Question: What constitutes “proper purpose” under Section 19 of the Illinois Condominium Property Act (Section 1-30 under the Illinois Common Interest Community Association Act)? Could “proper purpose” not be open to interpretation and cause problems for a Board if they did not allow for inspection? What happens if a Board simply responds that the owner’s reason is not a “proper purpose” and denies inspection to the owner?
Answer: Section 19 of the Illinois Condominium Property Act (“ICPA”) outlines the obligations of a condominium association with respect to record keeping and record production. For common interest communities (HOAs), the controlling statute is found at Section 1-30 of the recently enacted Illinois Common Interest Community Act (“ICICA”).
Section 19 (e) of the ICPA states that “any member of an association shall have the right to inspect, examine, and make copies of the records described in subdivisions (6), (7), (8), and (9) of subsection (a) of this Section, in person or by agent, at any reasonable time or times but only for a proper purpose....” (emphasis added). Reference to a “proper purpose” is also made in Section1-30(i)(1) of the ICICA as a prerequisite to receipt of certain records. Unfortunately, nowhere does the ICPA or the ICICA spell out or give guidance as to how to define a proper purpose.
Though case law, too, provides little precedent on this issue, the court in the case of Taghert v. Wesley did deliver an opinion that decided whether an association member had stated a proper purpose in requesting certain records from the association. Taghert v. Wesley, 343 Ill.App.3d 1140 (1st Dist. 2003). In making its determination, the court first acknowledged that “[t]here is a veritable dearth of case law in the state of Illinois interpreting section 19 of the Condominium Property Act and its provision directing the inspection of documents.” Id. at 1145-46. Then, recognizing a condominium association as a not for profit corporation and the fact that the original ICPA records requirements provisions were derived from the Illinois Not For Profit Corporation Act, it looked to a line of case law which has addressed the question of what amounts to a “proper purpose” in the context of corporate records requests. The Taghert ruling and the line of cases the court cited and relied upon tell us that a proper purpose is one that is based in good faith, and not for vexatious or speculative reasons or unlawful in character. It must be a purpose which seeks to protect the interests of the association. Where fear of misconduct or mismanagement is the basis given for the records request, that fear need not be proven. Rather, the requesting party must simply show that his or her fear is based in good faith. Though the burden of establishing a proper purpose does fall on the requesting party, once that proper purpose has been shown to exist, presuming all other requirements have been met, an association cannot withhold the records.
There is still much room for debate as to whether a proper purpose is established in a request for records. Though the case law does provide guidance, it also clearly shows that the answer involves a case-by-case factual analysis of whether or not the requesting party is acting in good faith. Where the line is drawn between speculation and good faith, however, may still not necessarily be easy to establish. Association boards and their counsel should carefully consider this issue when it arises because failure to provide the requested records in a timely fashion when a proper purpose has been stated may subject the association to significant costs, including the attorneys fees of the requesting member should he or she prevail in litigation.
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