July 2013 / Volume 11, No. 2

FOCAL POINTS FOR THE COMMERCIAL USE OF SOCIAL MEDIA

A recent survey by the Pew Research Center revealed that more than two-thirds of online adults now use one or more social networking outlets.  LinkedIn alone enjoys over 150 million users.  With this kind of prevalence, businesses can ill afford to ignore either the opportunities presented or the risks posed by their employees’ use of such highly popular services as Facebook, Twitter, YouTube, and LinkedIn, as well as various blogging sites.

Effective usage of social media platforms can generate buzz, raise profiles and add brand value.  Some cautionary words are in order, however, about the increased risk that greater use of social media, or a heightened social media presence, can create.  Businesses should make use of a well-drafted and carefully balanced policy that avoids stifling social media usage, while still providing employees with meaningful guidance in their use of social media as a valuable tool for business.

A few of the many considerations that go into devising a balanced social media policy include:

Copyrights and Other Intellectual Property – To ensure the company’s valuable and/or sensitive information, including its trade secrets and financial data, does not become publically available, its confidentiality must be preserved at all times.  Employees and managers in particular must be aware that publishing internal company information outside the company will usually divest it of its protected status. 

Additionally, any copyrighted information posted in furtherance of company business must generally be used with attribution, and may require permission from the author/artist.  Similarly, company postings should not make use of a third-party’s trademark or create a likelihood of confusion with that third-party.  At the same time, a company’s own logo or other trademark should be registered to protect against its use by others in social media (and elsewhere).

Defamation – The publishing of knowingly false or misleading statements, whether verbally or in writing, that damage another’s reputation, constitutes defamation.  A tweet from the wife of Britain’s parliament speaker erroneously intimating that a retired politician and former ally of Margaret Thatcher was a pedophile was recently ruled defamatory by London’s High Court of Justice.  In 2011, a NBA referee sued the Associated Press for defamation after one of its reporters tweeted that a questionable call may have been to make up for another bad call.  Employees should be trained to avoid publishing potentially defamatory remarks, and companies should consider monitoring social media sites for potentially actionable posts.  When any defamatory or other egregious statements are found, they should promptly be taken down and corrective action taken.

Employment/Discrimination – This is perhaps the area that most confounds employers and presents the widest array of issues.  Here’s four disparate ones:  (1) Discriminatory or harassing comments, or even adverse performance references, posted on social media platforms are easily accessed, and can comprise evidence that can readily subject companies to liability.  (2) An employer who rejects a job applicant after reading her social media postings and learning personal information such as her race, sexual orientation, or politics may face allegations of discriminatory hiring practices.  (3) Businesses subject to the health information privacy regimen of HIPAA can be liable for postings by employees that prove inconsistent with its data privacy and security rules.  (4) Employees can potentially be held to account for comments posted to social media outside of work and work hours (such as criticizing the company or its clients).

NLRB Compliance – Restrictions placed on employees’ use of social media are subject to certain guidelines and rulings of the National Labor Relations Board.  For example, the right of employees to discuss wages and workplace conditions, even in a public forum, is expressly authorized by the NLRB as “protected, concerted activity.”   A cautious employer may wish to add a savings clause to its social media policy providing the policy should not be construed to prohibit rights granted under the National Labor Relations Act.  As with most legal advice, such a clause is no magic bullet, but, when used together with other reasonable procedures, can prove to be sound.

By Adam Glazer


CONDOMINIUM UNIT FORECLOSURES – PROTECTING THE ASSOCIATION

When a lender forecloses on a condominium unit within a condominium building, it also impacts the Condominium Association and the other unit owners in the building.  Often, the unit owner who is in default under the unit mortgage loan has also stopped paying the monthly condominium assessments, thereby reducing the Association’s operating revenue and its ability to effectively operate the building.

While unit owner foreclosures are not within the control of an Association or its Board of Directors, there are procedures an Association can implement in advance and during a unit mortgage foreclosure proceeding to reduce the financial impact on the Association and attempt to recover some of its lost revenue. 

