Legal Updates

 

The law that applies to accommodations for an emotional support animal is primarily the Fair Housing Act (“FHA”). Please note that the American with Disabilities Act pertains to the state and federal government being prohibited from discriminating against people with disabilities in public places. It does apply to some types of housing situations, but is not the applicable statute for the Association, with service animal requests. The FHA requires “accommodations that are necessary (or indispensable or essential) to achieving the objective of equal housing opportunities between those with disabilities and those without.” Cinnamon Hills Youth Crisis Center, Inc. v. Saint George City, 685 F. 3d 917, 923 (10th Cir.2012).

Therefore, when considering whether the provisions above apply, the Association must
consider two questions:

1. Does the person seeking to have a service animal have a disability?
2. Does the animal perform tasks that assist a person with a disability?

If the Association answers both those questions affirmatively, then it must make an exception to its no-pet policy, as same would be considered a “reasonable accommodation” under the FHA.

The FHA prohibits the Association from placing restrictions on emotional support animals, and must permit owners to keep such animals. However, the Association can conduct a “reasonable inquiry” into the disability giving rise to the need of such an animal, to ensure that the FHA provision applies, if the disability is not obvious. This means that it can make an inquiry, but cannot be overly intrusive in its questioning. It also does not need and should not make an inquiry if the disability is readily apparent. For example, the Association must be cautious not to delve further if it can ascertain that the person is blind, requires assistance in mobility, or even if it receives a medical note, as same must be taken at face value. Courts have found that inquiries asking about treatment, medications, the diagnosis, etc., are beyond the scope of a reasonable inquiry. The
Association can also inquire as to the reasonable nexus between the emotional support animal and the person’s disability. In other words, the Association can ask why the animal is necessary. Please note that a note from a physician is typically sufficient to show the nexus. It is not for the Association to make a medical diagnosis of the person or even to determine if the animal is really necessary. It is only for the Association to ensure compliance with the law.

Once these requirements are met, an accommodation must be made and the “no pet” rule should not be enforced against the Owner. The Owner is also subject to certain rules of the Association but not those related to fees assessed by the Association. However, the FHA does provide exceptions and allows an Association to restrict the animal if the presence would cause an undue financial and administrative burden. In addition, if the animal poses a direct threat to health and safety of others, the Association may prohibit the animal. Please note that this must be based on actual conduct of the animal, not mere speculation, i.e. just because the animal is a Rottweiler does not mean that the request can be denied.

Generally, the best way for the Association to avoid litigation or a discrimination claim is to develop and follow a policy and procedure for the treatment of any accommodation requests. A policy should include what information the association requires to make a determination and how the determination is made to ensure a meaningful review of the request. The Association should develop a standardized request form and submission packet. Before implementing any standardized form, the Association should have the documents and procedure reviewed by its attorney, so that we can ensure that the Association is asking only questions permitted under statute. After all, even asking for certain information can give rise to a discrimination claim.

The following are certain statements or actions a Board should avoid when considering a request for an accommodation:

1. Telling the Owner this is a no pet building and all animals are prohibited.
2. Telling an Owner they are responsible for paying the Association’s annual fee for
pets who reside in the Building.
3. Denying a request because the Board does not believe that this particular breed will
provide the proper emotional support for the Owner.
4. Denying the request because the Board does not believe that the person is disabled
enough.
5. Denying a request because the Board does not believe the doctor who provided the
note is a legitimate doctor.

(You laugh, but these are true statements or actions by a Board!)

Finally, please note that a Board can decide to deny a request. Yet, it is important that before a request is denied, the Board consults with an attorney, as failure to properly consider a request or denial of a legitimate request may give rise to a discrimination lawsuit against the association and even individual board members.

 

The focus of this article is to provide a brief overview on the disclosures provided in Illinois by a
condominium association to a prospective buyer of a unit and: (a) what is mandated by law; (b)
what current practice is; (c) associations’ and board members’ exposures to claims for failure to
comply; and (d) action needed to remedy the ills that exist in the market today.

In Illinois, condominium associations are governed by the Illinois Condominium Property Act
(“ICPA”) while homeowner associations are governed by the Illinois Common Interest
Community Association Act (“ICICAA”). Both Acts contain provisions regarding certain resale
disclosure requirements to prospective purchasers of units within the association. In the ICPA, it
is Section 22.1 that contains these mandates, while in the ICICAA, it is Section 1-35. For purposes
of this article, since the two statutes have the same objectives and contain similar language, we
will focus on Section 22.1 of the ICPA. The reader should note that the discussion in this article is
focused on resale disclosures only, not original sales from developers as those latter sales are
governed by different provisions within each Act.

ICPA Section 22.1

Sections 22.1 (a) and (b) of the ICPA state as follows:

Sec. 22.1. (a) In the event of any resale of a condominium unit by a unit owner other
than the developer such owner shall obtain from the Board of Managers and shall
make available for inspection to the prospective purchaser, upon demand, the
following:
(1) A copy of the Declaration, by-laws, other condominium instruments and any
rules and regulations.
(2) A statement of any liens, including a statement of the account of the unit
setting forth the amounts of unpaid assessments and other charges due and owing
as authorized and limited by the provisions of Section 9 of this Act or the
condominium instruments.
(3) A statement of any capital expenditures anticipated by the unit owner’s
association within the current or succeeding two fiscal years.
(4) A statement of the status and amount of any reserve for replacement fund and
any portion of such fund earmarked for any specified project by the Board of
Managers.
(5) A copy of the statement of financial condition of the unit owner’s association
for the last fiscal year for which such statement is available.
(6) A statement of the status of any pending suits or judgments in which the unit
owner’s association is a party.
(7) A statement setting forth what insurance coverage is provided for all unit
owners by the unit owner’s association.
(8) A statement that any improvements or alterations made to the unit, or the
limited common elements assigned thereto, by the prior unit owner are in good faith
believed to be in compliance with the condominium instruments.
(9) The identity and mailing address of the principal office of the unit owner’s
association or of the other officer or agent as is specifically designated to receive
notices.
b) The principal officer of the unit owner’s association or such other officer as is
specifically designated shall furnish the above information when requested to do so in
writing and within 30 days of the request.

735 ILCS 605/22.1 (a)/(b). Section 22 (including 22.1) was first proposed to the Illinois legislature
on May 9, 1972. 77th Ill. Gen. Assem., House Proceedings, May 15, 1972 at 149. In introducing
the bill proposing to amend the ICPA to add this section, Representative David Regner described
it as a “truth in selling” provision. Id. When the bill was debated in the Senate, Senator Graham
explained that the bill was directed toward providing information for the elderly and other persons
on fixed incomes, so that they would be fully aware of the financial obligations associated with
their purchase at the outset of purchase negotiations. (emphasis added) 77th Ill. Gen. Assem.,
Senate Debates, June 21, 1972, at 91. In general, the legislative history behind Section 22 and
Section 22.1 show that the legislative intent was to encourage disclosure by the seller of a
condominium unit for the protection of the prospective purchaser.

Some of the key elements of the statute to bear in mind as the reader continues through this article
are:
– It is mandatory for a seller to obtain and make available for inspection those items set forth
in the statute.
– To trigger the protections of this statute, a purchaser must demand the required disclosures
of the seller.
– The association’s obligations under the statute, however, are only triggered upon the
written demand of the seller (owner).
– The association is granted 30 days in which to provide the mandated disclosures.
– The statute requires that the information be furnished by an officer of the association.

The current reality of Section 22.1 compliance

In today’s residential real estate practice, virtually all standard form contracts in areas with
condominiums contain some provision addressing the need for a condominium unit seller to
comply with the provisions of Section 22.1. Following are two versions of such provisions from
form contracts commonly used at present in the Chicagoland area.

Seller shall, within five (5) Business Days from the Date of Acceptance, apply for
those items of disclosure upon sale as described in the Illinois Condominium
Property Act, and provide same in a timely manner, but no later than the time period
provided for by law. This Contract is subject to the condition that Seller be able to
procure and provide to Buyer a release or waiver of any right of first refusal or other
pre-emptive rights to purchase created by the Declaration/CCRs. In the event the
Condominium Association requires the personal appearance of Buyer or additional
documentation, Buyer agrees to comply with same. (Excerpt from Paragraph 15 of
Multi-Board Residential Real Estate Contract 6.1)
Seller shall deliver to Buyer the items stipulated by the Illinois Condominium
Property Act (765 ILCS 605/1 et seq.) (“ICPA Documents”), including but not
limited to the declaration, bylaws, rules and regulations, and the prior and current
years’ operating budgets within ______ business days of the Acceptance Date.
(Excerpt from Paragraph 10 of Chicago Association of Realtors Residential Real
Estate Purchase and Sale Contract, Rev. 01/2012)

As the reader will quickly note, practice immediately begins to conflict with the statute in that the
contracts commonly used attempt to impose a significantly reduced timeline for compliance with
the statute. Whereas the ICPA gives an association up to thirty days in which to furnish the required
disclosures, sellers and purchasers consistently enter into contracts requiring the seller to furnish
that same information, which the seller must obtain from the association, within a handful of
business days after the contract has been executed. 765 ILCS 605/22.1 (b).

Furthermore, it is very common for real estate brokers and others, including attorneys, involved in
the residential real estate industry to be misinformed regarding practice versus reality, often
advising buyers that the Section 22.1 disclosures must be made to buyers during the attorney
review period found built into residential real estate contracts. This is simply not accurate.
Contracts should, and generally do, contain a separate contingency for approval of the ICPA
mandated disclosures precisely because that contingency will often take weeks to satisfy, whereas
attorney review contingencies should be concluded in a matter of days.

Another interesting matter of constant conflict arises in the form in which the disclosures are made.
Associations, particularly larger ones, are often managed by professional property managers.
Because the furnishing of these ICPA mandated disclosures involves the assumption of certain
aspects of liability and associations must safeguard against providing false or inaccurate
representations, associations and property managers, especially at the urging of their counsels, are
constantly working to limit their exposure in responding to these resale demands. Many large
property management companies now have their own forms which they require their association
clients to use and furnish when responding to 22.1 resale disclosure demands. In seeking to
minimize the liability exposure of the association and/or manager, many of these forms have
developed into pseudo disclosures that are circular in nature and which almost invariably fail to
provide all of the information required under the statute.

One example of this conflict is the following, taken from a professional property manager’s
preprinted 22.1 disclosure form submitted to a client of our firm, who was purchasing a
condominium unit in Chicago last year:

1. Are there any liens against the Association? If yes, please give details concerning
all such liens.
A: Not to our knowledge, however, we have not ordered a search.

In the foregoing example, when comparing the form’s preprinted question, it would appear that
the disclosure form is attempting to comply with Section 22.1(a)(2), which calls for a statement
disclosing any liens. The problem lies in the fact that the question is completely off target in that
Section 22.1(a)(2) is not directed towards liens “against the Association”. 765 ILCS 605/22.1
(a)(2). Instead, it calls for “a statement of the account of the unit setting forth the amounts of unpaid
assessments and other charges due and owing as authorized…by the provisions of Section 9 of this
Act…” Providing information regarding liens against the Association does nothing to comply with
Section 22.1(a)(2).

From the same disclosure form, consider the following example:

5. Any Improvements or alterations in the above referenced Unit or in the limited
common elements assigned to the Unit by the current and any prior owners are in
good faith believed to be in compliance with the Condominium Declaration. If not,
please specify those items not in compliance with the Condominium Declaration.

A: We have not inspected the premises.
This question and answer excerpt clearly is directed at satisfying the mandate of Section 22.1(a)(8).
However, it is questionable whether the answer provided by the association in the above example
even serves as a disclosure of any kind. The purpose of Section 22.1 is to provide a prospective
purchaser with full financial information before they purchase a unit. The legislature,
acknowledging that the association should have and supply the necessary information to allow a
prospective purchaser in making a fully informed decision, did not carve out exceptions for failure
to inspect the premises. Rather, the legislature specifically included the words “in good faith” in
Section 22.1(a)(8). The Association is supposed to make and provide an affirmative statement that,
in good faith, it believes that any improvements or alterations in the unit were made in compliance
with the Declaration. At minimum, to truly comply with the intent and mandate of this section, the
association should be required to state that it is not aware of any improvements or alterations
having been made in the unit. That is at least a statement upon which the purchaser can rely in
making a decision. To suggest that the answer provided by the association in the foregoing example
is a good faith compliance with Section 22.1(a)(8) is to completely gut the protections established
by the statute.

Dealing with the same Section 22.1(a)(8), consider the following response provided on a different
manager’s form for another Chicago condominium purchase:

(8) A statement that any improvements or alterations made to this unit, or the
limited common elements assigned thereto, by the prior unit owner are in good faith
believed to be in compliance with the condominium instruments.

A: The Association does not inspect individual apartments and takes no
responsibility for improvements or alterations made by individual unit owners
within individual units or to limited common elements. The Association has no
knowledge of any improvements or alterations made by the unit owner to the
subject unit (or to the limited common elements that serve that unit) that are not in
compliance with the Association’s Declaration and rules.

Here, the association has at least made an affirmative statement by including the second sentence.
But, upon scrutiny, it is hard to support the notion that the association is truly making this
disclosure in good faith. By including limited common elements in the first sentence, the
association, in this author’s opinion, belies any good faith. Limited common elements are owned
by the association, not the unit owner. Therefore, should it not be incumbent upon the association,
in making these disclosures, to actually determine that no improvements or alterations have been
made to the limited common elements or that any improvements or alterations thereto are in
compliance?

Continuing with the disclosure form cited in the first two examples, above, we find the following
disclosure which purports to be provided in satisfaction of Section 22.1(a)(5):

7. A copy of the latest financial statement, operating budget and Board meeting
minutes
showing any possible anticipated capital expenditures and/or approval of special
assessments, if applicable, should be requested from the seller.

Talk about being circular! This disclosure does not even bother to pose a question and present an
answer. Rather, it simply restates portions of the relevant statute and directs the intended recipient,
the purchaser, to request the documentation from the seller. This flies in the face of Section 22.1(b)
which, as previously noted, expressly states that an “officer of the unit owner’s association… shall
furnish the above information when requested to do so.” 765 ILCS 605/22.1(b).

One last example – see the following disclosure provided in connection with the mandates of
Section 22.1(a)(5):

(5) A copy of the statement of financial condition of the unit owner’s association
for the last fiscal year for which such statement is available.

A: A copy of the Annual Budget may be ordered from the HomeWiseDocs website.

