Changes to Illinois Homeowners’ Energy Policy Statement Act

The Illinois Homeowners’ Energy Policy Statement Act (765 ILCS 165/1 et. seq.) has been in effect for more than a decade. The general effect of the Act is that it grants certain rights to owners within different types of association communities related to solar energy systems. House Bill 0644, which passed both houses of the Illinois General Assembly as of May 30, 2021 and was signed into law by Governor Pritzker on July 26, 2021 as Public Act 102-0161 makes several significant changes to this Act that may affect how owners within association communities and/or boards of association communities approach solar energy systems. Below is a summary of the major changes to this Act made by Public Act 102-0161. These changes are now in effect.

Applicability to Condominiums and Townhomes

By definition, the Act still applies to condominium associations and townhome associations. However, the effect of the changes in Public Act 102-0161 is that the Act will no longer apply to the vast majority of condominium associations and townhome associations. Section 45 of the Act is changed to state that the Act does not apply to any building that is part of an association community and has a “shared roof”. The changes to the Act define a “shared roof” as “any roof that (i) serves more than one unit, including, but not limited to, a contiguous roof serving adjacent units, or (ii) is part of the common elements or common area”.

Therefore, to the extent that the roof is considered part of the common elements for a condominium (which is the case in most condominium associations), the Act no longer applies to that condominium. Additionally, to the extent that multiple townhome units in the same building share a roof and/or have a contiguous roof (which is the case in most townhome associations), the Act no longer applies to that townhome association. The effect of this is that any rights granted to owners within the Act to install solar energy systems on the roof do not apply to the owners within these townhome or condominium associations. Owners within such townhome and condominium associations would only have the right to install solar energy systems on the roof if, and to the extent, these are permitted by the association’s governing documents.

Location of Solar Energy Systems

For those associations where owners are still granted rights to install solar energy systems under the Act (i.e. most detached single-family homeowner associations), the rights of associations to regulate the placement of solar energy systems on the roofs has been significantly altered. Previously, the Act permitted associations to limit solar energy system installations to “an orientation to the south or within 45 degrees east or west of due south” as long as this did not “impair the effective operation of the solar energy system”. This location limitation has been removed from the Act.

Instead, the Act now permits an association to “determine the specific configuration of the elements of a solar energy system on a given roof face, provided that it may not prohibit elements of the system from being installed on any roof face and that any such determination may not reduce the production of the solar energy system by more than 10%.” As used in the Act, “production” means “the estimated annual electrical production of the solar energy system”.

Thus, associations may still adopt restrictions on where a solar energy system may be placed on a roof. However, in adopting such restrictions the association must take into account the impact these restrictions will have on the production of the solar energy system. A calculation will need to be made, and if the association’s proposed restrictions would reduce the production of the solar energy system by more than 10%, then the proposed restrictions would not be permitted by the Act. What this likely means is that a case-by-case analysis will be necessary with each solar energy system application from an owner to determine what impact, if any, the association’s proposed placement restrictions will have on the production of the solar energy system.

Deadline to Adopt Energy Policy Statement

The Act previously gave associations 120 days to adopt an energy policy statement following the receipt of a request for a copy of the statement or the receipt of an application from an owner to install a solar energy system. The changes to the Act now give associations only 90 days to adopt an energy policy statement following the receipt of either of these requests.

Deadline to Respond to Application for Solar Energy System

The Act previously gave associations 90 days to respond to an owner’s request to install a solar energy system. The changes to the Act now give associations only 75 days to respond to such a request from an owner.

Height Applicability

Previously, the Act stated that it did not apply to any building that was greater than 30 feet in height. The Act now states that it does not apply to any building that is greater than 60 feet in height. The effect of this change is that any homes that are between 30 and 60 feet in height were previously not subject to the Act but now are.

Summary and Conclusion

For most townhome and condominium associations, the changes to the Act mean that owners within these associations no longer have a right under the Act to install solar energy systems on the shared roofs. For associations falling into this category that previously adopted an energy policy statement, the changes to the Act may mean that those statements can now be rescinded.

For most detached single-family homeowner associations, on the other hand, the changes to the Act mean that any previously adopted energy policy statements now likely need to be revised to reflect the different analysis necessary in evaluating a request by an owner to install a solar energy system. Additionally, any such associations that have not previously adopted an energy policy statement now have a shorter window of time to do so upon the initial receipt of a request for such statement or application to install a solar energy system by an owner.

If your association is looking to adopt an energy policy statement or modify a previously adopted energy policy statement, please feel free to contact our office and one of our attorneys would be happy to assist you.

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.

AN OVERVIEW OF THE IMPACT OF SECTION A-CORONAVIRUS ECONOMIC STABILIZATION ACT OF 2020 UPON CERTAIN MORTGAGE FORECLOSURES AND EVICTIONS

Upon Certain Mortgage Foreclosures and Evictions

Today, March 27, 2020, the President enacted H.R. 748, more commonly known as the “coronavirus stimulus package,” “coronavirus relief bill” or “coronavirus stimulus bill,“ into law. Section A entitled the “Coronavirus Economic Stabilization Act of 2020” (the “Act”) contains provisions which affect mortgage foreclosures and tenant evictions where the property is subject to a federally backed mortgage or multi-family mortgage loan. How do these provisions of the Act impact private investors and multi-family housing providers?

