New Community Association Laws
The 2014 Illinois Legislative Session was quite active for condominium and common interest community associations. Over nineteen (19) pieces of legislation were introduced effecting associations. A total of nine (9) pieces of legislation passed the House of Representatives and Senate and were sent the Governor for signature. Eight (8) new acts were signed by the Governor and the foreclosure legislation was vetoed with an amendatory veto. There was no override or approval of the amendatory veto and, accordingly, it failed.
The following a description of new public acts passed into law effective in 2015. Below each synopsis is a link to the actual legislation.
PUBLIC ACT 98-0996 LEASE OF UNITS AFTER POSSESSION. This act amends the Illinois Forcible Entry and Detainer Act regarding leasing of units by associations. The act 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, within that 8 month period, 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. Additionally, the amended language to the Act reflects that the court may, upon motion, extend the time to lease for additional 13 month periods.
This amendment to the Act will aid association in leasing units by affording more time to complete any necessary repairs and locate tenants. The act took effect January 1, 2015.
PUBLIC ACT 098-1068 VOIDS CERTAIN DEVELOPER PROVISIONS IN CONDOMINIUM INSTRUMENTS. This act amends Section 9.1 of the Illinois Condominium Property Act. The act provides that any condition in a condominium instrument which either: (1) requires the prior consent of the unit owners in order for the board to take certain actions, including the institution of any action in court or a demand for a trial by jury; or (2) requires the board to arbitrate or mediate a dispute with a developer, declarant or any person not then a unit owner prior to litigation or a demand for a trial by jury – is void. This act effectively voids restrictions in governing documents that seek to thwart or place oppressive procedural hurdles upon an association’s pursuit of claims against the developer found in many declarations. The act took effect January 1, 2015.
PUBLIC ACT 098-0735 ELECTRONIC NOTICE. This act amends Section 18.4 of the Illinois Condominium Property Act. For condominium associations this act supplements, the Electronic Voting Act discussed below. The act grants a board the power to adopt rules and regulations permitting electronic delivery of notices and other communications, but only upon an individual unit owner’s authorization. Additionally the act permits each unit owner to designate an electronic address, a U.S. Postal Service address, or both, as his or her contact information to be kept on the list of unit owners. This will be an important piece of legislation that will allow associations to take advantage of technology while satisfying the various notice requirements in the Condominium Property Act and the various governing document. The act took effect January 1, 2015.
PUBLIC 098-1042 ELECTRONIC VOTING, NOTICE AND USE OF TECHNOLOGY. This bill, introduced by CAI, amends both the Illinois Condominium Property Act and the Common Interest Community Association Act. The bill permits boards to adopt rules and regulations concerning the use of acceptable, verifiable means of technology, including electronic means for unit owner notice, voting, signatures, consents and approvals. The bill establishes that electronic votes are valid and may be used for the purpose of establishing meeting quorums. The bill also provides that a verifiable electronic signature satisfies any requirements for signatures on documents. It acknowledges that if an owner either does not have the capability or desire to conduct business electronically, an association shall make reasonable accommodation, at its expense, for the person to conduct business without the use of electronic or other means. This act took effect January 1, 2015.
For a more thorough review of the act and its requirements please see our discussions of Public Act 098-1042 here.
PUBLIC ACT 098-0762 AMENDMENTS TO INSURANCE REQUIREMENTS FOR CONDOMINIUMS. This act amends Section 12 of the Illinois Condominium Property Act regarding insurance requirements. The amendment to the act clarify issues regarding amount of coverage required for replacement costs of the insured property, defense costs obligations of condominium insurance and improvements and betterments coverage. The act provides greater specificity as to the types of defense coverage required under an association’s directors and officer’s liability policy. Additionally, the act will remove the right of an association to purchase mandatory owner insurance and charge the cost of such insurance back to the owner. This act takes effect June 1, 2015.
PUBLIC ACT 098-0842 LEASING AND COMMON INTEREST ASSOCIATION. This act amends Section 1-35 of the Common Interest Community Association Act and adds a qualification to which leases must be provided to the association when a unit is not owner occupied. The new language of the law provides, “Unless otherwise provided in the community instruments” leases are required to be provided to the association. As such the act amends CICAA to allow associations to provide limitations in their instruments (declaration, by-laws or rules) on requiring owners to provide leases. Generally, speaking this legislation will only have effect on an association if its board determines that it does not want copies of leases – which should be rare. This act took effect January 1, 2015.
