Condo Board Fails the Duck Test

  • Posted: April 30, 2014

quack quackWhat’s the duck test? Of course, that’s the form of inductive reasoning where, “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.”

Before we waddle on any further, let’s step back for a moment. What’s your first instinct when someone needs to tell you, “trust me”? Okay, how ’bout when they similarly and variously repeat: “The board members are intelligent, ethical and well-intentioned professionals who volunteer their valuable time to our Association for our benefit. Your investment is in good hands.”

Uh-oh.

Well, as you can see, this article isn’t about ducks. It’s about one of the most prevalent problems arising out of the pernicious oligarchy otherwise referred to as an Illinois condominium board. According to the Illinois Department of Financial and Professional Regulation, the biggest problem is “self dealing.”

Self dealing is the most common form of conflict of interest. By definition: “A conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest.” The rub is that the secondary interest is personal. It can include financial gain but also more subtle motives as the wish to do favors for family and friends. Self-dealing happens when an official who controls an organization causes it to enter into a transaction with the official, or with another person or organization, that benefits the official. The point: the official is on both sides of the deal; and the outcome is rigged in his or her favor.

Sound familiar? It should. Here’s a few examples closer to home:

  • A board president buries a situation that’d likely cost him thousands for his exclusive use of a common element.
  • A board “streamlines the renovation process” circumventing Association rules allowing “friends of” to bypass building permits.
  • A board member overlooks building upkeep to instead spend thousands for new cardio equipment, his personal hobby.
  • A board member who owns a dog flagrantly ignores the rules regarding dogs.
  • A board member pushes for preferential treatment for his real estate broker buddy and in turn gets a great deal worth thousands.
  • A board president uses the management company as his personal assistants.
  • An “insider” manager gets a totally arbitrary $3,000 bonus.
  • “Investor” board members vote to skew the rental totals so as to avoid a rental cap.
  • Board members use management and Association attorneys to exact personal vendettas against select homeowners.

Okay, maybe the board fails the duck test, but c’mon, it’s just a cute little duck.  They’re “well-intentioned.”  They “volunteer.” Quid pro quo, right?

Problem is, it’s against the law. Per the Condominium Act, board members are fiduciaries and self dealing breaches their fiduciary duty. YOU and your interest as a member of the 111 East Chestnut Condominium Association, are supposed to come first exclusively.  Somehow, that’s gotten lost here.

Then again, this is Illinois.  Trust me, your investment is in good hands.  Quack quack.

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