Jagon Salad
The Impression of Easy Answers When It Comes to HOA Ethics
Don’t look to Section 18.4 of the Illinois Condo Act for ethical guidance; it’s more like a recipe book for legal compliance.
Brought to you by Drew McManus, your neighbor in 7908.
In his 10/04/2024 email, HOA board president Scott Timmerman attempts to muddy the waters by claiming that Section 18.4 of the Illinois Condominium Property Act is enough to guide the board’s actions.
It’s easy to see why this move seems designed to confuse the issue: while Section 18.4 outlines what the board is allowed to do, it completely sidesteps how board members and our processes should be conducted ethically.
HOA President, Scott Timmerman – 10/24/2024 email to owners
“Section 18.4 of the ‘Illinois Condominium Property Act’…provide extremely detailed guidance on operating parameters for Board members, including practices related to ethics,”
Rattling off a statement like that sounds authoritative and thorough, doesn’t it?
The reality is Scott’s reply is just a fancy way of saying, “Look at these official sounding words and reference to state law!” in order to create a false comparison.
The reality is the difference is pretty stark, but it’s also straightforward. It may be helpful to think of it this way:
- Section 18.4 is like a job description. It outlines the tasks and responsibilities they are expected to fulfill, such as completing reports, attending meetings, and managing projects. It defines what the HOA board members are supposed to do in terms of operations and day-to-day operations.
- An ethics policy is like the company’s employee handbook. It provides the rules and expectations for conduct, such as avoiding conflicts of interest, treating others fairly, and maintaining transparency. It guides how board members should conduct themselves in ethical situations beyond just their operational duties.
As a side note, the ethical approach to these exchanges is to provide owners with unedited reference material. Unlike Timmerman’s email, which fails to reference the article from 8/17/2024 that he’s responding to, I have included the full text of his email below for transparency and context1.
why an ethics policy remains critical
Four Simple Steps to Understanding Why Section 18.4 Isn’t an Ethics Guide
In response to the board president’s assertion, it’s important to clarify that Section 18.4 of the Illinois Condominium Property Act outlines general operational guidelines for the powers and duties of the board, but it does not specifically address comprehensive ethical standards in the same way a formal HOA ethics policy would2.
Here’s why:
- 18.4 Focuses on Operations, Not Ethics: Section 18.4 outlines the board’s responsibilities regarding budgeting, maintenance, rule enforcement, and other operational matters. While it emphasizes the fiduciary duty of board members, it does not set specific ethical boundaries, such as conflict of interest management, prohibitions on self-dealing, cronyism, or policies on transparency in decision-making processes.
- Ethics Require Specific Guidance: A dedicated ethics policy would address situations beyond day-to-day management, such as board members endorsing candidates, disclosing conflicts of interest, or avoiding favoritism (sound familiar?). Section 18.4 does not provide detailed guidance on these ethical issues, whereas an ethics policy would clarify expectations and behaviors that fall under ethical scrutiny.
- Preventing Misuse of Power: The Illinois Condominium Property Act focuses more on general governance. However, a robust ethics policy provides clear guidelines for how board members should conduct themselves in ways that maintain fairness, impartiality, and trust. It includes areas like whistleblower protection and ethical behavior during elections, which are not covered under Section 18.4.
- Proactive Ethical Oversight: An ethics policy serves as a proactive measure, ensuring that all board members and officers are aware of their ethical obligations. Section 18.4 is reactive, it outlines what the board can do operationally but doesn’t prescribe how ethical dilemmas should be handled. A dedicated policy would bridge this gap.
The Bottom Line
Ethics Policies Build The Trust Every HOA Needs
While Section 18.4 is necessary for governing the mechanics of board responsibilities, it is not designed to serve as a policy for ethical conduct. Our HOA board president’s letter acknowledges this by saying Section 18.4 “including practices related to ethics.”
The key word there is “related.”
It’s important to understand that being ethics-adjacent isn’t enough, which is why an ethics policy strengthens trust in the board by ensuring that its members are held to the highest ethical standards, something that benefits everyone in the community equally.
Ask yourself, do you really want board leadership that actively resists the creation of an ethics policy and perceives requests for such a policy as a personal attack?
Have Your Cake And Eat It Too 🍰
Delicious Irony
It’s tough to miss the irony when you consider that the HOA President justifies ethically questionable actions, such as sending owners a list of preferred candidates, by claiming to act as an individual owner.
Yet, he uses his position as a board officer and official Association communication channels to address issues that directly influence the election outcome. This contradictory behavior raises a number of significant concerns.
If the Association had a well-written ethics policy, here are key issues it would address as related to the HOA President’s actions on this matter:
- Conflict of Interest: As a candidate, the HOA President has a vested interest in shaping the narrative to favor his re-election. Using official HOA channels for personal benefit can be seen as leveraging a position of power unfairly.
