Handbook for Directors

This handbook has been developed in accordance with the

WEST SHORE PARK CORPORATION

AMENDED AND RESTATED BY-LAWS

(By-laws were recorded May 28, 2014)

Adopted  February 10, 2014

Table of Contents

Objectives of the Amended By-Laws………………………………………………………………………………………. 1

Subdivision History……………………………………………………………………………………………………………….. 1

Ramifications of Our History that Affect Our By-Laws……………………………………………………………… 2

Remedies to Collect Fees and Assessments……………………………………………………………………………. 3

Alternative Considerations Regarding the Collection of Fees Related to the Water System…………… 3

Remedies to Enforce the Covenants………………………………………………………………………………………. 4

Remedies to Enforce Rules and Regulations…………………………………………………………………………… 4

The Bottom Line on Remedies……………………………………………………………………………………………….. 4

Considerations Regarding Specific Provisions of the 2014 Amended and Restated By-Laws………… 5

Illinois Statutes that May Have Relevance to our Governance…………………………………………………… 7

Ethics………………………………………………………………………………………………………………………………….. 7

Board Member’s Oath…………………………………………………………………………………………. Attachment A

Objectives of the Amended By-Laws

The points of primary consideration for the development of the year 2014 Amended and Restated By-Laws were to:

·         Conform to State Law.

·         Conform to the Articles of Incorporation.

·         Protect the rights of the minority.

·         Avoid assessments and restrictions that may have questionable legality.

·         Provide the greatest transparency.

·         Provide the greatest protection for and minimize the burden on Directors and Officers.

·         Discourage Corporation interference with other jurisdictions.

·         Facilitate the action of Directors to respond to emergencies.

·         Provide the greatest chance to prevail when undertaking legal action against a delinquent homeowner.

·         Make the By-Laws difficult to amend.

·         Preserve Corporation property.

·         Encourage Members to participate in annual, board and special member meetings.

Subdivision History

The subdivision was created in 1923.  The subdivision plat notes that “All drives, lanes, terraces, beaches and parks in this Subdivision are for the use only of the present owners, their heirs, successors or assigns” and is recorded as Document #231127 pages 1 and 2 with the Office of the recorder for Lake County, Illinois.

Subsequent conveyances of subdivision residential lots by the Grantors (original owners) established the subdivision Covenants and Restrictions as part of each new deed and stipulated that they be passed along with those lots in perpetuity (forever).  Examples of such conveyances are documents #333009 and 390741.

As these lots were sold off, the Grantors retained their ownership of the non-residential subdivision real estate that included the easements they had created, which must also pass to new owners in perpetuity.

In 1939 West Shore Park Corporation (hereafter referred to as “WSPC”) was established to own and maintain a water system as well as the non-residential real estate.  Then in 1943 the Grantors quit-claim deeded that real estate to WSPC.  This resulted in our rather unique situation in which all subdivision lot owners, their heirs, successors or assigns have easements to the non-residential real estate, which is owned by WSPC, which is a corporation comprised of some of the subdivision lot owners; those being all of the owners of improved lots.  This conveyance is recorded on page 586 of the Book of Deeds #497.

For decades water was obtained from private wells and from Mundelein via a connection near the north pillars.  Then in 1985 WSPC began supplying its own well water to those residences that were connected to the system.  The piping from Mundelein was disconnected.

Ramifications of Our History That Affect Our By-Laws

Typically a developer transfers governance of a common interest community development to the development’s association along with a means for the association to modify its governance, by its membership, according to State Law.   The document of transfer is called a “Declaration”.  A purchaser of a unit within the development is bound to the Declaration by his deed and is thereby subject to the by-laws and rules and regulations of the association.  The association has jurisdiction over the common properties as well as the individual private units within the development.

With respect to WSPC however, because the Covenants and Restrictions as well as the easement rights were attached to the deeds of subdivision residential lots well before WSPC was established, they are separate from and not related to WSPC or its by-laws.  Nor can they be rescinded or amended by WSPC.  The jurisdiction of WSPC and its By-Laws is strictly limited to the subdivision common properties, both real and personal, and to the acquisition, maintenance and improvement thereof.

There is no legal documentation or evidence that has been found that any lot owners are, or could be, subject to any type of homeowner’s association.  As owners of the common properties however, this does not relieve WSPC members of their obligations to pay for the maintenance and improvement of the common properties that they collectively own.

Should residents outside the subdivision prove they have easements to the common real estate, WSPC still has sole ownership thereof and regulatory powers there over.

