Mr. Kasten is an associate attorney at the firm of Michael Kim & Associates, specializing in condo and common interest community association law (generally known as community association law). He is active in the Condo Subcommittee of the Chicago Bar Association’s Real Property Law Committee and regularly reports to that Subcommittee on new bills being discussed in the Illinois State Legislature that can affect community associations (e.g. condos, homeowners associations, etc.).
Question: This new law says every condo association has to create “a written policy for resolving complaints” from individual unit owners; once the unit owner has received a “final decision” from the board about their complaint, the unit owner can ask the Ombudsman to intervene to get the board and the unit owner to seek a resolution “by mutual agreement”. What do you think of that provision? Won’t it be highly unlikely a Board would agree to have a mediation about a matter on which it’s already formally made a final determination?
Attorney Kasten: Yes, it is unlikely that a board would agree to mediation.
Keep in mind that the requirement to establish a written policy for resolving complaints also applies to common interest community associations that are governed by the Common Interest Community Association Act.
Under Section 40 of the Ombudsperson Act, an owner must first obtain a final decision from the board before making a request for assistance. Such request is essentially an attempt to appeal a board’s decision to a mediation format, but that mediation is entirely voluntary on the part of the board. It is questionable whether a board would partake in the mediation process in which the board might be second guessed by the mediator.
It is not clear what the Ombudsperson will do with submissions for requests for assistance that do not result in a mediation with the Ombudsperson. For example, will the Ombudsperson include in his or her report to the General Assembly what types of disputes were the subject of requests for assistance submissions? Obviously, such requests would only tell one side of the dispute. Thus, any report would not contain sufficient information to apprise the General Assembly of the actual nature of the scenario from which the dispute arose. The General Assembly acting on incomplete information could adversely impact the ability of boards to function.
Second Question The function of an ombudsman in large organizations is to serve as a neutral channel of direct communication between the upper management and the rank-and-file membership: is there any chance this law, which creates one single roving ombudsman for all of the common interest associations in the whole state, might improve unit owners’ sense of being able to be heard by boards seen as unresponsive or inaccessible?
Attorney Kasten: Possibly.
Requiring condominium and common interest community associations to establish written policies for resolving complaints affords some measure that boards are required to take seriously and address owner complaints in a timely manner. The failure of an association to adopt such required written policy may subject the association to penalties under the Ombudsperson Act. However, the subsection of the Ombudsperson Act to which a non-complying association is subject does not actually exist in the Ombudsperson Act. Thus, in its present form, the Ombudsperson Act may not improve an owner’s ability to be heard by an unresponsive or inaccessible board.
Third Question: If Governor Rauner implements this law and creates this new condo ombudsman office, do you see it changing the balance of power very much between individual unit owners and association boards?
Attorney Kasten: Presently, it is not clear whether there will be any impact on the balance of power.
Under the Ombudsperson Act, the Ombudsperson primarily gathers and distributes information. He or she can also mediate limited types of disputes between an owner and a board, but only when both parties are agreeable to such mediation. Thus, the Ombudsperson is not vested with authority that could shift the balance of power.
However, the Ombudsperson Act is in its infancy and the Department of Financial and Professional Regulation (“DFPR”) has yet to adopt administrative rules for the administration and enforcement of the Ombudsperson Act. Thus, the ultimate impact of the Ombudsperson Act on condominiums and common interest communities, including the balance of power between owners and boards, remains largely unknown.
Fourth Question: I assume you see this law as making it harder for these boards, especially the self-managed boards, to comply with state law. The Ombudsman law adds new paperwork requirements for every association and imposes sanctions on associations that don’t register their new complaints policy.
Attorney Kasten: Not necessarily.
An association is required to register with the Ombudsperson Office every two years using forms not yet created by DFPR. Although the Ombudsperson Act places an obligation on the association to notify DFPR of any changes in information, such information is not likely to change often.
It is only necessary to adopt the written policy to address complaints once by way of adopting rules and regulations. Although such policy may be amended form time to time, such amendments are not likely to occur often.
Therefore, in its present form, I do not see the Ombudsperson Act requirements as over burdensome on associations, whether professionally managed or self-managed.
Final Question: As it’s written, would this law allow the Ombudsman’s office to make any rulings or findings about whether a Board is or isn’t following the law?
Attorney Kasten: No.
In the present iteration of the Ombudsperson Act, the Ombudsperson can only act as a mediator to assist willing parties in resolving a dispute. The Ombudsperson has no authority to make rulings or findings in a manner similar to an arbitrator or judge.
However, the Ombudsperson is tasked with collecting and keeping data on the Ombudsperson Office’s activities and the most common and serious types of disputes. The Ombudsperson is required to submit annual reports of such data to the General Assembly, along with recommendations for statutory reform. The Ombudsperson may report to the General Assembly scenarios in which he or she believes boards to be acting in violation of the law and setting forth recommendations to address such scenarios.
Thus, even if the Ombudsperson does not presently have authority to make legally binding rulings or findings, he or she could still impact boards through recommended statutory changes, which could possibly include expanding the scope of the Ombudsperson’s authority. And there is presently no assurance that the Ombudsperson would be competent to make such determinations or recommendations, especially if the office is filled based solely on political affiliation.