- Equal Access: If other candidates do not have similar access to the association’s communication platforms, it creates an unbalanced playing field, where the HOA President can influence voters through an official medium that others cannot use.
For these reasons, it’s considered best practice to avoid using association resources for campaign purposes, ensuring fairness and transparency in the election process. An ethics policy would have made sure the HOA President used personal communication channels or initiate oversight measures if that failed to happen.
TAKE ACTION
Conclusions
An ethics policy serves as a cornerstone of HOA governance, by providing clear guidelines for handling conflicts of interest, establishing transparency beyond basic record-keeping, and offering mechanisms for reporting and addressing ethical violations.
By setting these standards for board members’ conduct, an ethics policy ensures that decisions are made fairly and that all homeowners are treated equally. This type of policy is essential for maintaining the integrity of the board and fostering trust within the community, beyond what is outlined in Section 18.4.
I urge all residents to join in advocating for an ethics policy. Make your voice heard by sending a letter to Board President Scott Timmerman using the following template:
Be respectful, concise, and clear in articulating the negative impact it has had on you and your fellow homeowners. You are welcome to use the example language as-is, but feel free to personalize the example message before you send.
Curious to learn more about some of these issues? Feel free to get in touch, I’m happy to chat.
- Date: Friday, 10/4/2024
Subject: Message from Board President Scott Timmerman
Body: “A number of you have contacted me regarding a handful of emails you have received about both the Board and Management. I am very proud of the work done by both the Board and Management, so I wanted to briefly respond in defense of both. As I stated in the last Newsletter, I consider the Board’s work to be the best rebuttal to any false narratives and conspiracy theories that are being spread.
There have been emails sent by one or two people making baseless accusations of corruption and implying a lack of ethics, which is offensive to both the Board and Management. The Board’s history and work prove the opposite. Regarding suggestions that an ethics code is needed, there are well-established laws in both Chicago and Illinois (e.g. Section 18.4 of the “Illinois Condominium Property Act”) that provide extremely detailed guidance on operating parameters for Board members, including practices related to ethics. It has also been suggested that Board members approve Resolutions or recommendations without discussion or dissent. Anyone attending our Board meetings knows that we often engage in thorough discussions which result in changes to Resolutions or sending an item back to committee for further research. Any owner can attend a Board meeting or view a video recording of every Board meeting from the past four years which, along with our Board Minutes, are available on both the HOA app and the HOA website.
I believe we are lucky to have 48 Board members with diverse backgrounds and experience who volunteer their time to help ensure our property is well-managed, that our budgets are sound, that our Reserves are strong, and that we are doing everything we can to protect our property values. It would be nice to more frequently update our amenities, but careful consideration is given to where and how money is spent in order to maintain our financial stability. Indeed, we have a history of conservative financial decisions with moderate assessment increases, which has allowed us to never have a special assessment. Our Reserves are now over $23 Million and we have been on budget for many years despite rising costs, such as insurance, energy, and union labor.
Finally, I am grateful that we have professional Management and dedicated staff that is capable of working with a few thousand people, often with differing views and opinions on many issues. In my experience, our Board and Management have always been open to suggestions and are continually looking for ways to improve HOA operations, which directly impact our living experience. If any of you has a concern that you would like to discuss based on any emails you may have received (admittedly I may not have read all of them), please don’t hesitate to reach out to me at timmermanhoa@gmail.com.” ↩︎ - Section 18.4 Copy in-full:
Sec. 18.4. Powers and duties of board of managers. The board of managers shall exercise for the association all powers, duties and authority vested in the association by law or the condominium instruments except for such powers, duties and authority reserved by law to the members of the association. The powers and duties of the board of managers shall include, but shall not be limited to, the following:
(a) To provide for the operation, care, upkeep,
maintenance, replacement and improvement of the common elements. Nothing in this subsection (a) shall be deemed to invalidate any provision in a condominium instrument placing limits on expenditures for the common elements, provided, that such limits shall not be applicable to expenditures for repair, replacement, or restoration of existing portions of the common elements. The term “repair, replacement or restoration” means expenditures to deteriorated or damaged portions of the property related to the existing decorating, facilities, or structural or mechanical components, interior or exterior surfaces, or energy systems and equipment with the functional equivalent of the original portions of such areas. Replacement of the common elements may result in an improvement over the original quality of such elements or facilities; provided that, unless the improvement is mandated by law or is an emergency as defined in item (iv) of subparagraph (8) of paragraph (a) of Section 18, if the improvement results in a proposed expenditure exceeding 5% of the annual budget, the board of managers, upon written petition by unit owners with 20% of the votes of the association delivered to the board within 21 days of the board action to approve the expenditure, shall call a meeting of the unit owners within 30 days of the date of delivery of the petition to consider the expenditure. Unless a majority of the total votes of the unit owners are cast at the meeting to reject the expenditure, it is ratified.
(b) To prepare, adopt and distribute the annual
budget for the property.
