By Deborah Goonan, Independent American Communities
For a few months now, I’ve been following a developing story involving The State Parkway Condo Association in Chicago.
According to Loop North News, Michael Novak is a CPA with an MBA in finance. Novak became concerned when State Parkway announced an assessment increase of 12% this year, following a 7% increase last year. He made several written requests to view tax returns and other management and financial statements for his condo association. But only part of his request was honored, while other documents were withheld.
Previously, according to Novak, an examination of tax returns turned up red flags pointing to alleged tax evasion on the part of State Parkway.
The issue is a common one: a condo association that balks at owner requests to examine financial records. Instead of providing prompt access and full transparency, the association provides some, but not all, of the records requested.
I hear this story over and over again. And generally, state laws require open access to records for all association members. But rarely do those state laws provide a straightforward enforcement mechanism for property owners. An owner’s only option is to take their HOA to civil court, a costly endeavor, yet the HOA may continue to ignore even a court order to produce financial records.
However, what makes this story somewhat unique is the fact that a municipal government – the City of Chicago – actually has an Ordinance requiring condo associations to provide access to financial records within 30 days, upon receipt of a written request of any member of the association. If the responsible board member or agent fails to provide timely access according to the Ordinance, the City will issue a fine of $100-$300 for the first offense, $300-$500 for the second offense, and for a third offense within 180 days, criminal misdemeanor charges with possible incarceration of up to 6 months.
Here’s a link to the current ordinance: https://chicagocode.org/13/13-72/
Excerpts from current code:
Examination of records by unit owners
No person shall fail to allow unit owners to inspect books and records of account for the condominium association’s current and 10 immediately preceding fiscal years, including but not limited to itemized and detailed records of all receipts and expenditures, within thirty business days of the time written request for examination of the records is received.
Penalty for violation
Unless otherwise provided, any person found guilty of violating sections 13-72-050(A) & (B), 13-72-060 or 13-72-065 shall be punished by a fine of not less than $200.00 nor more than $5,000.00 for the first offense, and not less than $2,000.00 nor more than $10,000.00 for the second and each subsequent offense in any given 180-day period. Any person found guilty of violating any other section of this chapter shall be punished by a fine of not less than $100.00 nor more than $300.00 for the first offense and not less than $300.00 nor more than $500.00 for the second and each subsequent offense in any 180-day period. Repeated offenses in excess of three within any 180-day period may also be punishable as a misdemeanor by incarceration for a term not to exceed 180 days. Each failure to comply with the provisions of this chapter with respect to each person shall be considered a separate offense. A separate and distinct offense shall be regarded as committed each day on which such person shall continue or permit any such violation. In addition to such fines and penalties, violation of any provision of this chapter shall be cause for revocationof any license issued to such violator or offending party by the City of Chicago. Nothing herein shall be construed to preclude the revocationof any license for violation of any other provision of the Municipal Code of Chicago.
That’s pretty serious stuff.
So it’s kind of a big deal when a condo association receives its third citation, as was the case for The State Parkway Condominium Association along the Gold Coast, back in October.
Gold Coast condo association issued three citations over records requests
By Steven Dahlman
10-Oct-16 – A condo association that allegedly did not allow a unit owner to inspect tax returns and other financial documents has received three citations from the city.
Notices of ordinance violations have been sent by the Department of Business Affairs and Consumer Protection to The State Parkway Condominium Association, a 160-unit residence near the north end of State Street and about one block from Lake Shore Drive.
Michael Novak says over the past year he has asked in writing to see his association’s federal and state tax returns for 2004, 2005, and 2006, along with a property manager’s financial report and financial statements, but has received just three federal returns.
By city ordinance, homeowner associations have 30 days after a written request to make financial books and records available to unit owners at no charge. After 30 days, a unit owner may sue to enforce compliance and, if successful, recover damages and attorney’s fees. The association can also be fined by the city. Repeated offenses can land condo board members and property managers in jail for up to 180 days.
Hearings are scheduled for November 2 and December 14 to address the complaints.
When I read this article back in October, I decided to check back on the status of Citation enforcement after the November and December hearings. But then I read the following update a few days ago, where I learned that the hearings have been postponed.
Now Novak is being threatened with a fine by his condo association for distributing one-page letters to his neighbors regarding the upcoming condo board election. Prior to their September annual election meeting, Novak was running for an open board position and urged his neighbors to vote against incumbent board members.