While Section 22.1 does only require that the association “shall make available” the copies called
for in subsection (a)(5), is that obligation satisfied when the access referenced on the referenced
website requires payment and, as is not uncommon, the seller turns around and tells the purchaser
to log into the website and pay the requisite fees? Fighting this common practice is like tilting at
the windmills and buyer’s attorneys have little choice in these cases but to tell their clients to play
along and go with the flow. But this shifting of the burden and liability under the statute is
detrimental to purchasers and severely undermines the intent behind the enactment of Section 22.1.

Lender’s Questionnaires

Oddly enough, concurrent with a steady erosion of compliance with Section 22.1, there has been
a growing, and equally concerning expansion of association exposure to liability through
responding to lender’s condominium association questionnaires. Almost invariably, when a
purchaser applies for a loan for the purchase of a condominium unit, the lender sends the
association its own questionnaire, which the lender must get back and have approved by the
lender’s underwriter before the purchaser’s financing can be approved. These questionnaires
commonly mimic many of the questions posed by Section 22.1 but also go well beyond the scope
of that statute. Typical questions asked in these questionnaires include the following (taken from
the USBHM Established Condominium Project Underwriting Questionnaire, Revision
02.11.2015):

– Does at least 10% of the budget provide for funding of replacement reserves, capital
expenditures, deferred maintenance, and insurance deductibles?
– Number of units over 60 days delinquent in payment of HOA dues or assessments
(including REO owned units).
– Do the project documents include any restrictions on sale which would limit the free
transferability of title?
– Are the recreational amenities or common elements leased?
– Does the association have any knowledge of any adverse environmental factors affecting
the project as a whole or as individual units?
– Does the property management company (if applicable) have the authority to draw checks
against or transfer from the reserve account?
– Are two or more members of the Board of Directors required to sign checks drafted against
the reserve account?

There is no statute requiring an association to provide the above information. In the event that an
association were to elect to not provide the requested answers, it is almost certain that the
prospective purchaser’s financing would be declined. Since most, if not all, conventional lenders
have some form of condominium questionnaire similar to the one cited above, refusal of an
association to respond to the questionnaire would mean that an owner would be limited to selling
to a purchaser buying with cash or unconventional financing, severely reducing the available pool
of purchasers and likely significantly suppressing the purchase price. For this reason, despite being
adverse to providing information strictly compliant with Section 22.1, associations regularly
provide answers to the lenders’ questionnaires, even though doing so vastly expands the potential
for liability for having provided bad information.

Enforcement Rights in the Event of Non-Compliance
Unfortunately, Section 22.1 does not contain specific enforcement rights or remedies in the event
of a breach of seller or association obligations under the statute. A prospective buyer, of course,
can rely on contractual rights contained in their purchase contract prior to closing on the unit
purchase, should the seller fail to provide the requisite disclosures upon demand. But dealing with
evasive, erroneous, misleading, or even fraudulent disclosures can be significantly more difficult
for a buyer, particularly because they generally will not find out that the disclosures were such
until after they have closed on their purchase. And by then, the economics of the situation very
often are such that they simply move on and bear the brunt of the misrepresentations because
taking legal action is too risky when the legal fees would significantly outweigh the damages
sustained as a result of the defective disclosures.

But a small number of cases have been litigated in Illinois and serve as critical precedent in this
arena. One such case is Mikulecky v. Bart, 355 Ill. App. 3d 1006 (2004), which addressed Section
22.1(a)(3). The reader will recall that this section of the statute calls for a statement regarding any
anticipated capital expenditures in the current and succeeding two years. In Mikulecky, the
purchaser received disclosures that only set out known (approved) capital expenditures but omitted
information regarding various capital expenditures that had been discussed and planned, but not
yet finalized or confirmed. 355 Ill. App. 3d at 1008. Shortly after closing on her purchase, the
plaintiff discovered that those anticipated expenditures were going to cost her over $10,000 in
additional special assessments. Id.

On appeal, the court reversed a trial court ruling in favor of the association and held that “disclosure
of information [by sellers] in furtherance of the public policy of Illinois” was the driving legislative
mandate behind the statute. 355 Ill. App. 3d at 1012. More specifically, the appellate court ruled
that the word “anticipated” must be defined in this context by giving “effect to the plain and
ordinary meaning of the language without resort to other tools of statutory construction.” Id. at
1013. In doing so, the court rejected the seller’s argument that it had satisfied its obligations under
the statute by simply disclosing those capital expenditures which had been approved, despite the
fact that the seller and the association knew that other major capital expenditures had been
discussed and likely would be undertaken by the association in the near future. Id.

Another recent Illinois case (D’Attomo v. Baubeck, 2015 IL App (2d) 140865) shed light upon,
and confirmed the existence of, post-closing remedies available to purchasers who have been
provided with less than complete disclosures pursuant to Section 22.1. In D’Attomo, the purchaser
had been provided with a copy of the original Declarations and Bylaws of the association, but not
of an amendment that had been passed prior to his purchase. 2015 IL App (2d) 140865 at 7. The
trial court, as in the Mikulecky case, ruled in favor of the association and the seller. Id. at 16.
Significant portions of that ruling (for procedural reasons, only as to the seller) were reversed on
appeal. Id. at 76. The appellate court, after expressly noting that “Section 22.1 is silent with respect
to any remedy for the violation of the disclosure obligations” (Id. at 35), held that said silence is
not to be interpreted as precluding a purchaser’s private cause of action under that statute and,
citing to Mikulecky and legislative intent, further ruled that an implied private right of action in
favor of the purchaser, post-closing, did exist under Section 22.1 in light of the facts presented. Id.
at 39.

Conclusion

In the opinion of this author, legislative action needs to be taken to stop the use of evasive
responses that have become so commonplace in the condominium resale market when providing
Section 22.1 disclosures. Steps need to be taken to clarify and codify the intent of the statute and
to incorporate the key elements of the Mikulecky and D’Attomo cases into the statutory provisions.
The legislature should also revise the statute to provide for specific remedies for misleading or
erroneous disclosures. Barring such intervention, it is unlikely that the abuses often being exercised
so flagrantly by associations and property management companies will be stemmed because the
economics of a legal battle by individual purchasers to challenge those abuses is virtually always
going to be cost-prohibitive. Until and unless these changes are made, condominium purchasers
should exercise caution in relying exclusively on the intended protections of Section 22.1 and
should attempt to dig deeper into the association records and require the seller to provide direct
answers to specific questions – something that can be quite impractical in a seller’s market.

Our firm represents many condominium associations throughout the Chicagoland area, as well as
sellers and purchasers of condominium units. We understand that associations and their counsels
may resist the changes suggested by this article. We likewise understand the position of sellers
who don’t want to absorb any more liability than necessary in responding to purchaser’s inquiries.
But, when viewed in light of what is most equitable and when factoring in the significant impact
that major undisclosed special assessments can have on a new owner, it benefits nobody to support
continued lack of transparency and wordsmithing in this context. In the end, there can be as much
harm to the association when an owner struggles to meet his or her financial obligations as a result
of being caught by surprise by anticipated, but undisclosed repairs and capital expenditures. Nor
is it beneficial to welcome an owner into the community on such negative terms. After all, as
emphasized throughout this article and in the caselaw, transparency and focus on protection of the
purchaser was the underlying impetus when our legislature promulgated Section 22.1 in the
first
place.

Written By: James A. Erwin, Principal
Contributing Author: Michelle Craig, Law Clerk

 

As a practitioner for many years in the area of association law, I have been aware of a long-standing difference of opinion among association attorneys as to the obligation of a condominium association to pay for damages caused to the Common Elements (CE), Limited Common Elements (LCE), and to the Units and personal property of owners by the failure of the CE. An example would be water damage caused by the failure of the roof to keep rain water out. On the one hand, some association attorneys argue that an association’s only obligation with regard to such an event is to repair and replace the CE, up through the primer paint covering the walls of a unit. On the other hand, I (and various other attorneys) believe that if an association is responsible to maintain, repair and replace the CE (the usual formulation) which fails to do its job, the association is responsible for all of the damages that result from that failure. The whole question is complicated by variations in relevant declaration provisions and also by the duties of both an association and its unit owners to maintain casualty (property) and/or liability insurance. While it is possible that the interplay of liability law, declaration provisions and insurance may result in an association’s out-of-pocket liability being limited to the repair and replacement of CE up through the primer paint, I believe that such an outcome should not be assumed to be the customary outcome. Indeed, it will often not be the customary outcome.

What is very interesting to me is that there is no controlling caselaw in Illinois answering the question. Although CEs fail every day, causing damage to both real and personal property in condo associations, it appears to be one of those matters that does not get litigated (or at least not litigated at the appellate level).
As a further matter, I want to recognize that it is possible that CE could fail for reasons beyond an association’s control. The roof could be struck by lightning; an exceptionally heavy snow or rain could fall. Such “occurrences” (an insurance term, which will be relevant later on in this article) from nature are not what I am trying to address. However, an association could have a routine and apparently proper repair/replacement policy on which it follows though in a timely manner, with the result that it could argue that it has not breached its duty to keep the roof (or the particular CE at issue) in good repair. Still, I have found that such an argument usually has holes in it: Repairs may have been timely done, but the contractor hired to do the job may not have done it properly; the repair/replacement policy misunderstood the useful life of the CE with the result that it was in fact “older” than the Board realized; some prior event damaged the CE in a way that could have been noticed but wasn’t. I am not arguing that an association has “strict liability” for a failure of a CE. But it has been my experience that an extremely high percentage of CE failures are avoidable with proper attention from the Board. It is those CE failures, which raise the issue of breach of duty, to which I address myself.

In order to examine the problem at hand, I want to go back to basics:
In a condominium property, everything is either Unit or CE. See Section 2(e) of the Illinois Condominium Property Act, 765 ILCS 605/1 et seq., the “Act”. If and to the extent that a property has LCE, the LCE are simply “a portion of the common elements as designated in the declaration as being reserved for the use of a certain unit or units to the exclusion of the units…” Act, Section 2(s).
The boundaries of units at an association are defined on the plats of survey required to be attached as an exhibit to the declaration. Act, Sections 5 and 6. An example of a common formulation of the definition of the boundaries of a unit is: “The horizontal and vertical planes forming the boundaries of a unit coincide with the top of the finished floor, bottom of finished ceiling and interior face of perimeter finished walls.” Thus a unit is a cube of air ending at the finished walls, floor and ceiling. In the absence of any other provision in the declaration, the finishes on the walls, ceiling and floor (paint, wallpaper, molding, paneling, etc.) are also considered part of the unit. Act, Section 4.1(a)(2).

Important: The Act does not control many aspects of the issues discussed below. Since there is no one standard form of condominium declaration in Illinois, the following analysis cannot be deemed to be always correct for every condominium association. What follows are what I consider to be general rules in this area. It is always possible that a given declaration may have language that mandates a different result. Review of any given situation by the association’s attorney is always proper.

A. Maintenance, Repair and Replacement (“MRR”)
The Act makes the association, by its board, responsible for the maintenance of the CE. Act, Section 18.4 preamble and (a). Every declaration I can remember seeing (and I have seen hundreds) makes the association responsible for the MRR of the CE.
Somewhat oddly, the Act says nothing at all about who is responsible for the MRR of the units (although as will be seen later, the association is obligated to insure the entire building, at least up to the bare walls, bare floors and bare ceiling of the unit-i.e. through the primer paint, but not the finishes). Since the units are separate real estate, title to which is owned by the unit owner, logically the MRR of the unit should fall to the unit owner. Virtually all declarations I have seen make a unit owner responsible for the MRR of the owner’s own unit.
Responsibility for the MRR of LCE is variable. If a declaration says nothing specifically about the LCE, then the MRR of the LCE are treated the same way as the CE (remember that LCE are just a subcategory of CE). But often, especially in more modern declarations, there is a separate provision that makes the relevant unit owner(s) directly responsible to maintain some part or all of their appurtenant LCE. Or a declaration may give the association the right or even obligation for the MRR of the LCE, but then allow the association to charge the cost back to the appurtenant unit owners. This is authorized under Act, Section 9(e).
So the result is that in order to analyze the obligation for the MRR of a part of a condominium, first you must determine what part of the building is at issue: CE, Unit or LCE. Even then, you must review the declaration to see who has the obligation for the MRR of that particular part of the building.

B. Common Elements Failures
To make this discussion slightly easier, I want to use the example of the roof as a CE. The roof of a condominium building is almost always expressly deemed a CE. And, if there is a rainstorm and the roof leaks, it is easy to see understand the consequences of such a leak.
If a roof leaks, virtually every type of property at a building can be affected. The roof itself, the hallway walls, walls interior to units, the finishes on the walls, floor and ceiling of a unit, even an owner’s personal property inside a unit, like furniture, rugs and clothing, can all be damaged by water from a leaking roof.

C. A Pure Liability Analysis
In what follows I am assuming that no person caused the roof to leak. That is, noone went up on the roof and poked holes in it or took any other actions to cause the leak. If someone does damage CE, whether intentionally or through negligence, virtually all declarations make the person doing so liable for all injury and damages caused by his/her actions. See, e.g. Gelinas v. Barry Quadrangle Condo. Assn., 2017 IL App (1st) 160826, para. 18.
Rather, the situation I am positing is that the roof is, for whatever reason, not properly maintained, and that as a result the roof begins to leak.
By contrast, if the cause of the water leak is from a unit (overflowing tub or other water leak internal to the unit), the Act, at Section 9.1(a), makes the unit owner responsible for all injury and damages cause by the leak. “A unit owner shall be liable for any claims, damages, or judgment entered as a result of the use or operation of his unit, or caused by his own conduct.”
No similar statement exists in the Act for association CEs.
As a general proposition, the party who has the duty to maintain, repair or replace a part of building is responsible for injury and damages caused by the failure of the relevant part of the building. Kallman v. Radioshack Corp., 315 F.3d 731, 737-39 (7th Cir. 2002), rehearing denied. As mentioned above, the Act clearly makes the association, by its board, responsible for the MRR of the CE. Act, Section 18.4(a); See also Spanish Court Two Condominium Association v Carlson, 2014 IL 115342, at para. 21.

Generally speaking, at Illinois common law, the elements of a claim for premises liability are existence of a duty owed by the defendant to the plaintiff, breach of the duty, and injury (or damage) caused as a result. Keating vs. 68th and Paxton LLC, 401 Ill.App.3d 456 (1st Dist. 2010), appeal denied 237 Ill.2d 559.