(c) To levy and expend assessments.
(d) To collect assessments from unit owners.
(e) To provide for the employment and dismissal of
the personnel necessary or advisable for the maintenance and operation of the common elements.
(f) To obtain adequate and appropriate kinds of
insurance.
(g) To own, convey, encumber, lease, and otherwise
deal with units conveyed to or purchased by it.
(h) To adopt and amend rules and regulations covering
the details of the operation and use of the property, after a meeting of the unit owners called for the specific purpose of discussing the proposed rules and regulations. Notice of the meeting shall contain the full text of the proposed rules and regulations, and the meeting shall conform to the requirements of Section 18(b) of this Act, except that no quorum is required at the meeting of the unit owners unless the declaration, bylaws or other condominium instrument expressly provides to the contrary. However, no rule or regulation may impair any rights guaranteed by the First Amendment to the Constitution of the United States or Section 4 of Article I of the Illinois Constitution including, but not limited to, the free exercise of religion, nor may any rules or regulations conflict with the provisions of this Act or the condominium instruments. No rule or regulation shall prohibit any reasonable accommodation for religious practices, including the attachment of religiously mandated objects to the front-door area of a condominium unit.
(i) To keep detailed, accurate records of the
receipts and expenditures affecting the use and operation of the property.
(j) To have access to each unit from time to time as
may be necessary for the maintenance, repair or replacement of any common elements or for making emergency repairs necessary to prevent damage to the common elements or to other units.
(k) To pay real property taxes, special assessments,
and any other special taxes or charges of the State of Illinois or of any political subdivision thereof, or other lawful taxing or assessing body, which are authorized by law to be assessed and levied upon the real property of the condominium.
(l) To impose charges for late payment of a unit
owner’s proportionate share of the common expenses, or any other expenses lawfully agreed upon, and after notice and an opportunity to be heard, to levy reasonable fines for violation of the declaration, by-laws, and rules and regulations of the association.
(m) By a majority vote of the entire board of
managers, to assign the right of the association to future income from common expenses or other sources, and to mortgage or pledge substantially all of the remaining assets of the association.
(n) To record the dedication of a portion of the
common elements to a public body for use as, or in connection with, a street or utility where authorized by the unit owners under the provisions of Section 14.2.
(o) To record the granting of an easement for the
laying of cable television or high speed Internet cable where authorized by the unit owners under the provisions of Section 14.3; to obtain, if available and determined by the board to be in the best interests of the association, cable television or bulk high speed Internet service for all of the units of the condominium on a bulk identical service and equal cost per unit basis; and to assess and recover the expense as a common expense and, if so determined by the board, to assess each and every unit on the same equal cost per unit basis.
(p) To seek relief on behalf of all unit owners when
authorized pursuant to subsection (c) of Section 10 from or in connection with the assessment or levying of real property taxes, special assessments, and any other special taxes or charges of the State of Illinois or of any political subdivision thereof or of any lawful taxing or assessing body.
(q) To reasonably accommodate the needs of a unit
owner who is a person with a disability as required by the federal Civil Rights Act of 1968, the Human Rights Act and any applicable local ordinances in the exercise of its powers with respect to the use of common elements or approval of modifications in an individual unit.
(r) To accept service of a notice of claim for
purposes of the Mechanics Lien Act on behalf of each respective member of the Unit Owners’ Association with respect to improvements performed pursuant to any contract entered into by the Board of Managers or any contract entered into prior to the recording of the condominium declaration pursuant to this Act, for a property containing more than 8 units, and to distribute the notice to the unit owners within 7 days of the acceptance of the service by the Board of Managers. The service shall be effective as if each individual unit owner had been served individually with notice.
(s) To adopt and amend rules and regulations (l)
authorizing electronic delivery of notices and other communications required or contemplated by this Act to each unit owner who provides the association with written authorization for electronic delivery and an electronic address to which such communications are to be electronically transmitted; and (2) authorizing each unit owner to designate an electronic address or a U.S. Postal Service address, or both, as the unit owner’s address on any list of members or unit owners which an association is required to provide upon request pursuant to any provision of this Act or any condominium instrument.
In the performance of their duties, the officers and members of the board, whether appointed by the developer or elected by the unit owners, shall exercise the care required of a fiduciary of the unit owners.
The collection of assessments from unit owners by an association, board of managers or their duly authorized agents shall not be considered acts constituting a collection agency for purposes of the Collection Agency Act.
The provisions of this Section are applicable to all condominium instruments recorded under this Act. Any portion of a condominium instrument which contains provisions contrary to these provisions shall be void as against public policy and ineffective. Any such instrument that fails to contain the provisions required by this Section shall be deemed to incorporate such provisions by operation of law.
(Source: P.A. 99-143, eff. 7-27-15; 99-849, eff. 1-1-17; 100-292, eff. 1-1-18.) ↩︎