One of the great truths of the association culture is that the board shall not conduct its business behind closed doors or have “secret” meetings as this deprives the owners of their rights. In concept, it sounds like a fine principled idea. In practicality, there are more exceptions than rules and more urban myths than exceptions.
Beginning with the minimum legal obligation, we can dispel the biggest myth first.
Illinois does have a law called the Open Meetings Act. It is set forth in Ch. 50 ILCS 120, et seq. of the Illinois Statutes. It requires open meetings for public bodies only. Public bodies are duly elected or appointed governmental bodies such as village boards, park districts, etc. It does not apply to private organizations such as condominiums and homeowners associations. All of the scuttlebutt about violations of the Open Meetings Act at association meetings is not applicable.
Associations are subject to certain “open meetings” requirements set forth in other statutes and often in their operating documents.
The following requirements appear in the Illinois General Not-for-Profit Corporation Act, the Illinois Condominium Property Act, and many declarations and bylaws:
1. All meetings of the Board where business is conducted are open to the members;
2. Notice of a Board meeting must be sent to all members no less than 48 hours in advance;
3. Board meetings are to be conducted in accordance with the basic rules of parliamentary procedure (adopted from Roberts Rules of Order);
4. Members have a right to be present, but shall not participate in the discussion or voting on board business (most associations hold an open forum for the owners to speak before or after meetings);
5. All votes are recorded in the minutes;
6. Minutes are a short summary of board votes, not a verbatim transcript of discussions or owner comments;
7. Minutes are available upon request. They do not have to be sent out to all owners after every meeting;
8. The president runs the meeting and directors may only speak when called upon;
9. Minutes are not official until approved at a subsequent meeting;
10. Minutes must be kept for seven years.
Where there is confusion and often controversy is when the board meets without owners being present. There are three statutory exceptions and one implied condition of when a board meets in a closed session.
1. No notice to the owners is required.
2. No business can be conducted; i.e. no votes can be taken.
3. No minutes are kept.
4. The board can discuss:
(a) Third-party contracts or information regarding hiring and firing of agents, contractors, personnel, or any other provider of goods and services.
(b) Disciplinary action against an owner such as fines and delinquencies (and implied that a board can also discipline its own members for violations as a director).
(c) Confidential discussions with legal counsel about pending or threatened litigation.
(d) Where no business is actually conducted.
For condominium associations, once the “proposed” budget is hammered out, then the statute has protections built-in for the owners, i.e. it must be sent to all owners 25 days prior to adoption, owners must receive notice of not more than 30 nor less than 10 days prior to the meeting where it will be adopted, owners have a right to be present, the board voted on the budget at the open meeting and it is recorded in the minutes.
In the event the budget exceeds a 15 percent increase over the prior year, then the owners can file a petition for a referendum and could reject the budget if more than a majority of all owners deem it so.
As you can see, there is a balance in this instance. The board has a right to meet and crunch numbers without interruption; the owners are protected with the right to be present and even reject a large increase in assessments.
This is just an overview and there are exceptions to the exceptions.
The most important thing to remember is board members have the right to act as directors of a corporation, owners have the right to be informed as members of the association and the Illinois Open Meetings Act protects the taxpayers by imposing criminal penalties on public officials that knowingly violate it.
There are no such sanctions for private organizations, nor, in my opinion, should there be.
Presented at the 32nd Annual Community Association Law Seminar (January 13-15, 2011). Updated 2016.