Email communication is quick, easy and cost-free.  However, when it comes to communicating with your owners, it is not a legally acceptable form of relaying information without an owner's approval.

Notices of meetings, annual financial information, association budgets, and other legally required communication must still be delivered personally or via the US mail in order to be considered compliant.  An exception is made only when an owner has agreed to receive communication electronically.  That authorization should be provided in written form to the Board and kept in the association's files.  This protects the Board against any legal claims of failure to provide the required notice.

If your association pays any owner or Board member for services performed for the association, the Board must secure workers compensation insurance coverage for any accidents or injuries sustained while those services are being performed.  The association's general liability insurance will not cover any individuals who are being paid, only those acting in a volunteer capacity.

Income earned ($600 or more) is also taxable and must be reported to the IRS.  The Board should secure a completed Form W-9 from any paid owner/Board member.  A Form 1099-MISC should be completed and delivered to the recipient by January 31.  Government copies and Form 1096 must be filed by February 28.

If your association pays for common heating gas or electric, your bills will show a large increase during the winter months.  Enroll in the budget payment plan through Peoples Gas or ComEd and your monthly utility expense will be the same regardless of the month.

This option helps to even out cash flow throughout the year and makes financial data more consistent.  Peoples Gas usually offers the budget payment option on its invoices.  Just pay the budget amount as indicated instead of the total due, and they will automatically enroll you in the budget plan.

Monthly budget payments may be adjusted during the year to account for changes in usage or utility costs.

Many newer condominium association Declarations contain what is known as a mandatory arbitration clause.  The clause requires that any owner issues or claims against the Board be addressed through arbitration.  The results of the arbitration can be entered in court if the matter progresses to a legal battle. 

The purpose of the clause is to reduce the number of association matters that end up in the legal system and to reduce legal fees for associations and owners.  If an owner brings a case to court and it is determined that they did not comply with the arbitration requirement, the suit would most likely be dismissed.  Also, if an owner files suit after the matter has been addressed through arbitration (because they are unhappy with the result), the association can present the arbitration results as evidence and again, seek a dismissal.

Adding this clause to your Declaration, if it does not exist, requires an amendment.  For more information about amendments, please contact a Condo Law Attorney.

A client forwarded this great article on common mistakes made by association Boards.  I'm sharing it here.

The article was originally published in the November/December issue of Common Ground, CAI's magazine focusing on issues affecting condominium, co-op, and homeowner's associations.  Become a member of CAI and receive the magazine in its entirety, as well as access to additional resources for your association.  See the CAI website for details.

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