Over the past several years and primarily in Chicago, investors have been purchasing entire condominium buildings for the purpose of de-converting them; that is, changing the building from a condominium into apartment rental property. That trend has been driven by the slow recovery of the market for individual condominium units (after the market crash) and the increased demand for rental property, and with it the ability to charge high rent. In other words, certain condominium buildings could be quite profitable as rental property.
Section 15 of the Illinois Condominium Property Act governs those “de-conversion” sales (i.e. the sale of the entire condominium property). One of the key provisions of Section 15 is that the sale of the entire property must be approved by at least 75% of all unit owners for buildings with four or more units. (That approval threshold is different for buildings with two and three units.)
As investors have become more aggressive in their tactics toward acquiring target buildings, there has been a growing concern (and outright anger) among individual unit owners who face being forced out of their homes. In 2017, a bill* was introduced in the Illinois General Assembly that would have increased the unit owner approval threshold from 75% to 85% in certain situations. In addition to supporting that bill, ILAC was instrumental in drafting and negotiating amendments to that bill. However, that bill died in the legislature.
Those unit owners who are appalled by the tactics employed by investors to obtain target buildings have not been silenced and have not stopped their quest to find relief. Recently, those voices caught the ears of some Chicago Aldermen. This past July, Alderman Brendan Reilly (42nd Ward) proposed an amendment to the Municipal Code of Chicago, which would increase the unit owner approval threshold for all condominiums (regardless of the number of units) to 85%. That proposed amendment passed the City Council of the City of Chicago in September and became effective on October 16, 2019. Because Chicago has home rule authority, the new ordinance supersedes Section 15 of the Condominium Property Act, but only as to condominiums located in Chicago.
Under the new Section 13-72-085 of the Municipal Code of Chicago, the affirmative vote of at least 85% of the unit owners is necessary to approve the sale of the entire condominium property for all condominiums, regardless of size. The higher approval threshold applies only to transactions in which the owners elect to sell the property after the effective date of the ordinance. That means that the new ordinance does not apply to any transactions in which the unit owner vote occurred prior to the effective date of the new ordinance, even though the closing has not yet occurred.
Oktoberfest Legislative Fundraiser
Thanks to the participation of donors, sponsors, and attendees, the Legislative Fundraising Committee was able to raise over $10,000 toward lobbying expenses, all while having a fun time. The lobbyist is hired by the Illinois Legislative Action Committee to communicate with legislators and represent the interests of CAI members with respect to community association legislation, like the issue discussed above. Our lobbyist has helped ILAC successfully support/oppose proposed bills and acts to improve community association living. Couldn’t make it to the event? See photos here. Plus, you can still support ILAC’s efforts and its ability to have one voice in Springfield, by donating here.
*For those interested, Representative Sara Feigenholtz introduced the bill as HB2401 in the 100th General Assembly. It initially passed out of the House. It was amended a few times before it passed out of the Senate. The bill was then sent back to the House for concurrence on the Senate amendments, and that is where it eventually died.