The duty of the association for the MRR of the roof is thus both statutory (Act, Section 18.4) and per the declaration (a form of contract). The failure of the roof to prevent the leak is a breach of the duty. The injury is the actual damage caused as a result of the leak.

The next question is the measurement of the damages. In Illinois, it depends if the property damaged is beyond repair or not. If beyond repair, then the damages are the fair market value of the property immediately before the destruction, less any salvage value the property may have. If the property can be repaired, then the damages are the cost of repairs necessary to restore the property to its physical condition before the damage. Macy’s Inc. v Johnson Controls World Services, Inc., 670 F.Supp.2d 790, 800-01 (N. D. Ill., 2009). To the extent that personal property is damaged, the damages are the fair market value of the property immediately before the loss. But not the replacement cost. See Benford v. Everett Commons, LLC, 2014 IL App (1st) 130314, paras. 30-32.

So, under a pure liability analysis, the various outcomes are these:

1. If the roof leaks and other CE (e.g. walls of the hallway) are damaged as a result: The hallway walls are CE. The association is responsible both for the MRR of the hallway walls and the roof which leaked. Clearly the association is responsible for the damages to its “own” property caused by the failure of the roof to do its job.

2. If the roof leaks and the perimeter walls (and/or ceiling and/or floor) of a unit (but not the finishes) are damaged as a result: The association is responsible for the MRR of the walls, floors and ceiling which are CE (that is, the walls and ceiling up through the primer coat and the floor often to the finish flooring). Again, because those walls are CE and the roof which leaked is CE, it is the association that has to bear the damages caused by the roof’s failure.

3. If the roof leaks and the finishes on the interior of the perimeter walls (and/or ceiling and floor) of a unit are damaged as a result: The finishes are usually part of the unit (Act, Section 4.1(a)(2)-although the declaration may alter that conclusion), and the unit owner is usually stated in a declaration as being responsible for the MRR of the finishes on the walls of his/her unit. But the issue is not who has the obligation for the MRR of them. The issue is who has damaged them (that is, a liability, not a maintenance analysis). After all, the unit owner is blameless in causing the damages. Thus, the roof CE having caused the damages to the finishes, the association will either be obligated for the MMR of the finishes, or the association will have to pay damages to the unit owner for the damaged finishes, measured as stated above.

4. If the roof leaks and a LCE of a unit below are damaged (such as, for this purpose-a perimeter door): The LCE may be the responsibility of the association for the MRR of that item. Or the LCE could be the responsibility of the owner for the MRR of that item (depending on the declaration). But the issue is not who has the obligation for the MRR of the item. The issue is who has damaged it (that is, a liability, not a maintenance analysis). After all, the unit owner is blameless in causing the damages. Thus, the roof CE having caused the damages to the door, the association will either be obligated for the MMR of the door (if the association has the responsibility for the MRR of the door in the first place). Or the association will have to pay damages to the unit owner for the damaged door, measured as stated above.

5. If the roof leaks and personal property (furniture, clothing, rugs) of a unit owner is damaged as a result: The unit owner’s personal property is never the obligation of the association for MRR. Here again the unit owner is blameless in causing the damages to his/her personal property. To the extent of the damage to the personal property (as measured as above) the association will be responsible to the unit owner.

D. Insurance at an Association

The association is obligated by statute to carry both property (casualty) insurance and liability insurance. Act, Section 12(a). The property insurance is required to be in the full insurable replacement cost of the property (including CE, LCE and units, up through the primer coat on the walls, subject to certain board decisions). Act, Section 12(a)(1). If a unit owner makes certain improvements to his/her unit, the increased value of the building doesn’t have to be covered by the property insurance. But if such improvements are covered, the association may bill the increased premium costs for those improvements back to the relevant unit owner. Act, Section 12(b).

The amount of any deductible under the association’s policies is a board decision, not governed by the Act.

From the unit owner’s side, insurance is more hit or miss. Most more modern declarations require an owner to carry property insurance on the unit owner’s property anywhere on the property (whether inside the unit or, for example, in a storage area). In addition, a unit owner is often required by the declaration to carry liability insurance-that is, insurance against the unit owner or the unit causing injury to a 3rd person or damage to a 3rd person’s property. The Act, at Section 12(h), allows (but does not require) an association’s declaration (or bylaws) or rules to mandate that each unit owner have liability insurance. There is no comparable statute re unit owner property insurance.

Finally, many declaration have a provision that states some variation of the following: “Each Unit Owner hereby waives and releases any and all claims which he or she may have against any other Unit Owner, the Association, its officers, members of the Board, the Declarant (developer) the managing agent of the Association and their respective employees and agents, for damages to the Common Elements, the Units or to any personal property located in the Unit or Common Elements, caused by fire or other casualty, theft, vandalism and each and all other causes to the extent that such damage is covered by fire or other form of casualty insurance.”

Note that I have seen the last few words have a number of variations, such as: “to the extent such damage is actually covered by fire…insurance”; “to the extent the unit owner has received payment, in whole or in part, from said unit owner’s fire insurance”; “to the extent that such damage is covered by fire or other form of casualty insurance or would be covered by insurance for which the unit owner is responsible to obtain under this declaration”; and other variations.

Each of these formulations can result in a different outcome. If the unit owner has insurance, makes a claim and is paid in full (less a deductible) that is the easy situation. But maybe the unit owner doesn’t want to make a claim for some reason. Or maybe the unit owner doesn’t have the insurance he/she was obligated to obtain. The exact language of the waiver/release section is important.

Note that under Act, Section 12(c), the board can determine who is responsible for damages and cause that party to have to pay the deductible of an innocent unit owner who makes a claim on his/her insurance and who gets paid (less the deductible). In that way, innocent unit owners (or, if the damages to CE are caused by action of a unit owner, then the association itself,) can be truly made whole. See Gelinas, at paras. 20-22.

E. Effect of Insurance on the Liability Analysis.

Let’s return to the 5 situations posited above:

1. If the roof leaks and the walls of the hallway (for example) are damaged as a result: The association’s property insurance is at issue here, as the property damaged is CE. The association’s liability insurance is not at issue, as the damaged party is not a 3rd person, but is the association itself.
A roof leak, not caused by an “occurrence”, may not be covered by the property insurance. If that is the case, the association will have to pay for the MRR of the hallways to the extent the association chooses to do so (after all, the hallways being CE, the association has control of how the hallways look).

2. If the roof leaks and the perimeter walls (and/or ceiling and/or floor) of a unit are damaged as a result: Here again, the property damaged is CE (up through the primer coat), so the association’s property insurance is at issue. The association may (or may not) get insurance proceeds due to the lack of an “occurrence”, but because the damaged walls are CE, the association (not the unit owner) will have to pay to restore the interior walls and ceiling, at least through the primer, and the floor, up to (depending on the definition of CE at the association) the finished flooring.

3. If the roof leaks and the finishes on the interior of the perimeter walls (and/or ceiling and floor) are damaged as a result: My analysis is that since the finishes are often deemed part of the unit (and not CE or LCE), and are on the unit side of the primer paint, the association’s property insurance will not cover the damage. Then the association liability insurance will take over, as the damaged property is being treated as a 3rd party’s (the unit owner’s) property.
The outcome is that the association (and likely its liability insurer) will be liable for the damages under the liability analysis. The only other issue is whether the unit owner’s insurance covers the damage and whether the waiver/release language of the declaration (referenced above) is applicable to mandate such waiver or release.
It could happen that the waiver/release language applies but the unit owner, for reasons of his/her own, does not wish to, or will not, make a claim on his/her property insurance. In that case, the association doesn’t have to pay for the damages, but the unit owner’s insurance hasn’t reimbursed the unit owner. The finishes could remain unrepaired, as the association can claim that, despite its liability, until the unit owner’s own insurance has paid or denied coverage, the association will not know if the unit owner’s insurance coverage will result in waiving or releasing the association’s liability.
Such a situation (finishes remaining unrepaired) is rarely acceptable. So the alternative is for the association (or its liability carrier) to repair the finishes, and then assess the unit owner for reimbursement depending on the outcome of the waiver/release issues.
And as between the association’s property insurance and the unit owner’s insurance (if both arguably cover the same damaged property), the association’s insurance is primary. Act, Section 12(f).

It has been argued that because the CE only run through the bare walls (primer coat) as a matter of MRR, the association’s liability to a unit owner is similarly limited. I do not agree with this. The issue of the extent of the association’s obligation for the MRR of the CE at a building is not the same, in my opinion, as the issue of liability for failure of the CE. In the liability context, the existence of the MRR obligation only goes to establishing who is liable if that part of the building fails to do its job, and is not a limitation on that liability.

I note that it is also possible a declaration may affirmatively make the “interior surface” of the perimeter walls, ceilings and floor LCE of that unit, and not part of the unit itself. Such a provision overrules the default provision of Act, Section 4.1(a)(2). Thus, the finished interior surface, as LCE, could be deemed covered by the association’s property insurance. The exact coverage of the association’s property insurance would have to be reviewed to determine the insurance outcome here. If the association’s property insurance does not provide coverage, the association’s liability insurance still could do so.

4. If the roof leaks and a LCE of a unit below is damaged (such as, for this purpose- a perimeter door): My analysis here is the same as per the last paragraph of no. 3 above.
But, if the doors are treated in the declaration as part of the unit, then the association liability insurance would take over, as the damaged property is being treated as a 3rd party’s property. See also para. 3 immediately above.

5. If the roof leaks and personal property (furniture, clothing, rugs) of a unit owner/occupant is damaged as a result: The association’s property insurance never covers the unit owner’s personal property. But the association’s liability insurance may be triggered. At the same time, the unit owner’s property insurance (if required of the unit owner, or if the unit owner has the same) should cover the damages. Thus, again, the association remains liable to the unit owner. The only issues are whether the association’s liability insurance covers the damage, and the extent, if any, that the unit owner’s own property insurance covers the damages (and/or the effect of the waiver/release language on the liability of the association).

Overall, issues of liability for the failure of the CE as a result of failure to properly maintain, repair and replace them are a complex combination of common law, statutory, documentary and insurance analysis. Basic liability law mandates that the association will, in almost all cases, be liable for all such damages. The Act, and the given association’s documents and insurance may result in that liability being covered by insurance and/or waived/released. But there is no basis, in my opinion, for automatically concluding that, in the ordinary course, the association’s liability for damages to the unit, LCE or the personal property of the unit owner or other occupant, is limited solely to putting the CE, up through the primer paint, back into good repair.

© 2017
Mark R. Rosenbaum

 

The 2017 Cook County assessment season has begun. This year, all property in the south suburbs will be re-assessed.
After several years of steady market declines, property values and assessments are on the rise again in most places. Over the past two years, assessment increases proposed by the Assessor have typically ranged from 15% to 40% with the largest increases occurring in the highest property value areas. Increased assessments coupled with increased local government spending suggest rising property taxes and the need to aggressively monitor and contest assessments.

Property owners in each of the seventeen south suburban townships will receive a notice of re-assessment in the mail during 2017. This notice will set forth the proposed 2017 assessment. Taxpayers will have thirty days to file an assessment appeal with the Assessor’s office to seek a reduction in the proposed re-assessment.
In a non-reassessment year, the taxpayer will only receive an assessment notice if the Assessor proposes to increase the assessment. However, all taxpayers have the right to appeal during the 30-day filing period for their township, regardless if their assessment has been increased.
To view a list of Cook County townships and a tentative township mailing schedule click here.

What is a re-assessment?
Illinois law requires that the estimated property value and assessed valuation of your property be periodically updated for real estate tax purposes. In Cook County, property is re-assessed at least once every third year. This is called triennial re-assessment. Elsewhere in Illinois the general assessment of property occurs every four years.
The assessment process begins with the Assessor determining the market value of your property. The Assessor then applies an assessment percentage to the market value to determine the assessment or assessed valuation.
In Cook County, residential property is assessed at 10% of fair market value. Commercial and industrial properties are assessed at 25% of fair market value. Properties outside of Cook County are assessed at 33.33% of fair market value.

Why appeal?
The assessed value placed on your development directly impacts the amount of real estate taxes you will pay for each year of the triennial 3-year period (Cook County).
The assessed value is the largest component of your tax bill. The larger the assessment, the larger the tax bill.

How does the Assessor determine the property value for residential condos?
Basically, by analyzing recent sales in the building.

Residential properties are assessed as of January 1st of the current year, using three years of prior sales information. The Assessor typically excludes sales that are not arms-length transactions (a transaction in which the seller and buyer act independently and are not related or subjected to duress by the other party).

What can my association do to lower assessments?
Illinois law allows condo boards to appeal tax assessments on behalf of all unit owners. These are known as collective appeals and is the method preferred by assessing officials.
The assessing officials prefer collective appeals for a few reasons:
• Collective appeals are less work for the assessing officials.
• The assessing officials generally prefer to negotiate with one knowledgeable attorney rather than numerous property owners or their attorneys.
• Collective appeals result in uniform assessment results.

What is needed for a successful condominium association appeal?
Consideration of a 3-year sale history of units within the association is the best evidence for a successful condominium association appeal. Understanding what deductions will be considered by the assessing officials for personal property adjustments is also important. If inadequate sales exist an appraisals can also be used to determine the value of the units.

How long is the appeal process?
The tax appeal process begins with the Assessor. Once an appeal has been filed with the Assessor and a decision is rendered the taxpayer will have a second opportunity to appeal to the Cook County Board of Review. It is not uncommon for associations who have been denied a reduction by the assessor’s office to have a successful appeal at the board of review. The entire appeal process prior to the issuance of the tax bill can span up to a year. Cook County tax bills are paid in arrears and issued in two installments. The 1st installment bill is always 55% of the previous total tax bill and will be due while the appeals are pending. The 2nd installment tax bill is issued and due later in the fall. Assessment reductions granted by the Assessor and/or Cook County Board of Review will be reflected in the 2nd installment tax bill and result in a lower tax bill than otherwise.
Further appeals from the board of review decision can be pursued but may take another year or more before a decision is rendered. If these subsequent appeals prove successful a refund of any excess tax paid will be ordered.

Does our association have to hire an attorney?
The filing of a tax appeal in Illinois is considered the practice of law. As such, corporations or associations must use an attorney. However, individual unit owners can file pro se appeals for their individual units.

Joanne P. Elliott
Attorney

 

Condominium associations often choose to finance major common element repair projects by obtaining bank loans. This type of loan is typically secured by the association’s pledge to the lender of all or substantially all of the association’s assets, including the association’s assessment receivables, operating account and reserves. Effective January 1, 2017, the procedure for approving this pledge of collateral has been streamlined for Illinois condominium associations.