Novak is deaf. Some condo owners have reported difficulty understanding his speech, so Novak prefers to use written communication to convey important or complex information to his co-owners. According to statements he provided to Loop North News, Novak says the condo association failed to provide him with a mailing list of owners in the 160-unit condominium. So Novak decided to hand deliver each letter through the mail drop of each condo unit’s door.
Just one problem. State Parkway supposedly has a rule against “door-dropping” of correspondence to one’s neighbors. So now Novak is threatened with a fine of $50-$500 for attempting to exercise his rights to free speech, with regard to a condo board election.
Novak calls it retaliation for blowing the whistle with regard to the condo board’s failure to provide access to records, and the fact that he has made allegations of gross financial mismanagement. Novak claims a $10 million shortfall in the budget is responsible for two substantial assessment increases, with more to come.
GOLD COAST CONDO THREATENS FINE OVER DOOR-DROPPED LETTER
State Parkway Condominium Association
Gold Coast condo threatens fine over door-dropped letter
By Steven Dahlman
8-Dec-16 – A Gold Coast condominium association is threatening a unit owner with a fine of $50 to $500 for sending a letter to his fellow owners urging them to attend a condo board meeting.
The problem State Parkway Condominium Association has with the letter is that it was dropped in person to each door, in violation of one of the association’s rules.
Michael Novak, whose complaints to the Department of Business Affairs and Consumer Protection resulted in three citations from the city against the condo association, calls it retaliation. The citations are over tax returns and other financial documents that Novak, a former CPA with an MBA in Finance, claims he was not allowed to see. Hearings were scheduled but then postponed.
In his one-page letter dated September 26, Novak urged unit owners to attend the condo association’s annual meeting and vote against the incumbent board of directors. He says they are responsible for a $10 million shortfall that owners will have to make up for through increased assessments.
Novak is entitled to a hearing before the condo board, and says he plans to take legal action if the condo board decides to fine him.
There’s a long history of disputes between Novak and his condo association, with Novak accusing the condo board of harassment and discrimination.
Last November, a Judge gave approval for a Federal housing discrimination lawsuit that Novak has filed with State Parkway. The dispute involves noise and other complaints over Novak’s service dog.
Can State Parkway legally fine Novak for distributing campaign information to condo owners?
With regard to “door-dropped letters” involving political matters within the condo association, Michael Novak might want to check out Dublirer v. 2000 Linwood Avenue Owners Inc.
The case bears striking similarities to Novak’s case. In that case, co-op resident Robert Dublirer was prohibited from “leafletting” his neighbors with flyers pertaining to his proposed candidacy for co-op board. After a 6-year pro se battle, NJ Supreme Court found in Dublirer’s favor.
N.J. Supreme Court: Fort Lee co-op board violated man’s free-speech rights in leafletting case
BY PETER J. SAMPSON
STAFF WRITER | THE RECORD
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The New Jersey Supreme Court ruled Wednesday that the free-speech rights of a resident of a high-rise co-op building in Fort Lee were violated when the co-op’s board barred him from distributing leaflets under the doors of his neighbors.
In a unanimous decision, the court held that Robert Dublirer, a regular critic of the co-op board, had been denied a fundamental right guaranteed by the state’s Constitution.
In 2008, Dublirer sued the owners of the 483-unit Mediterranean Towers South complex, claiming a rule it enforced against him was unconstitutional.
Dublirer was contemplating a run for a seat on the board, but was denied permission to distribute campaign materials to residents. The board had previously distributed literature that criticized its opponents.
But the board cited a “house rule” that barred soliciting and distributing written materials without board authorization. The rule was intended to preserve the residents’ privacy and quiet enjoyment of their homes, and minimize litter.
Read more here:
Can Novak convince his condo association to back off on the fine? We’ll have to wait and see.
Looking back at the history of Chicago’s Condo ordinance, the 2011 version was more strict than the current version:
(Prior code § 100.2-11; Amend Coun. J. 5-4-11, p. 118299, § 3; AmendCoun. J. 11-16-11, p. 13798, Art. X, § 3)
Previous code (from 2011) is here. Notice on page 7, a condo association used to be required to provide access to financial records within “three business days” rather than the current 30-day window.
Read about it here:
Also, some background history on Michael Novak’s disputes with The State Parkway Condominium Association via Michael Novak’s blog: