How should association handle money owed to former owners?

Q. As manager for a condominium association, the board asked me to clean up some of the association’s financial records. There are many former unit owner accounts with small credits, going back as far as about 2010. These credits range from pennies to hundreds of dollars. Many of these former owners have been sent refund checks that were never cashed. At what point in time can we write these off?

A. Initially, this would not involve write-off as this does not involve monies due to the Association. Rather, this involves monies held by the Association that belong to former owners.

If the Association has been holding unclaimed funds of a former owner whose status and whereabouts are unknown, the unclaimed funds need to be sent to the state of Illinois. The Illinois Uniform Disposition of Unclaimed Property (765 ILCS 1025) requires a business (whether or not for profit) to report property unclaimed for five years to the state treasurer. If the funds, as here, have been unclaimed for five years, the Association is supposed to complete the paperwork to transfer those funds to the state of Illinois. The process to submit unclaimed funds to the state is fairly simple and remittance can be done by check or ACH credit. Here is a link for more information and address as to where funds can be submitted:

https://icash.illinoistreasurer.gov/app/reporting-guidelines.

A former owner seeking those funds that have been transferred to the state treasurer would need to deal with the state treasurer, not the association.

Q. I am the member of a board of directors of a condominium association. Other board members and our property manager keep referring to the “Palm Act” What is the Palm Act?

A. There is no “Palm Act” in Illinois. When persons incorrectly refer to the “Palm Act,” they are referring to the Illinois appellate court decision commonly referred to as “Palm II.”

In the 2014 Illinois appellate court decision, Palm v. 2800 Lake Shore Drive Condominium Association, the Fifth Division of the First District Appellate Court of Illinois issued a decision concerning the validity of many common association practices. Importantly, portions of the order are specific to the governing documents for that association and the facts in issue in that case. The court’s conclusion is startling on some issues, and confirms what should have been common practice on other issues. The case involves a suit by a unit owner, challenging a variety of conduct of the board of directors of his condominium association.

The Legislature amended portions of the Condominium Property Act in response to portions of Palm II, in order to assist boards in carrying out their responsibilities.

In any event, the board directors of associations and management need to consider Palm II, the association’s governing documents, and the Condominium Property Act in handling the affairs of their association.

Q. Can the board of my condominium require an owner to provide an email address where the association can send me association notices?

A. The owner in a condominium cannot be forced to provide an email address where the association can send notices.

In order for the condominium to issue notices to owners by email, two actions need to occur. First, the board needs to adopt appropriate rules authorizing electronic delivery of notices and other communications required or contemplated by the Condominium Property 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. Next, an owner needs to provide the association with written authorization for electronic delivery, and provide an electronic address to which such communications are to be electronically transmitted. Otherwise, notice must be mailed or delivered to owners in the manner described in the association’s declaration, at the association’s expense.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.