It is fairly common for condominium instruments (particularly older sets of documents) to require that a condominium association obtain the consent of two-thirds or some other supermajority of the unit owners before pledging all or substantially all of the association’s assets as collateral. Previously, Subsection 18.4(m) of the Illinois Condominium Property Act provided that such unit owner approval requirements were enforceable. This unit owner consent requirement often proved burdensome to condominium boards seeking to undertake much-needed common element repair projects and to spread the repair costs over time, rather than having to fund the projects through large special assessments payable within a short time frame. Historically, many condominium boards were unaware that their condominium instruments contained this restriction and were caught by surprise when the restriction was discovered shortly before the scheduled loan closing date and the anticipated commencement of the repair contractor’s work.

Effective January 1, 2017, Subsection 18.4(m) has been amended to provide that all condominium associations have the right to pledge all or substantially all of the assets of the association by a majority vote of the entire board of managers, regardless of governing document restrictions requiring unit owner consent. This change will make loan transactions much more efficient for many condominium associations, obviating the need to obtain a supermajority vote of the unit owners, amend the condominium instruments or restructure the loan transaction due to governing document language restricting the authority to pledge assets.

Condominium associations should remain aware that governing documents may contain other restrictions relevant to a loan transaction which remain unaffected by the amendment to Subsection 18.4(m). Most notably, the governing documents might contain a contract duration limitation applicable to loan transactions having loan terms exceeding a specified number of years. Also, it is important to note that the change to Subsection 18.4(m) only affects condominium associations and does not apply to other types of community associations. It therefore remains advisable for all community associations to consult with legal counsel regarding the scope of corporate authority to enter into a loan transaction during a project’s planning stage, before entering into a binding transaction with a lender or repair contractor.

Scott A. Rosenlund

 

It is not unusual for owners to try to enlist the help of the board of directors to resolve disputes with their neighbors. Sometimes, the board is required to assist because a violation of the declaration or rules and regulations has occurred. In many instances, the board tries to stay out of the dispute and asks those involved to resolve it amongst themselves. New rules adopted by the United States Department of Housing and Urban Development (“HUD”), which became effective on October 14, 2016, has made it mandatory for associations to take action to bring a dispute to an end if it involves discriminatory conduct by one of the owners or occupants.

The Fair Housing Act (“FHA”) prohibits associations from engaging in discriminatory treatment based on race, color, religion, sex, handicap, familial status or national origin, which are often called protected classes. The FHA has, for years, prevented associations from targeting protected classes or treating them differently. If an association were to do so, it would be directly liable for it discriminatory conduct. Likewise, associations have long been held responsible for the actions of their employees and agents. This means that an association can be responsible for discriminatory conduct by its property manager.

Under the new rules, associations can be responsible for quid pro quo (this for that) harassment, where the association or its agents condition receipt of any of the benefits of ownership in the association based on an unwelcome request or demand. For example, an association board member cannot request an owner to engage in sexual relations in exchange for reducing fines levied against the owner’s account. While we hope this is unlikely, it can lead to discrimination.

The more likely issue for associations is the interpretation of what constitutes hostile environment harassment. The new rules define hostile environment harassment as unwelcome conduct because of an individual’s membership in a protected class, which is so sufficiently severe or pervasive that it unreasonably interferes with the availability, terms and/or privileges of living in a unit within the association. Beyond being liable for its own conduct and that of its agents and employees, an association can be liable for failing to take prompt action to correct the conduct of third-parties, including owners and occupants.

Before an association could be found liable for the actions of a third party, it must be shown that it knew or should have reasonably known about the discriminatory conduct and had the power to correct it. HUD makes it clear that a court must consider the amount of control the association has over the third party and what legal responsibility it has to correct the conduct. While it can always be argued that an association does not have the power to stop the conduct of its unit owners, it is clear that almost every association does have enforcement remedies that it can use when owners overstep their bounds such as fines for noxious and offensive behavior. The rare exception would be a homeowners association that was developed before 1985 and which has never adopted the Forcible Entry and Detainer Act.

HUD states that a totality of the circumstances test must be used to determine whether hostile environment harassment exists. This means that a court must consider all of the facts of an event to determine whether harassment is occurring. The factors, include, among others, the nature of the conduct, the context in which the incident or incidents occurred, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the persons involved. The conduct can include written, oral or other conduct. Moreover, it does not have to involve multiple incidents in order to be actionable. To determine whether conduct is sufficiently severe or pervasive, a court will look at a reasonable person in the victim’s shoes.

What does all of this mean for associations? Since associations can be responsible for actions by third-parties if they knew or should have known about the discriminatory conduct, they must be more willing to take sides in disputes when discrimination is clearly or appears to be involved. Evidence of discrimination can manifest itself in many forms. If an owner versus owner dispute has any hints of being motivated by a protected class (race, color, religion, sex, handicap, familial status or national origin), the association should consult with its attorney to ensure that it is properly informed on how it must proceed.

Robert M. Prince, Chatt & Prince P.C.

 

 

Governments from around the world, including, China, Germany, Japan, Netherlands, Norway, U.K. and the U.S. are taking steps to combat climate change by increasing access to clean energy technologies and reduce dependence on oil.  One policy focus has been on programs that will accelerate the adoption of electric vehicles. electric-charging-station

A Bloomberg New Energy Finance report suggests that the sale of electric vehicles in the U.S. will hit 41 million by 2040, representing 35% of new car sales.  The future of electric vehicles, however, depends on several factors; including vehicle cost and maintenance, oil prices, government tax incentives to manufactures and purchasers, and … vehicle charging stations.

Accessibility to vehicle charging stations at the workplace and at home are critical to the future of the electric vehicle.  Consumers are going to demand they be close to their home or better yet – at their home.  What leadership role will condominium and homeowners associations take in helping our country meet the changing needs of consumer choices as it relates to their vehicle?

The U.S. Department of Energy’s office of Energy Efficiency and Renewable Energy will be working with the American Public Power Association to collaborate on fleet electrification – aka helping consumers find places to charge their electric vehicle.  Power companies and municipalities will collaborate to establish convenient locations for electric charging stations.  The goal of the Obama Administration is to establish a plan to have charging stations throughout the country close enough in proximity so an electric vehicle could be driven across the country maintaining the charge through strategically placed electric charging stations.

As quickly as the demand for charging stations will increase, the standards and practices for green buildings – especially multi-unit dwellings – are changing to prepare a building (condominium or townhome community) with electrical infrastructure to accommodate a future charging station installation.

The Obama Administration encourages collaboration with vehicle manufactures, power companies, state and local governments, universities and local communities to identify strategies and solutions for community electronic charging stations.  For more information about the Obama Administration’s White Paper on Electric Vehicle Adoption in the U.S., click here.

The community association housing model currently makes up approximately 20% of the housing stock.  In 2040, CAI anticipates community associations will represent a majority (more than 50 percent) of the housing stock in the U.S.  As we continue to transition towards this majority, it is each of our responsibility to take a leadership role in planning for the consumer shifts around us; including the electronic vehicles and the need for charging stations near residents in our communities.

Dawn Bauman, CAI Advocacy

 

In reviewing condominium association declarations over the past several years, on a number of occasions I noted a similar provision in many declarations which places a cap on the amount of a special assessment the board of directors can adopt without an owner vote. Typically, this provision provides that the board may adopt a special assessment, but if the special assessment is for more than three hundred dollars ($300) per unit or more than five (5) times the monthly assessment per unit, then owners with at least two-thirds (2/3) of the total votes in the association must approve the special assessment before it can be adopted. Such a provision would seem to restrict a condominium association’s board of directors’ ability to adopt a needed special assessment if the special assessment would be more than the capped amount.

However, while this language remains in many condominium declarations, and in particular those declarations drafted in the 1970s (or earlier), 1980s and early 1990s, it is outdated based on changes to the Illinois Condominium Property Act (765 ILCS 605/1 et. seq. and referred to as “Condo Act). While the relevant changes to the Condo Act took place more than twenty (20) years ago, based on my experiences there remains some confusion as to the applicability of these provisions related to caps on special assessments.

Specifically, the Condo Act used to have a section, Section 9(d), which provided that special assessments over a certain amount could not be adopted by a condominium association board without the approval of owners with at least two-thirds (2/3) of the vote in the association. Presumably, this former section of the Condo Act is the reason many older declarations contain a cap on special assessments. But, the Condo Act was amended in 1994 by Public Act 88-417 to eliminate Section 9(d). The historical notes to the Condo Act provide that “P.A. 88-417, effective January 1, 1994, repealed the unit owner approval requirement of Subsection 9(d) and replaced it with amended procedures set forth in Subsection 18(a)(8) giving condominium boards substantially greater latitude with respect to increases in special assessments.” The historical notes further provide, in discussing PA 88-417, that the language in Section 18(a)(8) of the Condo Act “was intended to totally replace the procedure previously set forth in Section 9(d), which had placed the burden on the condominium board to obtain approval from unit owners with two-thirds of the interest in the condominium before a large special assessment could be adopted.”

Thus, in 1994 the Illinois General Assembly removed the requirement that all special assessments over a certain amount must be approved by owners with two-thirds (2/3) of the total vote in a condominium association. Instead, the provisions of Section 18(a)(8) of the Condo Act apply with respect to special assessments. Section 18(a)(8) of the Condo Act provides in part:

“that except as provided in subsection (iv) below, if an adopted budget or any separate assessment adopted by the board would result in the sum of all regular and separate assessments payable in the current fiscal year exceeding 115% of the sum of all regular and separate assessments payable during the preceding fiscal year, the board of managers, upon written petition by unit owners with 20 percent of the votes of the association delivered to the board within 14 days of the board action, shall call a meeting of the unit owners within 30 days of the date of delivery of the petition to consider the budget or separate assessment; unless a majority of the total votes of the unit owners are cast at the meeting to reject the budget or separate assessment, it is ratified, (iii) that any common expense not set forth in the budget or any increase in assessments over the amount adopted in the budget shall be separately assessed against all unit owners, (iv) that separate assessments for expenditures relating to emergencies or mandated by law may be adopted by the board of managers without being subject to unit owner approval or the provisions of item (ii) above or item (v) below. As used herein, “emergency” means an immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners, (v) that assessments for additions and alterations to the common elements or to association owned property not included in the adopted annual budget, shall be separately assessed and are subject to approval of two-thirds of the total votes of all unit owners, (vi) that the board of managers may adopt separate assessments payable over more than one fiscal year. With respect to multi-year assessments not governed by items (iv) and (v), the entire amount of the multi-year assessment shall be deemed considered and authorized in the first fiscal year in which the assessment is approved;”

Accordingly, the Condo Act permits a condominium association board to adopt a special assessment of any amount in most cases. But, if the board adopts a special assessment that results in the total assessments in a given year exceeding one hundred and fifteen percent (115%) of the total assessments in the prior year, then owners can petition the board for a meeting of owners to vote on such special assessment. The petition must be signed by owners with at least twenty percent (20%) of the total votes and presented to the board within fourteen (14) days of the board’s approval of the special assessment. If such a petition is presented, the board must call a meeting of owners within thirty (30) days, and at the meeting owners with a majority of the total votes in the association must vote to reject the special assessment, or else it is ratified.

Further, Section 18(a)(8) of the Condo Act provides that all special assessments related to emergencies (as defined above) or mandated by law are not subject to veto by the owners. However, there is also a requirement in Section 18(a)(8) of the Condo Act that any special assessments for additions or alterations to the common elements or other association owned property must be approved by owners with at least two-thirds (2/3) of the total votes in the Association.

In conjunction with questions about caps on special assessments within condominium declarations, one of the questions I often receive is about a cap on expenditures within condominium declarations. A number of condominium declarations I have reviewed contain language prohibiting the board from making expenditures over a certain dollar amount without the approval of a certain percentage of owners. While these types of spending caps remain valid, Section 18.4(a) of the Condo Act contains language which limits what these spending caps apply to. Specifically, Section 18.4(a) of the Condo Act provides in part that:

“Nothing in this subsection (a) shall be deemed to invalidate any provision in a condominium instrument placing limits on expenditures for the common elements, provided, that such limits shall not be applicable to expenditures for repair, replacement, or restoration of existing portions of the common elements. The term “repair, replacement or restoration” means expenditures to deteriorated or damaged portions of the property related to the existing decorating, facilities, or structural or mechanical components, interior or exterior surfaces, or energy systems and equipment with the functional equivalent of the original portions of such areas. Replacement of the common elements may result in an improvement over the original quality of such elements or facilities; provided that, unless the improvement is mandated by law or is an emergency as defined in item (iv) of subparagraph (8) of paragraph (a) of Section 18, if the improvement results in a proposed expenditure exceeding 5% of the annual budget, the board of managers, upon written petition by unit owners with 20% of the votes of the association delivered to the board within 14 days of the board action to approve the expenditure, shall call a meeting of the unit owners within 30 days of the date of delivery of the petition to consider the expenditure. Unless a majority of the total votes of the unit owners are cast at the meeting to reject the expenditure, it is ratified.”

Accordingly, Section 18.4(a) of the Condo Act gives the board of a condominium association much flexibility with expenditures by providing that spending caps included within declarations do not apply to expenditures by the condominium association for “repair, replacement or restoration” of the existing common elements. While a definition for what constitutes a “repair, replacement or restoration” is provided in the Condo Act, if a condominium’s declaration contains a spending cap, it is a good practice for the board considering an expenditure of an amount greater than the spending cap included in the condominium’s declaration to consult with the association’s attorney prior to approving the expenditure to determine whether or not the spending cap applies to the proposed expenditure.

In summary, any condominium declaration which contains an outright prohibition on a board adopting a special assessment over a certain amount (such as $300 per unit or five (5) times the monthly assessment) is outdated. The Condo Act was amended more than twenty (20) years ago to give condominium association boards more flexibility in passing special assessments. The Condo Act gives condominium association boards the ability to adopt most special assessments, while reserving to owners a veto option for special assessments over a certain amount, and still requiring the approval of a certain percentage of owners for special assessments used for additions or alterations of the common elements or other association owned property. Further, even if an association is able to raise funds through a special assessment, its declaration may contain a spending cap. For an association facing a spending cap in its declaration, the association should consult with its attorney to determine the applicability of the spending cap.

