NEW LAW: Clarifying Board of Directors’ Ability to Secure Loans
NEW LAW AMENDING THE CONDOMINIUM PROPERTY ACT CLARIFIES A BOARD OF DIRECTORS’ ABILITY TO SECURE LOANS
Public Act 099-0849 was signed into law by Governor Rauner on August 19, 2016. 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.
This change in the Condominium Property Act takes effect January 1, 2017.
This article is being provided for informational purposes only. This article does not constitute legal advice on the part of Keay & Costello, P.C. or any of its attorneys. No association, board member or any other individual or entity should rely on this article as a basis for any action or actions. If you would like legal advice regarding any of the topics discussed in this article and/or recommended procedures for your association going forward, please contact our office.