

(b) Common interest community associations which in their declaration, bylaws, or other governing documents provide that the association may not use the courts or an arbitration process to collect or enforce assessments, fines, or similar levies and common interest community associations (i) of 10 units or less or (ii) having annual budgeted assessments of $50,000 or less shall be exempt from subsection (a) of Section 1-30, subsections (a) and (b) of Section 1-40, and Section 1-55 but shall be required to provide notice of meetings to members in a manner and at a time that will allow members to participate in those meetings.

Accordingly, many homeowners associations are governed by the Common Interest Community Association Act. A condominium or cooperative does not qualify as a common interest community. A townhome may qualify as a common interest community, and whether a townhome is a common interest community or a condominium will depend on how the real property and association were organized under the governing documents.

Is notice of a membership meeting required?

Yes, pursuant to 765 ILCS 160/1-40(a) of the Common Interest Community Association Act, notice of any membership meeting must be given detailing the time, place and purpose. The notice must be given no less than 10 and no more than 30 days prior to the meeting and the notice must be given through a “prescribed delivery method.”

The Common Interest Community Association Act defines a “prescribed delivery method as follows:

“Prescribed delivery method” means mailing, delivering, posting in an association publication that is routinely mailed to all members, electronic transmission, or any other delivery method that is approved in writing by the member and authorized by the community instruments.

Is notice of a board meeting required?

Yes, pursuant to 765 ILCS 160/1-40(b)(4), notice of board meetings must given to the members at least 48 hours prior to the meeting by either (i) using a prescribed delivery method or (ii) posting copies of notices of meetings in entranceways, elevators, or other conspicuous places in the common areas of the common interest community at least 48 hours prior to the meeting. If there is no common entranceway for 7 or more units, the board may designate one or more locations in the proximity of the units where the notices of meetings shall be posted.

However, there are special notice rules with respect to board meetings concerning the adoption of: (i) the proposed annual budget, (ii) regular assessments, or (iii) a separate or special assessment. In those instances, the board must give notice of any board meeting through a prescribed delivery method within 10 to 60 days prior to any meeting.

What constitutes a quorum?

Pursuant to 765 ILCS 160/1-40(b)(1), 20% of the membership constitutes a quorum, unless the community instruments indicate a lesser amount.

Is an annual meeting of the members required?

Yes, the members are required to hold an annual meeting pursuant to 765 ILCS 160/1-40(b)(2) of the Common Interest Community Association Act.

How may special meetings be called?

Special meetings of the board may be called by the president, by 25% of the members of the board, or by any other method that is prescribed in the community instruments.

Special meetings of the membership may be called by the president, the board, 20% of the membership, or any other method that is prescribed in the community instruments.

Are board meetings open to members?

Yes, all board meetings are open to any member. However, pursuant to 765 ILCS 160/1-40(b)(5), the board may close any portion of a noticed meeting or meet separately from a noticed meeting for the following reasons:

1. 1. to discuss litigation when an action against or on behalf of the particular association has been filed and is pending in a court or administrative tribunal, or when the common interest community association finds that such an action is probable or imminent;
   2. to discuss third party contracts or information regarding appointment, employment, engagement, or dismissal of an employee, independent contractor, agent, or other provider of goods and services;
   3. to interview a potential employee, independent contractor, agent, or other provider of goods and services;
   4. to discuss violations of rules and regulations of the association;
   5. to discuss a member’s or unit owner’s unpaid share of common expenses; or
   6. to consult with the association’s legal counsel.

However, any vote on any of the aforementioned matters must be taken at a meeting or portion of a meeting that is open to any member.

Is a board required to reserve meeting time for member comments?

Yes, the board must reserve a portion of the meeting of the board for comments by members pursuant to 765 ILCS 160/1-40(b)(6). However, the duration and meeting order for the member comment period is within sole discretion of the board.

Conclusion

It is critical that common interest community associations observe the meeting requirements set forth under ILCS 160/1-40 of the Common Interest Community Association Act. Failure to do so could result in the invalidation of any board decision made at such a meeting. The attorneys at Hirzel Law are seasoned community association attorneys who can ensure that community association boards are complying with the meeting requirements set forth under the Common Interest Community Association Act.

 

Jeremy Fernando is an Associate Attorney at Hirzel Law, PLC. Mr. Fernando is licensed to practice law in the State of Illinois. He concentrates his practice on community association law, condominium law, homeowners association law, and real estate law. Mr. Fernando’s legal career includes serving in corporate practice where he represented insurance companies and institutional investors in U.S. and cross-border private placements of securities, including transactions in the Netherlands, England, Ireland, Australia, and Germany. Mr. Fernando earned his Juris Doctor from Marquette University Law School, where he graduated with honors and ranked in the top 15% of his class. He also served as an Associate Editor of the Marquette Law Review. Mr. Fernando is committed to providing effective legal representation to his clients and is passionate about helping communities navigate complex legal challenges. He may be reached at 312-552-7669 or jfernando@hirzellaw.com.