Keith R. Jones

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Please refer to the latest legislation for updates on dates and deadlines

 

BILLS AFFECTING COMMUNITY ASSOCIATIONS IN THE 99TH GENERAL ASSEMBLY

INTRODUCED IN 2016

 

           Similar to past legislative sessions 2016 has been an active year for legislation affecting common interest communities and condominium associations. CAI Illinois’ Legislative Action Committee (ILAC) has, again, had an active year in sponsoring, advising, commenting on and opposing various bills throughout the year. Below is a list of legislation introduced throughout 2016. CAI was active in opposing House Bills, 4489, 4490 and 4491. CAI drafted, sponsored and supported Public Acts 099-0567, 099-0569 and 099-0849.

PUBLIC ACTS

Public Act 099-0567 (Sen. Haine) EXECUTIVE SESSION/CLOSED PORTION OF MEANINGS. The act amends Section 1-40 of the Common Interest Community Association Act and Section 18 (a) (9) of the Illinois Condominium Property Act. The new law changes both the Condominium Property Act and the Common Interest Community Association Act to clarify what items may be discussed by a board of directors during the closed portion of a meeting or executive session meetings. Importantly, the new law the specifies that board members can meet in a closed portion of a noticed meeting, or separate from a noticed meeting to discuss certain enumerated executive matters. The act details that Boards may discuss engagement, interviewing and dismissal of employees, independent contractors, agent or providers of goods and services. Finally, the law makes it clear the Board members can meet with legal counsel outside to the presence of an open meeting. The effective date is January 1, 2017.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=2354&GAID=13&GA=99&DocTyp eID=SB&LegID=93705&SessionID=88

Public Act 099-0569 (Sen. Mulroe) SUCCESSOR DEVELOPERS. This bill creates a new section 47 of the Common Interest Community Association Act and Section 9.5 of the Illinois Condominium Property Act. The new law changes both the Common Interest Community Association Act and the Condominium Property Act to require successor developers to obtain written assignment of developer (declarant) rights and to require the successor to record the assignment prior to it being effective. This alleviates the situation where a bank or subsequent purchasers of undeveloped portions of an association contends “they are the new declarant” without having anything in writing. The effective date is January 1, 2017.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=2358&GAID=13&GA=99&DocTypeID=SB&LegID=93712&SessionID=88

Public Act 099-0612 (Rep. Cassidy) AMENDMENT TO DEFINITION OF ACCEPTABLE TECHNOLOGY. The act amends the definition of “acceptable technological means” in both the Condominium Property Act and the Common Interest Community Association Act to expand its meaning to include “any generally available technology that, by rule of the association, is deemed to provide reasonable, reliability, identification and verifiability.” Additionally, the Act makes technical changes to the statutes to create a consistent use of the term “acceptable technological means. The effective date is January 1, 2017.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=5696&GAID=13&GA=99&DocTypeID=HB&LegID=95150&SessionID=88

Public Act 099-0627 (Sen. Haines) ERRORS AND OMMISSIONS CORRECTIONS UNDER CICAA. This act amends the Common Interest Community Association Act to provide that if a provision of the community instruments does not conform to the Act or to another applicable law because of an error, omission, or inconsistency in the community instruments of the association, the association may correct the error, omission, or inconsistency to conform the community instruments to the Act or to another applicable law by an amendment adopted by vote of two-thirds of the board of directors, without a membership vote. The effective date is January 1, 2017.

ILAC ACTIVELY SUPPORTED THIS LEGISLATION

 http://www.ilga.gov/legislation/billstatus.asp?DocNum=2741&GAID=13&GA=99&DocTypeID=SB&LegID=96048&SessionID=88

Public Act 099-0776 (Rep. Nekritz) AMENDMENT TO OMBUDSPERSON ACT. This law amends Condominium and Common Interest Community Ombudsperson Act and a small portion of the Freedom of Information Act. The act provides that information under the Ombudsperson Act may not be subject to certain Freedom of Information Act requests. Additionally the act provides that neither the Department nor the Ombudsperson shall consider charges under the Illinois Human Rights Act. Further, it amends Section 30 of the Ombudsperson Act to, in addition to a website, require the Department to provide a toll-free number for information and resources. Section 35 of the Act has been amended to move the date back upon which associations have to enact a written complaint policy from December 28, 2016 to January 1, 2019. Importantly the new law repeals Section 55 of the Act thereby providing that associations will no longer be required to register with the Department. Finally, it amends Section 50 of the Act to require the Department to submit an annual report to the General Assembly regarding education and training requests received instead of dispute resolution assistance requests and outcomes.

ILAC WAS ACTIVELY ENGAGE IN NEGOTIATING THIS LEGISLATION

 http://www.ilga.gov/legislation/billstatus.asp?DocNum=4658&GAID=13&GA=99&DocTypeID=HB&LegID=93903&SessionID=88

Public Act 099-0849 (Sen. Mulroe) BOARD’S ABILITY TO APPROVE A LOAN. The new law changes the Condominium Property Act to clarify the inconsistency in within Section 18.4 of the Act. The amendment to Section 18.4 (m) of the Act permits boards of directors, by majority vote, to execute various bank documents to secure a loan on behalf of an association. Currently the language of Section 18.4 (m) has a qualifier relating to the “condominium instruments” and there is a concern that some old condominium declarations and by-laws may require up to two-thirds of the owners to vote when either pledging an association’s assets or assigning future income. This change makes it clear that a board of directors, without owner approval, by majority vote can assign future income of an association and pledge the assets of an association. The effective date is January 1, 2017.

http://www.ilga.gov/legislation/fulltext.asp?DocName=09900SB2359sam001&GA=99&LegID=93713&SessionId=88&SpecSess=0& DocTypeId =SB&DocNum=2359&GAID=13&Session=

 

 BILLS WHICH DID NOT PASS

HB4489 (Rep. Drury) – UNIT OWNER LITIGATION. This bill amends the Illinois Condominium Property Act by creating Section 33 entitled “Unit owner’s right to fairness in litigation.” The bill states that an owner has a right to “fairness” in all litigation between the owner and a condominium association regardless of whether the owner commenced the litigation or the litigation is commenced against the owner. The bill voids any covenant or rule which limits the owner’s right to commence litigation. The bill provides an owner be awarded attorney’s fees if the owner prevails in any litigation or if the unit owner prevails on any affirmative defense against the association. The bill further provides for a judicial reduction of attorney’s fees in litigation (except assessment collection matters) and a complete bar to an association recovering attorney’s fees in an assessment collection matter if the owner prevails on any affirmative defense or counterclaim. Finally, the bill prevents an association from being represented by counsel of it’s choosing in any litigation if such counsel “also represents the board of managers either individually or collectively.” On February 4, 2016 this bill was assigned to Judiciary – Civil Committee. On March 2, 2016 this bill lost in Judiciary by a vote of 3-8.

ILAC ACTIVELY OPPOSED THIS BILL

 http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=88&GA=99&DocTypeId=HB&DocNum=4489&GAID=13&LegID=93465 &SpecSess=&Session=

HB4490 (Rep. Drury) ATTORNEY’S FEES IN THE EVENT OF AN OWNER DEFAULT. This bill amends Section 9.2 (b) of the Illinois Condominium Property Act. Currently Section 9.2 provides that attorney’s fees incurred by an association arising out of default by a unit owner, tenant guest or invitee of the governing documents or the Act can be added to the unit owner’s share of the common expense or unit owner’s account. The bill amends the section to prohibit an association from adding attorney’s fees to an owner’s account without a finding by a court. The bills require a court to award attorney’s fees, in every default, before attorney’s fees can be added to the unit owners’ account, thereby requiring a judicial finding on any default. On February 4, 2016 this bill was assigned to Judiciary – Civil Committee.

ILAC ACTIVELY OPPOSED THIS BILL

 http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=88&GA=99&DocTypeId=HB&DocNum=4490&GAID=13&LegID =93467&SpecSess=&Session=

HB4491 (Rep. Drury) EXPANSION OF UNIT OWNER DEFENSES IN COLLECTION CASES UNDER THE FORCBILE ACT. This bill amended Sections 9-106 and 9-111 of the Illinois Forcible Entry and Detainer Act. Effectively this bill seeks to overturn the Illinois Supreme Court’s decision in Spanish Court Two Condominium Ass’n v. Carlson, 2014 IL 115342 (2104). In Spanish Court Two the Supreme Court held that the obligation to pay assessments was an independent covenant and a unit owner’s attempt to raise as a defense a breach of duty by an association was not “germane” to the collection case and thereby not permitted.

This bill seeks to amend the Forcible Act to reverse the holding of the Supreme Court and permit an owner to raise, in any delinquent assessment collection case, a “material breach of any duty” in the condominium instruments, rules or statutes, or an “improper motive” by the association in bringing the action. Further, the bill amends the Forcible Act to bar an association in a collection case from recovering any attorney’s fees and costs if the court finds that the association breached an obligation under the governing documents or a fiduciary duty to the unit owner, regardless of non-payment of assessments. On February 4, 2016 this bill was assigned to Judiciary – Civil Committee.

ILAC ACTIVELY OPPOSED THIS BILL

 http://www.ilga.gov/legislation/billstatus.asp?DocNum=4491&GAID=13&GA=99&DocTypeID=HB&LegID=93468&SessionID=88

HB4959 (Rep. Batinick) AMENDMENT TO MANAGER LICENSING ACT. This bill amends the Community Association and Manager Licensing and Disciplinary Act. The bill makes some minor language changes to the Act. The bill modifies the initial examination standard to remove the requirement that the initial licensing exam comply with standards set by the National Organization for Competency Assurances. The bill includes a reference to limited liability companies. On February 5, 2016 this bill was referred to Rules Committee.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=4959&GAID=13&GA=99&DocTypeID=HB&LegID=94257&SessionID=88

HB5812 (Rep. Breen) MORE AMENDMENTS TO OMBUDSPERSON ACT. This bill amends multiple sections of the Condominium and Common Interest Community Ombudsperson Act. The bill makes some minor technical changes to the Act and the terms. Additionally, the bill amends Section 15 of the Act to revise the definition of “Condominium Association” to mirror the definition within the Condominium Property Act. The bill includes a new term in Section 20 to provide that the Ombudsperson has no authority to consider matters which would constitute charges under the Illinois Human Rights Act. The bill amends Section 30 to provide that the Office of Ombudsperson make available a toll free number to provide information and resources.

The bill provides that the Ombudsperson would be named (rather than employed) by the Department and the office would also be situated under the Division of Real Estate instead of the Division of Professional Regulation. The bill retains the existing requirement that, on or before December 27, 2016, associations must establish and adopt written policies for resolving complaints made by unit owners.

The bill amends Section 35 by requiring an association to make a final determination on a unit owner’s complaint within 90 days (versus a reasonable time). The bill removes a provision enabling the unit owner to notify the Department of the association’s lack of, or the inadequacy of, a written policy, which could lead to an association losing its legal rights to bring civil actions for the collection of delinquent assessments.

The bill repeals Section 55 of the Act thereby providing that associations will no longer be required to register with the Department. Significantly, the bill mandates associations amend their governing documents to adopt dispute resolution mechanism. The bill provides that no later than July 1, 2019, Associations will be required to adopt a bylaw or declaration amendment to provide for mandatory mediation or arbitration with respect to the vast majority of disputes between associations and unit owners. The parties could choose whether alternative dispute resolution would be binding or non-binding. The bill removes all provisions relating to the Ombudsperson providing “request for assistance.”

Finally, the bill amends Section 50 of the Act to require the Department to submit an annual report to the General Assembly regarding education and training requests received instead of dispute resolution assistance requests and outcomes. On April 8, 2016 this bill was re-referred to Rules Committee.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=5812&GAID=13&GA=99&DocTypeID=HB&LegID=95276&SessionID=88

HB5927 (Rep. Fine) CODIFIES A COMMON INTEREST COMMUNITY’S ABILITY TO ENACT RULES. This bill amends Section 1-30 of the Common Interest Community Association Act to explicitly provide that a board of a Common Interest Community has the statutory authority to adopt rules and regulations. Similar to the Condominium Property Act, the bill sets forth a mechanism of prior notice to the members of the Board meeting whereby rules and regulations will be considered and adopted. The bill prohibits a board from adopting rules which impair First Amendment rights or conflict with the declaration or bylaws. On April 8, 2016 this bill was re-referred to Rules Committee.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=5927&GAID=13&GA=99&DocTypeID=HB&LegID=95414&SessionID=88

HB6243 (Rep. Jesiel) CREATES SHORT-TERM RESIDENTIAL RENTAL PROPERTY ACT. The bill creates the Short-Term Residential Rental Property Act. It provided that a short-term residential rental property listed on internet-enabled platforms (such as airbnb) shall not be regulated by a unit of local government in a manner more restrictive than bed and breakfast establishments are regulated under the Bed and Breakfast Act. Further provides that a short-term residential rental property, platform administrator, rental property host, or guest shall not be taxed by a unit of local government in an amount greater than a hotel, a hotel operator, or hotel guest. On February 11, 2016 this bill was referred to Rules Committee.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=6243&GAID=13&GA=99&DocTypeID=HB&LegID=95784&SessionID=88

SB2837 (Sen. Silverstein) AMENDMENT TO SMOKE DETECTORS ACT. This bill amends the Smoke Detector Act. It provides that if a smoke detector is battery powered, then the battery must be non-replaceable, non-removable, and capable of powering the detector for a minimum of 10 years. An amendment was filed in the Senate further defining the requirements and providing that it shall apply to smoke detectors which more than 10 years old, fail to respond to testing or are newly installed. Additionally, the amendment provides that the requirements will not apply to centrally monitored systems, low frequency/Wi-Fi devices or those designated by State Fire Marshall. Finally, provides that violating of the statute is a petty offense subject to fines. On April 21, 2016 this bill passed the Senate. On April 22, 2016 this bill was referred to the House Rules Committee.

http://www.ilga.gov/legislation/fulltext.asp?DocName=09900SB2837sam001&GA=99&SessionId=88&DocTypeId=SB&LegID= 96149&DocNum=2837&GAID=13&Session=

SB2863 (Sen. Connelly) AMENDMENT TO SECTION 15 OF THE CONDO ACT. This bill amends Section 15 of the Condominium Property Act “Sale of Property.” Section 15 provides a mechanism where the entire condominium property can be sold to a third party. The bill was amended on March 15, 2016. The bill amends a subsection (a) to Section 15 of the Act to provide that if a unit owner has filed a written objection to the sale within 20 days after approval the unit owner shall be entitled to receive reimbursement for relocation costs. This bill will not apply to any pending approved sales. On April 6, 2016 this bill passed Judiciary. No additional action was taken.

http://www.ilga.gov/legislation/BillStatus.asp?GA=99&DocTypeID=SB&DocNum=2863&GAID=13&SessionID=88&LegID=96180

SB3275 (Sen. Connelly) AMENDMENTS TO MANAGER LICENSING ACT. This bill amends Community Association Manager Licensing and Disciplinary Act. The bill removes the requirements that any examination for obtaining a license utilize “psychometric measurement” and employ standards set forth by “National Organization for Competency Assurances.” Additionally, the bill makes other technical changes to the Act. On April 21, 2016 this bill passed the Senate. On April 21, 2016 this bill was referred to House Rules Committee.

http://www.ilga.gov/legislation/billstatus.asp?DocNum=3275&GAID=13&GA=99&DocTypeID=SB&LegID=96626&SessionID=88

This document provides a general synopsis of various bills that affect community associations. This list is by no means complete. Further, the information contained herein can change throughout the legislative process. Bills can be amended and language originally proposed can be deleted. In order to assure you have the most accurate information about any given bill, please go to www.ilga.gov and review not only the synopsis but the actual language of the bill and any relevant amendments. This information is provided as May 24, 2016.