Please note that in 1991 some lots had the 1984 By-Laws recorded against their deeds (document #3095962) and other lots did not.  It is important to understand that this recording attests only that WSPC believed that all of the provisions of the 1984 By-Laws were legally binding upon various, or perhaps all, lots within the subdivision.  It does not attest to the actual legality of those By-Laws.  It is up to the prospective purchaser of a lot to accept, reject or challenge the recording when he considers the purchase.  The document previously noted cannot restrict our private subdivision residential lots because: (a) it was recorded by WSPC many years after the subdivision was created rather than by the original Grantors who created the subdivision; (b) it was not approved by 100% of the lot owners, and; (c) it contains provisions that violate the Covenants as well as the Articles of Incorporation such as Article I Section 8 regarding the authority to enforce County building codes or the laws of any outside governing authority, or Article I Section 13 regarding the authority to approve any act that promotes the “general welfare of members of the Corporation.”

The advantage to our unique origin is that our private residences are protected from the whims of a majority, or of a vocal and active minority, while our access to and control of our water system, parks and beaches is preserved.  The disadvantage is that some actions that could be approved in a common interest community, such as the collection of assessments to enforce County building codes, can only be accomplished through contributions of willing members on a voluntary basis.

The significance of “membership” needs to be clarified.  The argument as to whether or not the owner of an improved lot is bound to Corporation membership is insignificant if one considers that the term only classifies a resident as part of a group by virtue of his place of residence.  Whether an owner of an improved lot is a member or not has no bearing as to his legal obligations within the subdivision.

Remedies to Collect Fees and Assessments

Much attention has been directed toward structuring these By-Laws in compliance with the Covenants and Restrictions, the Articles of Incorporation and applicable State law, thus maximizing our ability to prevail in a legal action to collect delinquent fees and assessments.

A lien, filed against a residence, can be an effective means of collection because the residence cannot be sold until the lien is cleared.  If this action is considered, be aware that there may not be enough equity in some properties to make foreclosure worthwhile.  Also be aware that WSPC would be the last entity in line to collect.

A lawsuit could be filed based on case law, or on the basis of past precedent, or on the Doctrine of Quantum Meruit by which the law infers a promise to pay a reasonable amount for valuable services and materials received to prevent the unjust enrichment of the defendant even in the absence of a specific legally enforceable agreement.

It should be noted that the By-Law stipulation regarding the reimbursement of court costs, should WSPC prevail, does not guarantee such.  In any case, in order to prevail, WSPC must prove that the defendant was aware that he was expected to pay the proper fees and assessments that are required by the By-Laws.  Current lot owners must be notified that this obligation has been recorded against their deeds.  A certified letter with return receipt could serve to substantiate such notification.

Alternative Considerations Regarding the Collection of Fees Related to the Water System

In 2013 our legal counsel advised us that: (a) case law speaks to, but does not definitively answer, whether WSPC has the right to turn off a lot owner’s water; (b) the connection letters that were issued to and signed by some lot owners provide that they will pay assessments, but do not provide the association the express right to turn off their water if they become delinquent; (c) these letters are not binding on subsequent lot owners and; (d) some water recipients have no formal agreements for the water they are supplied.  Their recommendation was that WSPC should not turn off anybody’s water but should, instead, send all lot owners a letter setting for the terms upon which the Corporation would provide water.  The lot owners could either accept the terms or opt out of the water system.  

Under this recommendation we are still left with the problem of a delinquent lot owner who refuses to sign the agreement or discontinue his use of the water system.  Under these circumstances, if WSPC exhausted or decided against other remedies, it could possibly be able to safely turn off the water to the offending residence once the residence becomes vacated due to sale or foreclosure.  The new owner would then be required to sign an agreement to have the water supply restored.  If this action were to be taken for all such title transfers, eventually all residences on the water system would be subject to an easily enforceable contract.

Remedies to Enforce the Covenants

As stipulated in Document #333009 as well as various other deeds, individual lot owners, including Directors, or like-minded groups of lot owners, have the authority to enforce the covenants by a Writ of Injunction against any offenders and to recover the costs, including attorney’s fees of any suit brought to enforce the covenants.  WSPC as such would be overstepping its authority, however, if in its capacity, it committed corporation assets to enforce the covenants.  Because there is no documentation to subject individual lots to a homeowners’ association, corporation action to enforce the covenants would be to force unwilling members to financially support actions that they have no legal obligation to support.

Remedies to Enforce Rules and Regulations

Ownership of the common properties authorizes WSPC to adopt and enforce rules and regulations for the governance of said properties according to the By-Laws.  All appropriate legal remedies can be exercised except that there is no provision in the subdivision documents to deny a resident his easement rights for any breach of the By-Laws.  In the case of criminal offenses such as vandalism, riot and trespass, the proper policing authorities may be summoned and the offenders may be prosecuted.

The Bottom Line on Remedies

Because the subdivision grantors retained ownership of the common properties they also retained the right to commit their own expenditures to the maintenance and improvements of the common properties as long as they did not violate the easement rights that they granted to the residents.  Since this right transferred along with the title of the common properties to WSPC, every standard of logic and fairness implies that the corporation By-Laws stand as the legal authority for the collection of proper assessments from subdivision owners of improved lots for the maintenance and improvement of those the common properties.

