Can an Illinois condominium association use secret ballot voting in its board elections, and what happens when the board adopts internal voting policies but never tells unit owners about them?
Community association elections can be contentious, but few disputes illustrate the intersection of election procedures and fiduciary duties as clearly as Cohen v. 175 East Delaware Place Homeowners Association, 2024 IL App (1st) 230516-U. While the decision is unpublished, it provides valuable guidance for Illinois condominium boards navigating election procedures, voter eligibility, and their fiduciary obligations under the Illinois Condominium Property Act (765 ILCS 605/1). This article will discuss the court’s analysis and provide key takeaways and practical guidance for Illinois community associations.
Background of the Illinois Condominium Election Dispute
The dispute arose out of two separate board elections, one in 2017 and another in 2019, at a large Chicago condominium association consisting of over 700 units and a 48-member board. Unit owner Pat Cohen challenged both elections, alleging violations of the Illinois Condominium Property Act, 765 ILCS 605/1, and breaches of the board’s fiduciary duties.
The 2017 Election Dispute
In the 2017 election, unit owner Pat Cohen narrowly lost her reelection bid. The outcome turned on the invalidation of a single ballot submitted by Gary Bernstein. Bernstein owned his unit through a land trust but had previously submitted a voting member designation listing himself as a voting member. When his ballot was reviewed, the condominium association’s election judges noted a discrepancy: the deed listed a land trust as the record owner, while Bernstein signed the ballot as an individual. After consulting association counsel, the election committee invalidated the ballot because Bernstein’s authority to vote on behalf of the trust was not verified. Notably, the condominium association had an internal policy requiring trustee confirmation for units held in trust. Importantly, though, that policy had never been formally communicated to unit owners.
The 2019 Election Dispute
The second issue arose in 2019 when board candidate Stefan Edlis died on the morning of the election. Despite his death, Edlis received enough votes to place within the top 24 candidates. The board, relying on legal counsel, determined that Edlis should be deemed elected but unable to serve, leaving the seat vacant rather than awarding it to Cohen, who finished 25th. Cohen challenged both elections, alleging violations of the Illinois Condominium Property Act (765 ILCS 605/1) and breaches of fiduciary duty.
The Illinois Appellate Court’s Analysis of the Election Procedures and Fiduciary Duty Claims
The Illinois Appellate Court found that the board’s failure to disclose the election procedures to the unit owners before the 2017 election was a violation of its fiduciary duties under the Illinois Condominium Property Act. However, the Illinois Appellate Court affirmed the trial court’s ruling that the board did not breach its fiduciary duties in the 2019 election because it made an informed decision based on the findings and research of its legal counsel.
- Secret Ballot Procedures Were Valid
Cohen argued that the condominium association’s secret ballot procedures violated 765 ILCS 605/18(b)(10) of the Illinois Condominium Property Act, which requires associations to adopt rules verifying voter eligibility and to allow candidates to be present during vote counting. The Illinois appellate court rejected this argument and found that the condominium association had adopted sufficient procedures, including the use of voting member forms and election judges who cross-referenced ballots with ownership records. The Illinois appellate court found that 765 ILCS 605/18(b)(10) did not require the rules to address every contingency regarding voter eligibility, and such a requirement would place an undue burden on condominium associations.
Additionally, the Illinois appellate court clarified that candidates have a right to be present during counting, but not to inspect ballots or observe confidential voting information. The Illinois appellate court reviewed the pertinent sections of the Illinois Condominium Property Act 765 ILCS 605/18(b)(10) and found that the statute does not specify that candidates have a right to be present during vote challenges.
- The 2017 Ballot Invalidation Was Protected, But Not the Lack of Disclosure
The court upheld the decision to invalidate Bernstein’s ballot under the business judgment rule, emphasizing that the board relied on counsel, the decision was made in good faith, and there was no evidence of fraud or bad faith. However, the court reached a different conclusion on the board’s failure to inform unit owners about the trust voting requirement. The appellate court held that this omission constituted a breach of the board’s fiduciary duty of candor. Specifically, the board implemented a policy affecting voting rights that was not disclosed to affected unit owners, depriving them of a meaningful opportunity to comply. In making this determination, the Illinois appellate court reviewed Boucher v. 111 East Chestnut Condominium Ass’n, 2018 IL App (1st) 162233 and Wolinsky v. Kadison, 114 Ill. App. 3d 527, 533 (1983) and found that both cases “do not stand for the proposition that [Illinois] condominium associations have standalone fiduciary duties under the [Illinois Condominium Property] Act but, rather, ‘that when a unit owner can show that some association employee or board member has violated fiduciary duties, the unit owner may recover from the association.’”
- The 2019 Election Decision Was Protected by the Business Judgment Rule
Regarding the 2019 election, the Illinois appellate court ruled in favor of the condominium association. Although the situation, counting votes for a deceased candidate, was unusual, the court emphasized that the board sought and relied on legal counsel, there was no clear legal authority governing the issue, and the decision was made after deliberation and in good faith. In making this decision, the Illinois appellate court relied on Duffy v. Orlan Brook Condominium Owners’ Ass’n, 2012 IL App (1st) 113577, and Goldberg v. Astor Plaza Condominium Ass’n, 2012 IL App (1st) 110620. In both cases, the Illinois courts found that, absent evidence of bad faith, fraud, illegality, or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment of corporate directors, and the business judgment rule only applies to board members who exercise due care in carrying out their duties. As a result, the Illinois appellate court held that the board’s decision to leave the seat vacant was protected under the business judgment rule.
Key Takeaways and Practical Guidance for Illinois Community Associations
This case provides several important lessons and practical guidance for Illinois community associations:
- The Business Judgment Rule Has Limits
Boards are generally protected when acting in good faith and relying on professional advice. However, that protection does not extend to inaction, lack of awareness, or failure to communicate key policies.
- Trust Ownership Requires Special Attention
Units held in land trusts present recurring challenges. Associations should clearly outline who may vote, what documentation is required, and how voting member designations must be completed.
- Audit Election Rules and Policies
Illinois community associations should review all election procedures to ensure they are clearly written, consistent with the governing documents and the Illinois Condominium Property Act (765 ILCS 605/1), and fully disclosed to unit owners.
- Rely on Counsel, But Document the Process
When faced with unusual circumstances (such as candidate eligibility issues), boards should seek legal advice, document their reliance on that advice, and deliberate before making a decision.
Conclusion
Cohen v. 175 East Delaware Place Homeowners Association serves as a cautionary tale for Illinois condominium boards. While the business judgment rule provides meaningful protection, it is not a blanket shield. Boards that fail to communicate key policies, particularly those affecting voting rights, risk breaching their fiduciary duties. At its core, this case underscores that fair elections require not only proper procedures but also transparency. Illinois community associations that prioritize both will be best positioned to avoid costly disputes and maintain election integrity.