 

Handicapped SpotAs any Chicago resident with a motor vehicle knows, from the expensive park-per-day prices to the difficulty of parallel parking, owning a car in the city can sometimes be a nuisance and a burden. Even rightful owners of parking spaces in the city have faced some interesting challenges in more recent years.

One such issue is ownership of accessible spaces (or handicapped parking), which has caused some controversy in condominium properties. Per the Fair Housing Accessibility Guidelines, at least two percent of parking spaces in multi-family homes must be available to individuals with disabilities. Availability does not dictate ownership, however, so developers have historically sold accessible parking spots to non-disabled individuals after all non-accessible parking spots have been sold. This has proven to be a somewhat lucrative choice for developers, who can sell those spots at a premium, given their location and spatial convenience.

So what happens when non-disabled residents rightfully and legally own an accessible parking spot, and a handicapped individual comes to need a handicapped parking space of his own in that particular lot? Courts have been reluctant to create a bright-line rule on this issue. As seen in a few cases, courts are not willing to punish non-handicapped individual owners of accessible parking spots by forcing them out of their spaces. , Instead, courts have looked not only to the developers who profited from the sale of the parking spots but to condominium associations with little to no real authority or capability to accommodate handicapped individuals. Suggestions have been made that condominium associations should somehow “take” physical space that does not belong to the association and re-designate for the benefit of the disabled owner such as redrawing parking lines to create an additional space where none existed or even forcing the sale of an accessible parking space from one rightful owner to a needing disabled owner.

So far, the courts have conveniently ignored this takings issue. If, as Americans, the Bill of Rights represents our core values, one must wonder, how can a court usurp private property for private use? The answer should be that the private parking space cannot be taken unless it is for “public use” and unless there is “just compensation,” per the Fifth Amendment Takings Clause.

The terms in the Takings Clause have been debated amongst courts for as long as the Clause has been in existence. What constitutes as “public use,” and how much compensation is “just compensation”? Courts have set many different answers to these questions. But whatever the answer, no court has indicated that forfeiture of private property to another individual for private benefit is either “public use” or that the taking of private property could be justly compensated, regardless of the fact that it may involve individuals with disabilities. In fact, it has been decided by many courts, many times over that taking private property for another’s private use, no matter the attempted justification, is a violation of the Takings Clause.

Further, the taking of a privately owned condominium parking space runs into other issues outside of constitutional rights. For example, though the Fair Housing Act (“FHA”) does exist to prohibit discrimination, it “does not create a right to an assigned handicapped space.” The FHA merely ensures that accessible spaces be created in the first place. The Illinois Human Rights Act (“IHRA”) outlines a similar definition of discrimination, and just like the FHA, the IHRA has no language indicating that a handicapped person is entitled to a handicapped space merely because one exists.

It is also important to note that residential facilities, i.e. condominiums, are not under the purview of “public accommodation” under the Americans with Disabilities Act (“ADA”). This helps to retain the private nature of condominiums, including their respective parking lots.

Given these parameters, courts would be left little room to justify taking one person’s parking space to give to another individual. However, condominium associations may still be liable for failing to accommodate handicapped persons in this regard. Though no owner can be forced to forfeit his parking space, the FHA defines discrimination as “refusal to permit, at the expense of the handicapped person, reasonable modifications of existing premises occupied…by such person if such modifications may be necessary to afford such person full enjoyment of the premises.” The question then turns to a matter of what a reasonable modification might be in matters of accessible parking.

Courts dealing with this issue have made a few suggestions with respect to accommodating handicapped individuals whilst keeping non-handicapped owners’ constitutional rights intact. The court in Jafri, for example, said that possible avenues to accommodate individuals with disabilities under these circumstances might include “reserving at least some accessible spaces for individuals with disabilities, including a clawback provision in the deeds for accessible spaces that were sold to individuals without disabilities, providing valet parking, or creating additional accessible parking with the parking spaces it retained or spaces that it could have repurchased.” The problem with the Jafri Court’s suggestions is that the Court failed to consider these suggestions in time and scope or expense. While a developer might take some of these suggestions to heart at the initial creation and selling stages of the project, an association cannot go back in time and change the restrictions in the initial deed. Further, the Jafri Court fails to address how an association would go about purchasing a parking unit or forcing an owner to sell a parking unit he did not want to sell. Lastly, a valet seems more in line with a modification rather than an accommodation as it requires an expenditure on the addition of a service rather than merely a change in policy. While it may be incumbent upon the association to allow the use of a private driver to drop off and pick up a disabled individual while parking or retrieving their vehicle, the cost of a valet service would be borne entirely by the disabled owner.

As this is a more recent problem, Courts haven’t held condominium associations liable yet, for the Developer’s sale of these accessible parking spots, but such sales “may be an FHA violation [by the Developer] if they are made without providing alternative means for making the building accessible.” While this statement was made in reference to a Developer’s sale of a parking space, associations are not in the clear. The court in Weiner went so far as to say, “condominium owners are required to take additional action to ensure that handicapped residents who require handicap parking space or other reasonable accommodation are, in fact, accommodated.” Because the Weiner Court was unable to provide any meaningful suggestion it conveniently left the unenviable task of formulating the remediation to the condominium association.

Though these options are highly problematic, opting for at least one alternative for handicapped individuals could save condominium associations a lot of hassle (and a lot of legal fees) in the future.

Authored by: Matthew J. Goldberg, Bancroft, Richman & Goldberg, LLC with assistance from Briana DeMaster

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(i) Final Fair Housing Accessibility Guidelines, 56 FR 9472-01.

(ii) Weiner v. Prairie Park Condo. Ass’n Inc., 16 C 1889, 2016 WL 3444210 (N.D. Ill. June 23, 2016)

(iii)Jafri v. Chandler LLC, 970 F.Supp.2d 852 (N.D. Ill. 2013)

(iv) U.S. Const. amend. V.

(v) Missouri Pac. Ry. Co. v. State of Nebraska, U.S.Neb.1896, 17 S.Ct. 130, 164 U.S. 403, 41 L.Ed. 489

(vi) Jankowski Lee & Assocs. V. Cisneros, 91 F.3d 891, 896 (7th Cir. 1996)

(vii) Gragg v. Park Ridge Mobile Home Court, LLP, 10-3313, 2011 WL 4459701 (C.D. Ill. Sept. 26, 2011)

(viii) 42 U.S.C.A. § 3604

(ix) See Jafri, 970 F.Supp.2d 852.

(x) See Jafri, 970 F.Supp.2d 852.

(xi) See Weiner, 2016 WL 3444210.

The comments and opinions expressed in this blog are of the individual author and may not reflect the opinions of CAI-Illinois.

 

Dogs

Many condominium and community associations are receiving increasingly frequent requests from residents to keep dogs and other “assistance animals” in communities that do not allow pets. Where pets are allowed, the requests are often for dogs that are much larger than the maximum weight limit, or are for a prohibited breed of dog, such as a pit bull. For even those associations that allow pets without size or breed restrictions, almost all have rules addressing issues that associations face when pets are allowed. Whether your association’s restrictions are based on provisions in the declaration or are included in the rules adopted by the board, those restrictions may not apply if a proper request for an assistance animal is made. Although understanding and navigating this area of the law may seem much like trying to find your way out of the Bermuda Triangle while blindfolded, don’t fret, this article will provide your association with steps to take the next time it receives one of these requests.

What is an Assistance Animal? According to the U.S. Department of Housing and Urban Development, an assistance animal is not a pet. Rather, an assistance animal is “an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability.” Many people confuse “assistance animals” with “service animals” and assume that exceptions must only be made for persons with physical disabilities, such as a seeing eye dog for a resident who is blind. But assistance animals include a much broader group of animals. Assistance animals are not limited to dogs. Nor are they limited to specific breeds, sizes or types of animals. In fact, any animal can be an assistance animal. This is true even if the type or breed of animal is typically considered to be dangerous. Further, assistance animals do not need to be certified or trained. An animal qualifies as an assistance animal so long as it helps the individual deal with his or her disability.

Who Is Entitled to Keep an Assistance Animal in a “No-Pet” Community? Any person with a disability, including a physical, mental, or emotional disability, is entitled to a reasonable accommodation. Federal fair housing law requires associations to allow disabled residents to have assistance animals in communities which otherwise prohibit pets or restrict the size, type or breed of animal, if a proper request is made.

Requests for assistance animals beg two important questions: 1) Is the person making the request disabled?, and, 2) Does the animal alleviate one or more of the symptoms or effects of the disability? If the answer to these questions is yes, then a reasonable accommodation must be granted, despite any prohibitions or restrictions to the contrary for that association.

What Documentation Must a Disabled Person Provide in Order to Keep an Assistance Animal? If the disability is not readily apparent, a disabled person seeking a reasonable accommodation must provide reliable documentation from a licensed healthcare professional to establish that he or she suffers from a disability. The disabled person must also provide documentation that he or she has a disability-related need for the assistance animal. In other words, the animal must help with one or more of the symptoms or effects of the disability.

What Should An Association Do When It Receives A Request for An Assistance Animal?

  • Review and respond in writing as soon as possible.
  • Request documentation. Unless the necessary documentation is provided with the request, the association should request documentation to establish that the individual suffers from a disability and that the animal will help with the disability. If the documentation provided does not satisfy these requirements, the association should respond in writing and provide the individual with at least one opportunity to provide supplemental documentation. However, associations cannot request medical records or require a medical provider to give specifics about the person’s disability.
  • Confirm that the documentation is reliable. The documentation should come from a licensed physician, psychiatrist, social worker or other mental health professional. Be wary of online services which provide emotional support letters for pets in exchange for a fee. The reliability of such letters is often doubtful when there has been no meaningful treatment relationship. Further, providing a certificate or identification card stating that the animal has been registered does not establish that the resident is disabled or that the animal will help with a disability.
  • Evaluate each particular animal. Associations should consider only that particular animal when responding to a request. Assistance animals cannot be denied simply on the basis of breed or species. And yes, this applies to even those types of animals presumed to be dangerous such as a python snake or a pit bull. Instead, the request must be analyzed for that particular animal. If that particular animal has done something to indicate that it poses a danger, such as biting or attacking someone in the past, the association may have a basis for denying the request. But do not deny an animal based on the assumption that it will be dangerous or cause damage because of its breed or species. The only question to ask is whether that specific animal will help with the person’s disability. Further, assistance animals are not required to be trained or certified.
  • Maintain confidentiality. The information provided by the requesting individual should remain confidential.
  • Vote on the request at an open meeting.
  • Seek legal counsel when in doubt. If the association has any doubts or concerns about the request or the reliability of the documentation received, seek counsel. This area involves very complex laws and the association may face liability if a request is improperly denied. In fact, denials of these requests are often the basis for discrimination claims filed with the Illinois Department of Human Rights or the filing of a lawsuit.

What Should An Association Do When It Grants A Request?

  • Grant requests subject to terms and conditions. Associations may hold the owner of the assistance animal liable for any damage the assistance animal may cause. Further, even assistance animals must behave themselves, meaning they cannot bark until all hours of the night or cause unreasonable disturbances to the other residents. Rules relating to nuisance and damage to property apply just as they apply to any other unit owner.
  • Waive any pet deposits or fees. Associations may not require the applicant or resident to pay a deposit for an assistance animal, since assistance animals are not “pets”.

 

  • Waive any breed, size, or weight limitations for pets. Pet restrictions such as these do not apply to assistance animals.

So next time your association receives one of these requests, try to keep these guidelines in mind. When in doubt, talk to the association’s attorney. But be careful, it’s a jungle out there!

Laura Lau Marinelli, Esq., Arnstein & Lehr LLP

 

The Chicago City Council passed a vacation rental ordinance on June 22 that will further regulate the house-sharing industry and provide protections to consumers like those living in the city’s community associations. Mayor Emanuel’s ordinance amends Chapter 3-24 of the Municipal Code of Chicago.

Here are specific changes that impact and/or protect condominiums, housing cooperatives, and townhomes (community associations) in the city:

  1. Explicitly defines single-family homes, condominiums, housing cooperatives, and townhomes as establishments impacted by the ordinance.
  2. Recognizes homeowner’s association, condominium association and housing cooperative boards may prohibit short-term rental activity through written bylaw and/over covenant restriction.
  3. Requires an owner interested in listing their home/unit as a vacation rental or short-term rental to register with the City of Chicago and become a licensee.
  4. Requires an owner to disclose whether the home/unit/building is compliant with the American with Disabilities Act (ADA). Note: The ordinance does not require ADA compliance.  The ordinance requires disclosure only.
  5. Prevents an owner from listing their home/unit as a vacation rental or short-term rental if their community association governing documents prohibit short-term rentals.
  6. Allows entire buildings to opt out of short-term rentals. The ordinance provides for creation of a list of ineligible units that will not be allowed to operate and a list of prohibited buildings.
  7. Provides clear limits on the number of allowable rental units within buildings. In single-family homes, only primary residences can be rented; in homes with two to four units, only primary residences can be rented and only one unit per building can be rented; Buildings with more than 5 units will be limited to the lesser of one quarter of the total number of dwelling units or six rental units.
  8. Requires on-line platform companies (Airbnb, Home Away, VRBO, etc.) to take responsibility for compliance of the regulation.  In other words, if there is a unit owner posting their unit in a building that has opted-out,  the on-line platform companies have responsibility for compliance.
  9. Creates a one-strike-and-you’re-out rule for certain egregious conditions and a three-strikes-and-you’re-out rule for units that cause a disturbance. To ensure compliance, the ordinance establishes a clear penalty structure, as violators may be fined $1,500 to $3,000 per offense, with each day that a violation exists treated as a separate and distinct offense. Egregious conditions, criminal activity or public nuisance will be subject to a heightened $2,500 to $5,000 per offense penalty.

