Posts Tagged ‘Illinois’

State of Lincoln Finds HOA Cops Don’t Create Police State

February 4, 2013


In an interesting development from LaSalle County, Illinois, the state Supreme Court has upheld the right of a private, covenant-based police force to detain and ticket speeders.  Is it shades of Snow Crash, or perhaps just a recognition that a multi-thousand-acre community needs to be able to keep the peace?

What I found interesting was that the policing was based almost entirely on some fairly vague provisions in the articles of incorporation:

“To promote and enhance the civic and social interests of the
owners of real estate in Lake Holiday Development, LaSalle
County, Illinois; insofar as those interests relate to the
maintenance of Lake Holiday, the dam constructed at the
headwaters thereof, and appurtenant structures thereto. To
acquire and hold real estate in its corporate name; to construct
and maintain thereon buildings and structures of all types,
roadways, beaches; and, to do all other things reasonably
necessary therefor; memberships herein shall be restricted to
owners of land in Lake Holiday Development ***.”

Based on this broad power, the Association had adopted more specific (barely) Bylaws empowering the Board to adopt and enforce rules and regulations:

The Board of Directors shall adopt such rules and
regulations relating to the use of association property as they
may deem reasonably necessary for the best interests of the
association and its members. They may also in order to better
effectuate said rules and regulations, adopt reasonable
sanctions for non-compliance therewith. *** The Board of
Directors shall also employ a sufficient number of persons to
adequately maintain association property.

To me, the analysis should be whether the rules and regulations adopted by the Board were outside the scope of powers permitted by the CC&Rs.  However, the Court of Appeals focused on questions of private policing powers only, so the Supreme Court used that analysis as well, holding that “courts generally will not interfere with the internal affairs of a voluntary association absent mistake, fraud, collusion or arbitrariness.”  An HOA evenhandedly enforcing its rules, obviously, is not mistaken, fraudulent, collusive or arbitrary.

I’m not sure if the courts here in Idaho would follow the same analysis.

-Jeremy O. Evans




The Tax Man Cometh

December 17, 2012

This column by Mr. Bendoff of Illinois is a timely reminder that even non-profit corporations like HOAs are required to file tax returns.

By David M. Bendoff

Condominium and other forms of community associations are entities that must account for their taxable income. Even if no tax is owed, there is still a filing requirement.

Today’s column provides brief and general information regarding the alternatives and filing requirements related to the taxation of community associations. When I use the term “community association,” it includes condominium, townhouse and master associations, but does not include cooperative housing corporations.

The laws concerning income taxation are complex. Careful tax planning, and input of an accountant, is required of each community association in order to receive the greatest income tax benefit.

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