Can Condo Board Members Be Held Personally Liable in Illinois?

In Illinois, condo board members generally enjoy a degree of protection from personal liability when they are acting within the scope of their duties and in good faith. According to the Illinois Condominium Property Act (ICPA), board members are afforded certain protections to encourage individuals to volunteer for these positions without fear of excessive personal risk.

Here are some protections board members typically have:

  • Protection under the Business Judgment Rule: Condo board members are protected under the business judgment rule, which presumes that decisions made by board members are made in good faith and in the best interest of the association. As long as board members act reasonably, in good faith and as fiduciaries, they are generally shielded from personal liability for their decisions.
  • Protection under insurance coverage: The ICPA also requires condo  associations to maintain directors and officers (D&O) liability insurance at “a level deemed reasonable by the board, if not otherwise established by the declaration or bylaws.” This insurance helps protect board members from personal liability arising from decisions made in their official capacity. It covers legal expenses and damages resulting from lawsuits against board members.

On the flip side, board members can be held personally liable if they engage in illegal activities, breach their fiduciary duties or personally benefit from association transactions. They may also be held personally liable if their actions involve gross negligence or willful misconduct.To ensure your board members are protected from personal liability, it’s advisable to seek legal counsel when making significant decisions, especially when legal or financial complexities are involved. And work with your association management company and insurance broker to discuss the essential insurance coverage and policies you need to protect your condo association and board members. To learn more about condo management in Chicago, get in touch with our team at First Community Management.

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