This is not the first vacation rental ordinance to be passed in Chicago; in fact, a vacation rental ordinance has been law in the City for more than five years, but the majority of the market continues to operate illegally, without a license. In addition to the protections above, the ordinance provides funding for the Mayor’s office to regulate and enforce the law; the ordinance includes fines, suspension and revocation of license to scofflaws. Rigorous enforcement is critical to the success of this ordinance.

CAI Illinois supports aggressive regulation as the only solution to remedy the serious issues that have arisen from the rapid growth of the short-term rental market and the intermediaries such as Airbnb, Homeaway, VRBO that market these rental units.

Please refer to the latest legislation for updates on dates and deadlines.

 

 

 

               On July 15, 2016 Gov. Rauner signed two CAI-Illinois sponsored pieces of legislation into law.  Click below to learn more about these bills.

http://www.ilga.gov/legislation/publicacts/99/PDF/099-0567.pdf

 http://www.ilga.gov/legislation/publicacts/99/PDF/099-0569.pdf

 

Federal Housing Administration Proposed Rule on Reverse Mortgage Program for Seniors Program excludes Seniors Living in Community Associations.

Take Action! CAI needs you to help by participating in this grassroots effort by contacting your congressmen and FHA that the proposed exclusion of community association senior citizens from the FHA reverse mortgage program which would expose association seniors to higher housing costs, fraud, and foreclosure—is simply bad public policy. 

Federal government officials need to hear from as many people as possible! Encourage those in communities in your area to take action by visiting our ‘Take Action!’ center at www.caionline.org/takeaction to file comments with FHA and write their congressmen.

 

 

On July 1, 2016, the Condominium and Common Interest Community Ombudsperson Act will go into effect.  The Act establishes the Office of the Condominium and Common Interest Community Ombudsperson.  This regulatory Office is designed to educate and assist condominium and common interest community owners and managers about the Condominium Property Act and the Common Interest Community Association Act.  The Act also tasks the Office with responsibilities including association registration, legislative reform, unit owner complaint resolution, and enforcement.  Notably, complaints can’t be filed by unit owners until July 1, 2019 and the law will be automatically repealed July 1, 2021.  That said, unit owners and associations will need to be aware of this currently limited life legislation and its effect on their community.

Here are some of the highlights of the Ombudsperson Act.

By January 1, 2017, associations must adopt a written policy for resolving complaints made by unit owners. The policy must include a sample form upon which owners can make complaints, a description of the process by which complaints are to be delivered to the association, the association’s timeline and manner of making final determinations in response to a unit owner’s complaints, and requirement that the final determination made by the association response to a unit owner’s complaint be in writing, within a reasonable time after the unit owner’s original complaint, and marked clearly conspicuously as “final.”

On or before July 1, 2018, the Ombudsperson, to be appointed by the Illinois Department of Professional Regulation, must offer training, educational materials, and courses to unit owners, associations, boards of managers, boards of directors in subjects relevant to the operation or management of condominiums and common interest communities and the condominium property act and the common interest community association act

Beginning July 1, 2019, qualifying unit owners may make complaints to the Ombudsperson for assistance in resolving a dispute between a unit owner and an association that involves a violation of the Condominium Property Act or the Common Interest Community Association Act. Notably, the Ombudsperson may not accept requests for resolutions of disputes with community association managers, or of disputes for which there is a pending complaint in any court or administrative tribunal.

In order for a unit owner to make a complaint, they must meet various qualifications, including that they must not owe any funds to the association (unless those funds are central to the dispute), the dispute must have occurred within the past two calendar years, the owner must have followed the complaint procedure within their own association, and the owner received a final adverse decision within their own association. The requirements of what must accompany the complaint are also outlined.

Every association is required to register with the Department of Financial and Professional Regulation. A registration is effective for two years, and the initial registration for an association existing on July 1, 2016 is due within one year, or at such later time as the Department has adopted rules and forms for registration. Newly created associations required to register with the Department must register no later than 90 days after the association has assumed control of a property.

If an association fails to initially register as provided in the Ombudsperson Act, or fails to timely renew its registration, the Department of Financial and Professional Regulation may impose a late charge or late fee against the association. More importantly, if an association fails to properly register within two years after the effective date of the Ombudsperson Act, or fails to renew its registration on three or more occasions, the association is ineligible to impose or enforce a lien for common expenses or to pursue any action or employ any enforcement mechanism otherwise available to it in enforcement of a lien for common expenses until it is validly registered pursuant to the Ombudsperson Act. So registration will be imperative.

Do note that common interest community associations that are exempt from the Common Interest Community Association Act are also exempt from the Ombudsperson Act.

As noted above, the Ombudsperson may not accept requests for resolution of disputes with community association managers.  Those disputes would have to be addressed through the Community Association Manager Licensing and Disciplinary Act.  Property managers will likely find themselves administering complaints received by the associations from owners and shepherding the complaints through the association’s resolution process that the board is required to establish.

Note that there is legislation, that has passed both legislative chambers, that provide that the Ombudsperson Act would be effective January 1, 2017 (instead of July 1, 2016), and that it would be repealed on July 1, 2022 (instead of July 1, 2021).  It currently awaits the Governor’s signature though.

David M. Bendoff, Principal

KSN

David M. Bendoff is a Principal with the law firm of Kovitz Shifrin Nesbit. He may be reached at Kovitz Shifrin Nesbit (voice: 847-777-7254; fax: 847-777-7368; e-mail: dbendoff@ksnlaw.com).

 

Please refer to the latest legislation for updates on dates and deadlines.

 

 

 

A recent decision by the Illinois Appellate Court ruled that a condominium unit owner must pay post-judgment attorneys’ fees (in addition to post-judgment common expenses) before he or she can vacate the judgment and regain possession of his or her unit.

In State Place Condominium Association v. Magpayo, a condominium association filed an eviction action against the unit owner for unpaid assessments.  A trial was held and judgment was entered in favor of the association and against the unit owner for money damages (assessments, attorneys’ fees and costs) and for possession of the unit.  After trial the unit owner filed several motions, which the trial court denied.  The association was awarded additional attorneys’ fees in connection to those various post-judgment motions.  The unit owner was eventually evicted from the unit.  After the eviction, the unit owner filed a motion to vacate the judgment, which was denied because the unit owner had not paid amounts owed to the association before filing the motion and because the association had leased the unit.  The unit owner filed a motion to reconsider, which was also denied.  The association was then granted leave to file a petition for additional attorneys’ fees, and the unit owner filed an appeal.

One of the issues on appeal was whether the unit owner was required to pay post-judgment attorneys’ fees before the judgment could be vacated.  The unit owner argued that post-judgment attorneys’ fees are not required to be paid before the judgment could be vacated.  Is support of that argument, the unit owner relied on Glens of Hanover Condominium Ass’n v. Chiaramonte, an Appellate Court decision from 1987.  In Chiaramonte, the Appellate Court held that a unit owner is not required to pay post-judgment attorneys’ fees before he or she can vacate an order for possession in a condominium eviction case.

The Magpayo Court held that Chiaramonte is no longer good law because after that case was decided, the Illinois legislature amended Section 9.2 of the Condominium Property Act (“Act”), which “requires that attorney fees incurred by the Association that arise out of a default be added to a unit owner’s share of the common expenses.”  Since the unit owner in Magpayo had not paid in full the amount, including post-judgment attorneys’ fees, necessary to vacate the judgment, the Appellate Court affirmed the trial court’s denial of the unit owner’s motion to vacate.

The Appellate Court’s decision in the Magpayo case is certainly positive for condominium associations.  However, one issue that was not expressly addressed by the Magpayo Court is whether the post-judgment attorneys’ fees to be paid by a unit owner must be adjudicated.  Generally, attorneys’ fees are subject to a court’s review and adjudication.  In Magpayo, the association had already been awarded post-judgment attorneys’ fees by the trial court on one occasion and granted leave to file a petition for fees on another occasion before the unit owner filed the appeal.  Certainly, the unit owner was obligated to pay those adjudicated (or soon to be adjudicated) attorneys’ fees in order to vacate the judgment.

It is fairly common that an association incurs some post-judgment attorneys’ fees, which may even be incurred without actually going to court.  Although, the Magpayo Court does state that Section 9.2 of the Act requires attorneys’ fees to be added to a unit owner’s “common expenses,” it does not make clear whether those attorneys’ fees must be adjudicated.  Accordingly, there remains a question as to whether the Magpayo case requires a unit owner to pay non-adjudicated post-judgment attorneys’ fees before the judgment in a condominium eviction case can be vacated.

Further, although pursuant to the Forcible Entry and Detainer Act (Article IX of the Illinois Code of Civil Procedure), common interest community associations are afforded the eviction remedy in the same manner as condominium associations, the Common Interest Community Association Act does not contain a provision similar to that portion of Section 9.2 of the Condominium Property Act relied upon by the Magpayo Court.  Accordingly, a common interest community association will need to be mindful that the Magpayo case may be limited to condominium associations.

In summary, the Magpayo case confirms that Section 9.2 of the Condominium Property Act allows a condominium association to add attorneys’ fees related to a unit owner’s default to that unit owner’s common expenses, and that a unit owner must pay post-judgment attorneys’ fees before a judgment in an eviction action can be vacated.

By Kristofer D. Kasten of Michael C. Kim & Associates. Reprinted with permission. Originally published on IllinoisCommunityAssociationLawBlog.com

 

The members of ILAC (Illinois Legislative Action Committee) met with IL legislators recently to discuss bills related to the community association industry.

ILAC represents the interests of CAI-Illinois Chapter members with respect to federal, state and local legislation and regulatory activities. Condominiums and other community associations are significantly affected by statutory changes. State and local legislation can either solve current problems or significantly and adversely affect the operations and governance of community associations. It is crucial that CAI Illinois’ position be considered by those that make our laws in Illinois. ILAC is the primary voice for community associations in the Illinois legislature and municipal governments.

Support ILAC

1.  Bid on online auction items from May 1 – May 12, 2016 at our online auction site.

 2.  Make monetary donations to our online fundraising page

3.  Attend our Annual Fundraiser on May 11th. Purchase Zanies tickets here

ILAC At Springfield 4_13_2016

 

Measure Would Give Millions of Homeowners a New Tax Deduction

February 16, 2016, Falls Church, VA—U.S. Representatives Anna G. Eshoo (D-CA) and Mike Thompson (D-CA) have introduced a measure that would allow homeowners in community associations who earn $115,000 or less in annual income to deduct up to $5,000 of their community association fees and assessments from their federal tax liability.

Community Associations Institute (CAI) has expressed support for the bill. The legislation will benefit many of the more than 66 million Americans who live in homeowners associations, condominium communities, cooperatives and other planned communities.

The bill—Helping our Middle-Income Earners (HOME) Act—“recognizes that millions of middle class homeowners are struggling to keep up with rising household expenses like child care, college tuition, health care, mortgage and community assessments,” Eshoo said. “The Home Act can go a long way by providing relief from this tax burden on millions of middle class families.”

This bill recognizes the financial unfairness facing homeowners in community associations, as they pay their fair share of local property taxes, along with their community assessments, and receive many municipal services from their community association, such as street and sidewalk cleaning, trash removal, snow removal and other services.

“CAI applauds Rep. Eshoo for her efforts to make homeownership more affordable and for recognizing the inequity of double-taxation faced by homeowners in America’s community associations,” said CAI Chief Executive Officer Thomas M. Skiba, CAE.

“We look forward to working with Eshoo and Thompson to ensure this legislation is a net gain for millions of Americans who live in community associations,” Skiba added.

While there hasn’t been a Senate companion bill introduced, CAI expects members of the House of Representatives in states with a large number of community associations—such as Florida, California, Texas, Illinois, North Carolina, New York and Massachusetts—to support the legislation and continue a dialogue that leads to inclusion of the tax deduction in comprehensive tax reform legislation.

With almost 34,000 members dedicated to building better communities, CAI works in partnership with 60 chapters to provide information, education and resources to community associations and the professionals who support them. CAI’s mission is to inspire professionalism, effective leadership and responsible citizenship—ideals reflected in communities that are preferred places to call home. Visit www.caionline.org or call (888) 224-4321.

______________________________________________________

For members and general inquiries, contact the CAI member service team:
Community Associations Institute
Phone: (888) 224-4321
E-mail: CAI-info@caionline.org

CAI GOVERNMENT AFFAIRS CONTACT: Dawn Bauman, CAE
Phone: (703) 970-9224
E-mail:dbauman@caionline.org

 

 
 

This document provides a general synopsis of various bills that affect community associations. This list is by no means complete. Further, the information contained herein can change throughout the legislative process. Bills can be amended and language originally proposed can be deleted. In order to assure you have the most accurate information about any given bill, please go to www.ilga.gov and review not only the synopsis but the actual language of the bill and any relevant amendments. This information is provided as April 4, 2016.

 

HB4489 (Rep. Drury) – UNIT OWNER LITIGATION. This bill amends the Illinois Condominium Property Act by creating Section 33 entitled “Unit owner’s right to fairness in litigation.” The bill states that an owner has a right to “fairness” in all litigation between the owner and a condominium association regardless of whether the owner commenced the litigation or the litigation is commenced against the owner. The bill voids any covenant or rule which limits the owner’s right to commence litigation. The bill provides an owner be awarded attorney’s fees if the owner prevails in any litigation or if the unit owner prevails on any affirmative defense against the association. The bill further provides for a judicial reduction of attorney’s fees in litigation (except assessment collection matters) and a complete bar to an association recovering attorney’s fees in an assessment collection matter if the owner prevails on any affirmative defense or counterclaim. Finally, the bill prevents an association from being represented by counsel of it’s choosing in any litigation if such counsel “also represents the board of managers either individually or collectively.” On February 4, 2016 this bill was assigned to Judiciary – Civil Committee. On March 2, 2016 this bill lost in Judiciary by a vote of 3-8.