Assessment Payment Deadlines. First, an Association should establish a clear set of guidelines for the payment of monthly assessments.  A due date no later than the fifth day of the month is a good initial requirement, but the Association or its management company must remain vigilant and promptly address assessment delinquencies.  A prompt notice of delinquency to any unit owner who has failed to pay its assessments, plus imposition of a reasonable late fee, is necessary to set the foundation for a future lien by the Association if the delinquency continues. For Associations that employ outside management companies, an additional layer of oversight is needed to ensure that the manager is following the Association’s established rules and procedures.  

Assessment Lien. Second, if the delinquency continues, the Association should retain an attorney to file an Assessment lien against the unit in question to preserve the Association’s rights in the event of a foreclosure proceeding by the unit owner’s lender or a bankruptcy proceeding is initiated with respect to the unit owner.  Association liens for assessments allow the Association to secure its claim for the payment of assessments from any subsequent unit purchaser, whether that occurs prior to or after a foreclosure proceeding has been completed.  An Association is able to collect six months of prior assessments from a third-party purchaser that acquires a unit from a lender that has foreclosed on its mortgage loan.  A party searching the chain of title to the unit will discover the Association’s lien and realize that the Association will have to be paid, at least for up to 6 months of delinquent assessments, in order to allow clear title to pass to a purchaser. 

Eviction and Rental of Unit. The third option for the Association, after it has filed its lien and sent an appropriate demand for payment, is to seek eviction of the unit owner just as though the Association were a landlord and the unit owner a delinquent renter.  In fact, the same procedure is used in both cases.  A Forcible Entry and Detainer Action, commonly referred to as an “eviction,” can dispossess a unit owner who has not paid assessments in the same way a renter would be evicted for failing to pay a landlord rent.  Once an order of possession is obtained in favor of the Association, the Association may rent the unit for up to 13 months to a third party.  Such rent will help offset the delinquency in assessments owed by the unit owner.       

Given the length of time it takes to complete a mortgage foreclosure, it is possible the Association can collect rent during the pendency of the entire procedure and thereby recoup as much of its loss as possible.  Once the unit foreclosure proceeding is complete, if the lender takes title to the unit, the lender must pay monthly assessments to the Association like any other unit owner.  Unfortunately, the lender is not liable for any delinquent assessments, which is why it is imperative for the Association to follow the above procedures to collect funds from other sources.  The defaulting unit owner and its lender will not be sources of recovery during the foreclosure process. 

Conclusion. The role of the Association’s lawyer in this type of situation should not begin with a request by the Association seeking to collect from a delinquent unit owner.  Rather, the lawyer can assist the Association and its Board of Directors before problems arise in creating legally-enforceable rules and regulations, guidelines and procedures, consistent with governing law, to place the Association in the best position possible once a delinquency occurs.  As Condominium Associations have learned during the mortgage crisis of recent years, there are many unintended consequences beyond the relationship of the lender and the financially impaired unit owner.  By establishing appropriate procedures in advance and taking prompt measures to address delinquent assessment payments, an Association can assert its rights and minimize the financial implications of a defaulting unit owner.

By Jay Presser


Practice Spotlight – Real Estate and Finance

Schoenberg, Finkel, Newman & Rosenberg, LLC provides a broad range of legal services to the Firm’s real estate and finance clientele.  The Firm represents clients in a variety of complex transactions involving development, construction, investment, financing and leasing of commercial real estate.  Some of the real estate law services provided by the Firm include:

  • Acquisitions and dispositions of commercial real estate.
  • Lease transactions for commercial landlords and tenants.
  • Financing and loan document preparation.
  • Tax deferred (1031) exchanges.
  • Development and construction.
  • Condominium and homeowner association law.
  • Title, zoning and planning.
  • Residential, hotel, and office condominium development.
  • Real estate and loan syndications.
  • Real estate tax assessments.
  • Real estate litigation.

See the Firm’s website for more information on the Firm’s practice areas.


Schoenberg Finkel Newman & Rosenberg, LLC (312) 648-2300

This newsletter is not intended to be legal or tax advice and is not a substitute for obtaining legal or tax advice. This Newsletter is deemed to be advertising material by the Illinois Supreme Court.