As long as WSPC remains true to the covenants of the subdivision and the objective of the Corporation, the most significant factor in determining the success of an action to prevail is its selection of the best lawyer or law firm it can find.

Considerations Regarding Specific Provisions of the 2014 Amended and Restated By-Laws

Article I, Section 3

The “objective” is quoted from the Articles of Incorporation and cannot be changed without dissolving and re-chartering the Corporation with the State according to State law.  The degree to which the general welfare can be promoted is limited to jurisdiction over the common properties.

Article I, Section 3-A

A sale of common real estate would probably not violate the rights of lot owners because such a sale would not remove any of their easement rights.  Lot owners would lose control of the ability to prevent the addition of future easements by the new owners.  In a worst case scenario, the Park District could eventually gain title to our beaches and access roads and then open them up to the public.

Lot owners cannot be subjected to any costs associated with the acquisition of any new common real estate unless they individually consented to do so because there is no provision for such in the Covenants or in their deeds.  If this were not so, lot owners would have purchased their lots under false pretenses.

Article I, Section 3-B

There is no documentation that authorizes any assessments beyond those associated with the water system and any other common property, both real and personal.  Assessments for the policing of subdivision traffic, fire protection to well owners and residential mosquito abatement, etc. are not allowed unless they are collected from willing members on a voluntary basis.

Article I, Section 3-K

Directors should advise the Members when they believe illegal alterations are proposed and are encouraged to consult legal counsel when appropriate.

Article II, Section 1

“Fee simple interest” refers to lot owners who have the unrestricted right to dispose of the lots they own.

Owners of only vacant lots cannot vote, be assessed, or be denied their easement rights to common real estate.

There is more than one situation where a single home is built across the boundary of two adjoining lots each of which has a different pin number.

Article II, Section 3

There is no subdivision documentation that allows the denial of easement rights to Members not in good standing.

Article III, Section 2

Rules and regulations, which can only apply to our common property, are allowed by the By-Laws but are separate from them so that they can be amended without amending the By-Laws.

Article III, Section 3

It is necessary to record the By-Laws because they cannot be enforced against a lot owner unless lot owners were aware, or should have been aware, of the By-Laws at the time they acquired title to their property.  By this section, these By-Laws and each amended version thereafter are to be recorded with the subdivision plat, thus eliminating the need and expense of recording future versions with each and every subdivision deed.

Article III, Section 6

Although original text cannot be eliminated, it can be contradicted, refuted and/or nullified.

Article IV, Section 6

By State Law, this cannot be amended to fewer regularly scheduled Board meetings.

Article IV, Section 7

This is a higher standard than our previous By-Laws and the By-Laws of typical homeowner’s associations but it protects against the possibility that any two directors with a common agenda could act to resolve a question by waiting for the absence of two directors who would otherwise oppose the resolution.

Article V, Section 1

The duties of the Secretary and the Treasurer may be, or may become, too burdensome to be fulfilled voluntarily in-house and may require a contract with an outside agent.

Article V, Section 5-B

This section should not be construed to prevent the storage of records anywhere or with any person that the Board approves as long as storage is overseen by the Secretary.  Stored records should be readily accessible.

Article V, Section 5-B/5

Currently for the previous seven (7) years.

Article V, Section 5-B/8

Currently for the previous single year.

Article V, Section 6

Subject to Board oversight, this section should not be construed to prevent the delegation of Treasurer tasks and responsibilities.

Article VIII, Section 5

There are no subdivision documents that require a specified source of water for any lot or that require those lot owners not connected to the WSPC water system to support it financially.

Article IX, Section 1

This section correlates with the Illinois Common Interest Community Association Act even though we are not bound by the Act.

Article IX, Section 3

It is advantageous to schedule the annual member meeting in February to allow adequate time for the preparation of the bills to be distributed in a timely manner at the beginning of the new fiscal year.

Article IX, Section 3-D

This subsection generally correlates with the Illinois Common Interest Community Association Act.

Article IX, Section 4-E

Votes to remove a director that were submitted by proxy would not be secret.

Article IX, Section 4-F

The By-Laws do not prohibit a Member from petitioning any number of Board Members to amend the Rules and Regulations at any time as long as action is taken only at a regularly scheduled Board meeting.

Article X

Any amendment that conflicts with State or local law, the covenants of record or the Articles of Incorporation is immediately invalidated when the conflict is confirmed by the Corporation.

Article XI

Directors that knowingly exceed their authority are subject to a lawsuit by any corporation member as per 805 ILCS 105/103.15 which is part of the Illinois General Not for Profit Act of 1986.

Illinois Statutes that May Have Relevance to our Governance

·         General Not for Profit Corporation Act

·         Condominium Property Act

·         Common Interest Community Association Act

·         Public Utility Act

·         Forcible Entry and Detainer Act

Ethics

Directors have the implied responsibility to represent the general interests of the Subdivision.  Directors, Officers and other officials should not accept office in order to achieve their own personal agenda.