PUBLIC ACT 098-0966 PROCESS SERVERS IN GATED COMMUNITIES. This act amends Section 2-203 of the Illinois Code of Civil Procedure regarding service of process on individuals. The act, as amended, requires employees of “gated residential communities” (including condominiums, cooperatives and private communities) to permit entry to a process server (as defined under the Code) for the purposes of serving process on a defendant or witness who resides or is known to be in the community. This act takes effect January 1, 2015.
PUBLIC ACT 098-1135 Ombudsperson BILL. This act (amended several times after it was originally filed) creates an Office of Condominium and Common Interest Community Ombudsperson under the authority of Illinois Department of Financial and Professional Regulation. Starting July 1, 2018, the Ombudsperson would be charged with offering training, educational materials and courses to condominium unit owners, condominium associations and boards. This bill requires the Ombudsperson to maintain and post certain information on the Department’s website. The bill requires that by January 1, 2017 every association covered by the Act to create and enact an internal dispute resolution policy with forms for filing complaints, a timeline for the complaint process and a mechanism for deciding complaints. Commencing July 1, 2019 the Ombudsperson would be authorized to provide assistance to owners in resolving disputes with their associations. Participation in such dispute resolution would be entirety voluntary. Further, each association would be required to register with the Office of Ombudsperson. The registration will require a renewal every two years. There is no fee provided in the legislation for such registration. However, in the event that the Association either fails to initially register or fails to register a late fee can be imposed. In the event the Association fails to initially registered two years after the effective date or fails to renew its registration on three or more occasions, the association right to enforce its claim for unpaid assessments, would be suspend during the period of non-registration. Finally, the Office of the Ombudsperson would be required to submit every October (starting in 2020) a report to the General Assembly detailing the disputes the Office has been involved in between owners and associations.
This act takes effect January 1, 2016.
For a more thorough description of the legislation please see here.
PLEASE NOTE THE BELOW BILL DID NOT PASS
HB2664 – CONDOMINIUM FORECLOSURE BILL.
This bill sought to amend only the Illinois Condominium Property Act by changing condominium association’s right to collect unpaid common expense on foreclosed. While the bill increased the months from 6 to 9 the expansion would only apply to regular assessments and not to any other unpaid common expense. Further, while attorney fees and costs of collection can be charged to the third-party buyer, in no event can the total balance collected exceed an amount equal to 9 months of regular assessments. It was anticipated that in large part this would reduce the amounts associations would be able to recover following a foreclosure sale.
In addition, the bill amended Section 2 of the Act to include definition of “regular monthly assessments.” The bill would remove the “initiation of an action” prerequisite to collecting these amounts. Finally, the bill amends Section 22.1 of the Illinois Condominium Property Act and reduces the days an association (or its management company) has to respond to a request from a purchaser for information from 30 days to 14 days, if the association is managed. If the association is self-managed it has 21 days. Currently the law requires the information to be made available within 30 days. On April 8, 2014 this bill passed the entire Senate and was sent to the House. That following a heated debate, May 22, 2014 this bill passed the House with a slight majority. This bill was sent to the Governor for signature, however, the Governor issued an amendatory veto.
The Governor’s veto kept the language of the bill substantially intact, but added that any unpaid amounts not covered by the third-party purchaser in the payment of 9 months regular assessment would be paid by the mortgage holder. Effectively, the mortgage holder would need to make-up any unpaid amounts and the association, following the foreclosure, would be made whole. In vetoing the bill Governor Pat Quinn stated the following:
SB 2664 limits condominium associations from collecting more than the sum of nine months of regular monthly assessments from the purchaser of a foreclosed condominium. Following the procedure in SB 2664 would force the rest of the homeowners in the condominium association to bear the costs of a foreclosure. While it is reasonable for a new homeowner to pay up to nine months of regular assessments when they purchase a property coming out of foreclosure, the lender who owns the mortgage should also contribute to the costs that the homeowners in a condominium association incur when a lender forecloses on a property.
On November 24, 2014, with no action taken on the bill, the bill died in the Senate.