Your condo association may need to contract with vendors for recurring maintenance or one-time projects. Your association may want to use a request for proposal when collecting bids from vendors.

A request for proposal (RFP) is meant to give direction to a contractor/vendor about the scope of service for a project and to the association with a focused cost to complete the identified scope. A properly prepared RFP can make a big difference in getting quality proposals from service providers and give the association the ability to make an informed decision. 

There are three keys to keep in mind when you are getting ready to develop the RFP for an upcoming project or contract: 

  1. Who should prepare the RFP?
  2. What unforeseen conditions may arise?
  3. What documents should you receive from the contractors?

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At HausFS, we come across many small associations that do not keep a separate bank account for accumulating reserves funds. Sometimes this is a result of the buildings simply not having any excess funds to transfer to a savings account because they are not budgeting properly. More often the board just never got around to opening an additional bank account and segregating the reserves that they have.

There is a few good reasons why your association should have a separate bank account for reserves funds:

  1. The board can make financial decisions regarding capital expenditures more easily when it can clearly see how much money is available to spend. When operating and reserves funds are co-mingled, it is not so black and white.
  2. Some mortgage products require that the association hold reserves in a segregated account. If your association does not have a separate reserves account, owners may encounter problems when trying to sell or refinance.
  3. Associations miss out out interest income when excess reserves funds are not held in a separate, interest-bearing account.

HausFS recommends that all small associations segregate their reserves funds in a no-fee savings account that bears interest. The association should also be transferring funds to reserves each month based on its annual budget. Your budget should show a minimum of 10% allocated to reserves each year to meet lender requirements.

Condominiums associations are considered corporations in the eyes of the IRS. As such, they are required to file an annual tax return (either an 1120 or 1120-H).

Condo associations showing taxable income on their federal returns are also required to file an IL-1120 with the state of Illinois.

Tax returns must be postmarked by April 16th this year. The IRS granted an extra month to file beginning with the 2016 tax year.

Board members can no longer represent their association in an administrative hearing. Administrative law judges hearing cases in the City of Chicago used to allow non-attorney representation for ordinance violations. However, it has been determined recently that non-attorneys appearing on behalf of such entities at administrative hearings were committing the unauthorized practice of law.

In Illinois, if you attend an administrative hearing on behalf of an entity without an attorney, a default judgment may be entered because you will not be allowed to appear on its behalf. In order to vacate the default judgment, you will need to engage an attorney to file a motion on your behalf, in most cases resulting in an additional hearing and costs.

Therefore, it is recommended that condo board members engage legal representation shortly after receiving an ordinance violation in order to prevent a default judgment and additional expense.

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It depends. 

Owners generally have the right to see attorney invoices. However, when an invoice pertains to attorney-client privileged information, the council should review them and redact any privileged information.

It is generally advised that community associations inform owners requesting access to the association’s counsel’s invoices that if they wish to review the content of legal invoices, instead of just the amounts billed, the invoices must first be reviewed by the council so privileged information can be redacted.

The association should not make the determination as to what is or is not subject to the attorney-client privilege or attempt to undertake the redaction on their own without the advice of counsel. The cost to review and redact the invoices should be charged to the requesting unit owner.

To learn more, click here.


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