CAI ILLINOIS OPPOSES THIS LEGISLATION

http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=88&GA=99&DocTypeId=HB&DocNum=4489&GAID=13&LegID=93465&SpecSess=&Session=

 

See More Bills

 

FB_ILAC_Fundraiser2-300x225

Illinois Legislative Action Committee (ILAC) Fundraiser
Wednesday, May 11, 2016
Doors Open 6:45pm, Show Starts at 8pm
Online Auction May 1 – May 12, 2016

  • Zanies Comedy Club in Rosemont Illinois
  • Bring your spouse, friends, and colleagues!
  • 6:45pm — Doors Open, Raffles, Cocktails
  • 8pm—Show Begins
  • There is a 2 drink minimum purchase during the show
  • Everyone must be 21 or over, with a proper photo ID
  • 25.00 / Ticket – Pay Online Below

“Support ILAC in 4 ways”

Donate an auction item!  Drop off at CAI office by April 15.

Bid on the online auction items from May 1 – May 12, 2016 at our online auction site.

 Make monetary donations to our online fundraising page

Purchase Zanies tickets here

 

FB_ILAC_Fundraiser2-300x225On May 11, 2016, CAI Illinois and ILAC will hold a Fundraising event at Zanies in Rosemont to support the lobbyist who works on your behalf. We are asking for your support towards the silent auction by donating an item by April 15th to our CAI office.

If you prefer to make a monetary donation, you may do so by making checks payable to the Illinois Legislative Action Committee and mailing to CAI, 1821 Walden Office Square, Suite 100, Schaumburg, IL 60173. Or by visiting the CAI National Website to make your donation.

For more information on the Zanies event please visit our event page.

Did you know?

ILAC is the primary voice with legislators and regulators for the state chapter that speaks with one voice on state legislative and regulatory matters that affect community associations, community association managers and CAI business partners.

• ILAC takes a pro-active role and develops legislation for introduction in the Illinois legislature
• ILAC reviews, monitors, supports or opposes pending federal, state and local legislation or regulations, collectively takes “a position” on each bill or ordinance and through our lobbyist, communicates the position to elected officials
• ILAC encourages members to communicate with their representatives to influence the course of proposed legislation
• ILAC provides educational services to the chapter membership through legal forums which update members on legal and legislative developments affecting community associations
• ILAC contributes articles to Common Interest Magazine
• ILAC monitors growing trends and develops strategies to protect community associations
• ILAC promotes, communicates, and implements CAI public policy at the state level

www.cai-illinois.org/ilac

 

HB 4489 did not advance from committee.  The votes were 8 no and 3 yes.  At that time Rep Drury withdrew HB 4490 and HB 4491 from consideration.  Be aware that this is not over.  It appears that the bills will be amended and possibly reintroduced in committee.

 
 
This pending legislation will greatly limit the rights of Associations, so please join a statewide effort to stop legislation proposed by Rep. Scott Drury from being passed.

Take 5 minutes to do this now (process needs to be complete before 4:30pm March 1.  Hearing is scheduled for 8:30am March 2):

1.        Visit the link below, which will take you to the House Judiciary page.
2.        On the bottom, you will see Representative Drury’s three bills HB4489, HB4490 and HB4491.
3.        To the far right, you will see two options under the column “Witness Slips.”  The tab on the right allows you to fill out a witness slip and
let the committee know your position.
4.    You can also make calls to members of the House Judiciary Committee to encourage them to oppose the bills.

http://my.ilga.gov/Hearing/HearingDetail/13413?CommitteeHearings-page=1&CommitteeHearings-orderBy=&CommitteeHearings-filter=&_=1456838645242

 
ILLINOIS LEGISLATIVE ACTION COMMITTEE
COMMUNITY ASSOCIATION INSTITUTE OF ILLINOIS


FACT SHEET IN OPPOSITION OF HBs 4489, 4490 and 4491

 

House Bills 4489, 4490 and 4491 were introduced in an attempt to reverse the Illinois Supreme Court’s holding in Spanish Court Two Condominium Ass’n v. Carlson, 2014 IL 115342 (2104).

Instead of “leveling” the playing field, the bills as introduced will encourage and increase litigation between condominium association and their owners. The result of the bill will see an increase of attorney’s fees being imposed on the association and passed back to all non-defaulting unit owners.

Additionally, the bills:

  • Will increase the time and expenses associated with delinquent assessment collection cases by allowing unit owner to interpose many defenses to the non-payment of assessments.
  • Limit (or in some matters bar) an association’s ability to recover attorney’s fees incurred as a result of an owner’s failure to pay or default, thereby increasing the expense on the remaining, non-defaulting owners.
  • Creates the legal defense to non-payment of assessments of “improper motive,” which is undefined and wholly subjective.
  • Increase litigation for any default of the governing document to ensure that an association has the ability to pass back any attorney’s fees incurred as a result of a default.
  • Prevent associations from choosing their own counsel if counsel represents the members of the board of directors collectively.
  • Increase lawsuits by owners against associations with the ability to recover attorney’s fees if the owner prevails on any claim or affirmative defense.
  • Ignores the alternative dispute and mediation provisions in the “Condominium and Common Interest Community Ombudsperson Act” and effectively encourages litigation.
  • Furthers the myth that condominium associations are hostile abusive entities instead of a collective of owners and neighbors working toward common understanding.

 

 

SYNPOSIS OF HOUSE BILLS 4489, 4490 AND 4491 (REP. DRURY)

 

HB4489 (Rep. Drury) – UNIT OWNER LITIGATION. This bill amends the Illinois Condominium Property Act by creating Section 33 entitled “Unit owner’s right to fairness in litigation.” The bill states that an owner has a right to “fairness” in all litigation between the owner and a condominium association regardless of whether the owner commenced the litigation or the litigation is commenced against the owner. The bill voids any covenant or rule which limits the owner’s right to commence litigation. The bill provides an owner be awarded attorney’s fees if the owner prevails in any litigation or if the unit owner prevails on any affirmative defense against the association. The bill further provides for a judicial reduction of attorney’s fees in litigation (except assessment collection matters) and a complete bar to an association recovering attorney’s fees in an assessment collection matter if the owner prevails on any affirmative defense or counterclaim. Finally, the bill prevents an association from being represented by counsel of it’s choosing in any litigation if such counsel “also represents the board of managers either individually or collectively.” On January 22, 2016 this bill was referred to Rules Committee.

HB4490 (Rep. Drury) ATTORNEY’S FEES IN THE EVENT OF AN OWNER DEFAULT. This bill amends Section 9.2 (b) of the Illinois Condominium Property Act. Currently Section 9.2 provides that attorney’s fees incurred by an association arising out of default by a unit owner,
tenant guest or invitee of the governing documents or the Act can be added to the unit owner’s share of the common expense or unit owner’s account. The bill amends the section to prohibit an association from adding attorney’s fees to an owner’s account without a finding by a court.
The bills require a court to award attorney’s fees, in every default, before attorney’s fees can be added to the unit owners account, thereby requiring a judicial finding on any default. On January 22, 2016 this bill was referred to Rules Committee.

HB4491 (Rep. Drury) EXPANSION OF UNIT OWNER DEFENSES IN COLLECTION CASES UNDER THE FORCBILE ACT. This bill amended Sections 9-106 and 9-111 of the Illinois Forcible Entry and Detainer Act. Effectively this bill seeks to overturn the Illinois Supreme Court’s decision in Spanish Court Two Condominium Ass’n v. Carlson, 2014 IL 115342 (2104). In Spanish Court Two the Supreme Court held that the obligation to pay assessments was an independent covenant and a unit owner’s attempt to raise as a defense a breach of duty by an association was not “germane” to the collection case and thereby not permitted. This bill seeks to amended the Forcible Act to reverse the holding of the Supreme Court and permit an owner to raise, in any delinquent assessment collection case, a “material breach of any duty” in the condominium instruments, rules or statutes, or an “improper
motive” by the association in bringing the action. Further, the bill amends the Forcible Act to bar an association in a collection case from recovering any attorney’s fees and costs if the court finds that the association breached an obligation under the governing documents or a fiduciary duty to the unit owner, regardless of non-payment of assessments. On January 22, 2016 this bill was referred to Rules Committee.

 

This document has been prepared by the
Legislative Action Committee of the Community Association Institute of Illinois Chapter

Please refer to the latest legislation for updates on dates and deadlines.

 

2015 12 17 CAI Logo

A key development and highlight for CAI Government Affairs in 2015 was the increasing number of CAI members advocating on federal government issues. CAI members responded in record numbers to federal legislative alerts, contacting members of Congress at critical times. CAI member phone calls, e-mails, and letters had a significant impact, amplifying CAI lobbying activities in the Congress. In one instance, CAI members flooded key Senate offices with more than 1,400 messages over the course of two critical days.

Importantly, 2015 saw growth in CAI’s Federal Issues Summit. In October, more than 45 CAI members traveled to Washington, DC to discuss CAI’s federal policy issues and spend a day lobbying on Capitol Hill. In just one day, CAI member advocates met with the offices of almost 80 U.S. Representatives and U.S. Senators.

CAI federal advocacy faced critical challenges in 2015, which will continue in 2016. Looking ahead, CAI Government Affairs will be actively lobbying in the following areas—

  • Qualifying all community associations for federal disaster assistance
  • Preserving association governance over HAM radio towers and antennas
  • Federal Housing Administration (FHA) approval rules for condominiums
  • Preserving state association lien priority statutes

(more…)

 

9553419_sGovernor Rauner Vetoes two bills affecting Community Associations

(more…)

 

BILLS AFFECTING COMMUNITY ASSOCIATIONS IN THE 99TH GENERAL ASSEMBLY

INTRODUCED IN 2015

This document provides a general synopsis of various bills that affect community associations.

This list is by no means complete. Further, the information contained herein can change

throughout the legislative process. Bills can be amended and language originally proposed can

be deleted. In order to assure you have the most accurate information about any given bill, please

go to www.ilga.gov and review not only the synopsis but the actual language of the bill and any

relevant amendments. This information is provided as of July 31, 2015.

LEGISLATORS NEXT IN SESSION:

          SENATE – 8/4/15

           HOUSE – 8/5/15

Click here to view the full document

Please refer to the latest legislation for updates on dates and deadlines

 

BILLS AFFECTING COMMUNITY ASSOCIATIONS IN THE 99TH GENERAL ASSEMBLY INTRODUCED IN 2015

THIS DOCUMENT PROVIDES A GENERAL SYNOPSIS OF VARIOUS BILLS THAT AFFECT COMMUNITY ASSOCIATIONS THROUGH JUNE 2015:

In order to assure you have the most accurate information about any given bill, please go to www.ilga.gov and review not only the synopsis but the actual language of the bill and any relevant amendments.

Click here to view the full document

Please refer to the latest legislation for updates on dates and deadlines

 

Comments on Rules for the Community Association Manager Licensing and Disciplinary Act

Dear Mr. Cellini:

We are pleased to submit comments on the Rules for the Community Association Manager licensing and Disciplinary Act on behalf of the Community Associations Institute (CAI) international headquarters and the Illinois Chapter.

CAI is the only international organization dedicated to fostering competent, well-governed community associations. For nearly 40 years, CAI has been the leader in providing education and resources to the volunteer homeowner leaders who govern community associations and the professionals who support them. CAI’s more than 33,000 members include homeowners, professional managers, community management firms, and other professionals and companies that provide products and services to community associations.

Please accept our sincere appreciation for the privilege of providing comments the Department.

Below we have listed our comments in order of section number. We list our primary recommendation followed by our rationale for comment.

In the event the Department does not accept our primary recommendations, we also list alternative recommendations in certain sections.

Click Here to View the Full Document

Please refer to the latest legislation for updates on dates and deadlines

 

BILLS AFFECTING COMMUNITY ASSOCIATIONS IN THE 98TH GENERAL ASSEMBLY INTRODUCED IN 2014

THIS DOCUMENT PROVIDES A GENERAL SYNOPSIS OF VARIOUS BILLS THAT AFFECT COMMUNITY ASSOCIATIONS THROUGH AUGUST 31, 2014:

THE FOLLOWING BILLS PASSED BOTH HOUSES AND HAVE BEEN SIGNED INTO LAW:

HB 4782 (Rep. Cassidy) LEASE OF UNITS AFTER POSSESSION.
This bill amends the Illinois Forcible Entry and Detainer Act regarding leasing of units by associations. The bill provides that an association may enter into a lease at any time within 8 months of expiration of the stay on its possession order.

The lease entered into may not exceed 13 months. Currently the statute provides that the term of a lease entered into by an association cannot exceed 13 months following the expiration of the stay of the order of possession.

This amendment to the Act will aid association in leasing units by affording more time to complete any necessary repairs and locate tenants.

This bill signed into law on August 18, 2014 as Public Act No. 98-0996.

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ILLINOIS REGISTER

DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION

NOTICE OF PROPOSED AMENDMENTS

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On September 11, 2013, the Chicago City Council passed the ordinance on energy benchmarking requiring landlords to show how much energy their buildings use. The new law requires the owners of commercial, residential and municipal buildings in Chicago to track energy consumption and report the findings to the city. The ordinance does not require buildings to improve energy consumption, just report it. Mayor Rahm Emanuel supported the measure and the opposition block was not able to stop it. The ordinance passed the City Council in a 32-17 vote.

The measure was criticized by some members of the local commercial real estate industry, like BOMA, which made it clear in a statement that public disclosure of low scores will only put low scoring buildings at a further disadvantage and potentially jeopardize their ability to attract and retain tenants.

While other local commercial property executives supported the bill, Ald. Brendan Reilly proposed a new ordinance to exempt residential properties from the rule. The proposal was sent to the Finance Committee, where it is unclear if it will receive a hearing. As part of a compromise from the mayor’s office, it was announced that residential building owners were given an extra year to collect and disclose the information after some building owners expressed concern that collecting energy information from individual tenants could prove onerous.

Buildings larger than 250,000 square feet must start reporting energy use by June, 2014 and structures that are between 50,000 and 250,000 square feet will start reporting in June 2015. Residential buildings that fall within both size ranges will have an extra year to comply with the law.

Any parties interested in supporting Ald. Reilly’s proposed new ordinance should contact Matthew Link, Legal Counsel for the Finance Committee, in Finance Committee Chairman Ed Burke’s office and request working with them on moving it forward. Anyone wishing to contact the mayor’s office should contact Matt Hynes, Director of Intergovernmental Affairs.

Please refer to the latest legislation for updates on dates and deadlines.