OMNIBUS HOUSE BILL 0189

With the recent votes in the Illinois Legislature, it appears that the current legislative session has come to a close.   As of July 10, 2017, only one significant piece of community association legislation has passed both houses.  HB0189 consolidated several other bills into a single omnibus bill.  This article discusses the changes to both the Common Interest Community Association Act, and the Illinois Condominium Property Act, which are encompassed in this bill.  It was sent to the Governor for signature on June 27, 2017.

COMMON INTEREST COMMUNITY ASSOCIATION ACT CHANGES 

  • Creates a New Section 1-20(e) involving amendments to governing documents. The language provides that approval or consent of a mortgage holder (if required by an association’s governing documents) can be implied if the mortgagee or lienholder receives notice of the proposed amendment and fails to respond after 60 days.    This change will allow associations whose membership has approved of an amendment to pass their agreed upon changes without being limited by lack of response from mortgagees or lienholders.
  • Creates a New Section 1-45 (i) which will require that any association with 100 or more units/homes use “generally accepted accounting principles (GAAP)” in fulfilling any statutory accounting obligations.

ILLINOIS CONDOMINIUM PROPERTY ACT CHANGES 

  • Creates a New Section 9(c)(5). Grants the board the authority (unless there are explicit terms and provisions to the contrary in the declaration and by-laws) at the end of any fiscal year, to dispose of surplus funds of the association by either: (1) contributing the surplus to reserves; (2) crediting the surplus against owners’ assessments; (3) returning the surplus as a direct payment to the owners; or (4) maintaining the funds in the operating account and applying such funds to the following year’s annual budget.  Additionally, the new language provides owners the ability to object to the board’s action regarding the surplus, similar to owners’ right to reject a budget or special assessment found in Section 18(a)(8) of the Act.
  • Amends Section 15 “Sale of property.” In the event the sale of the entire condominium property achieves the requisite percentage of vote, any unit owner who opposed such sale, and filed a written objection, would be entitled to the greater of the fair appraised value of the unit or the balance of any outstanding debt (mortgage/liens) against the unit.  Further, the new language provides that the objecting owner would also be entitled to receive a reimbursement for “reasonable relocation costs” as determined by federal law.  The changes to this section would apply to any pending contracts for sale of the entire property.
  • Amends Section 18(a)(8) of the Act. Currently the Act provides that owners shall have the right to object to any regular or special assessment increase, in excess of 115% of the prior year, by a petition signed by twenty percent (20%) of the votes of an association, and submitted to the board within 14 days of the action.  The change increases the amount of time to file such petition to 21 days.
  • Amends Section 18(a) (16) of the Act. Currently the Act provides that owners shall have the right to object to any contract entered into with a current board member, a board member’s immediate family or a company which the board member has a 25% or greater interest in, by filing a petition within 20 days of such action.  The change increases the amount of time to file such petition to 30 days.
  • Amends Section 18(b)(9)(C) of the Act. Currently the Act provides if the Board passes a rule eliminating proxies at an election and requiring the owners to vote by ballot, the owners shall have the right to object to such rule by filing a petition within 14 days of such action.  The change increases the amount of time to file such petition to 30 days.
  • Amends Section 18.4 (a) of the Act. Currently the Act provides that owners shall have the right to object to a capital improvement approved by the board in excess of 5% of the annual budget (not maintenance, repair or replacement of existing portions of the common elements) by petition signed by owners with twenty percent (20%) of the votes of the Association within 14 days of the action.  The change increases the amount of time to file such petition to 21 days.
  • Creates a new Section 18.10 of the Act which will require that any association with 100 or more units use “generally accepted accounting principles (GAAP)” in fulfilling any statutory accounting obligations.
  • Amends Section 19 “Records of the association; availability for examination” of the Act. The amendment is an attempt to permit owners greater access to records of an association.  Importantly records of an association must be made available within “10 business days” of receipt of the owner’s request to inspect.   Additionally, the amendment removed the portion of the statute which required a “proper purpose” to review certain records.   Further, the amendment includes permitting the inspection of owners’ email addresses and phone numbers, in addition to names and addresses.  However, the legislation provides that an association can require any member examining or copying records related to other owners’ information to certify that such information will not be used for a “commercial purpose.”  Finally, the amendment authorizes the board of directors to fine a member who violates the certification.
  • Amends Section 27 “Amendments.” The language provides that approval or consent of a mortgage holder (if required by the association’s governing documents) can be implied if the mortgagee or lienholder receives notice of the proposed amendment and fails to respond after 60 days.    This change will allow associations whose membership has approved of an amendment to pass their agreed upon changes without being limited by lack of response from mortgagees or lienholders.
  • Amends Section 31. The new language amends Section 31 (subdivision or combination of units) of the Act to define “combination of units.”  Importantly the new language establishes that in the event of a combination of units, use of limited common elements or common elements is not a diminution of other owners’ interest and, despite other language in the Act, shall not require the unanimous consent of all owners.

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. 

 

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