Federally Backed Mortgage and Multi-Family Mortgage Loans

Federally backed mortgage loans are secured by a lien on a residential property and which are made or insured by the federal government. They also include loans made or insured as part of a HUD housing or urban development program or those which Fannie Mae or Freddie Mac purchase or securitize.

Federally backed multi-family mortgage loans are the same as federally backed mortgage loans but are for residential properties that are designed for families of five (5) or more.

Mortgage Foreclosure Moratorium on Federally Backed Mortgage Loans

The Act prohibits servicers of federally backed mortgage loans from initiating the foreclosure process. This prohibits not just the filing of a foreclosure complaint but also serving notice and proceeding with current, pending litigation.  For all pending foreclosure litigation, the plaintiff is unable to seek entry of a judgment for foreclosure and sale, enforce a foreclosure and sale judgment by auctioning the property for sale, or obtain or enforce an order of possession. This provision is effective 60 days from March 18, 2020 and does not apply to abandoned or vacant properties.

To be sure, this provision only affects servicers whose loans are federally backed and has no impact upon foreclosure of liens related to assessments or common expenses.

Assistance for Multifamily Borrowers Who Have Federally Backed Mortgage Loans

The Act recognizes that multifamily borrowers with federally backed multifamily mortgage loans (“Multifamily Borrowers”) may be impacted financially due to the COVID-19 pandemic. Under the Act, Multifamily Borrowers who experience such hardship will be able to request a forbearance. However, those who receive a forbearance are prohibited from (a) initiating evictions or evicting tenants based upon non-payment of rent or other charges; and (b) charging late fees (or other fees) related to a tenant’s late rent payment. The prohibitions are effective during the term of the forbearance.

Eviction Moratorium
The Act also contains imposes a certain moratorium on initiating the eviction process to recover possession due to non-payment of rent from tenants. This applies to residential dwellings that are tenant-occupied designed for one (1) or more families and also fall under (a) a covered housing program under Section 41411(a) of the Violence Against Women Act of 1994; (2) the rural housing voucher program under Section 542 of the Housing Act of 1949; or (3) have either a federally backed mortgage or multifamily mortgage loan (“Lessors”).

The moratorium is effective as of today, March 27, 2020 and is effective for another 120 days. During the moratorium, Lessors are prohibited from serving notices of termination of tenancy for non-payment of rent (“Notice”). Once the moratorium has expired, Lessors are required to afford tenants at least 30 days to vacate after service of the Notice. This provision supercedes the terms of the lease or state or local law. Additionally, Lessors are prohibited from filing eviction actions predicated upon non-payment of rent or other charges during the moratorium.

Please feel free to contact our office for counseling and advice on the Act.

RECREATIONAL MARIJUANA USE IS COMING TO ILLINOIS…
NOW WHAT?

Historically, Illinois condominium associations have not had to pay particular attention to preventing owners and occupants from smoking marijuana within the association. Smoking marijuana was illegal, so in the event people were found to be smoking marijuana, an association’s board of directors could simply notify the police or take action against the person under the declaration’s general prohibition against illegal activity or noxious and offensive behavior from taking place upon the property.

For better or worse, this is about to change. The Illinois House of Representatives recently passed House Bill 1438 legalizing the recreational use of marijuana. On June 25, 2019, Governor J.B. Pritzker signed the Cannabis Regulation and Taxation Act into law, which permits adults aged 21 and older to use marijuana within a private residence and possess up to 30 grams of marijuana. This Act also permits medical marijuana user to grow up to five (5) marijuana plants in their home, but does not permit recreational users to grow any plants in their homes. Upon legalization (January 1, 2020), condominium associations wishing to regulate the smoking of marijuana within the association will no longer be able to simply rely on its covenants which generally prohibit criminal behavior.

Thankfully, the legislature acknowledged the idea that some condominium associations may still want to regulate this activity. As such, the legislature created a new section of the Illinois Condominium Property Act granting condominium associations the ability to regulate the smoking of marijuana within the association, despite the fact that it is now legal.

The addition to the Illinois Condominium Property Act provides that a condominium association’s governing instruments may prohibit or limit the smoking of marijuana within an owner’s unit. However, while the law grants an association authority to prohibit the smoking of marijuana within an owner’s unit, the law requires that such a regulation shall only be effective if set forth in the “condominium instruments.” While many consider an association’s rules and regulations to be part of the “condominium instruments,” the Illinois Condominium Property Act actually contains a narrower definition, and only considers documents recorded against the property (i.e., declaration and bylaws) to be “condominium instruments.” Therefore, while the smoking of marijuana within units can be prohibited or restricted, it must be done via an owner adopted amendment to the condominium instruments, not via a board adopted rule. It should be noted that the association’s ability to restrict via the condominium instruments specifically relates to the smoking of marijuana and does not pertain to the ingestion or consumption of marijuana by other methods (i.e. edibles). Lastly, the new law does expressly state that either the condominium instruments or rules and regulations may restrict the consumption of marijuana, in any form, upon the common elements. Therefore, if the association wants to restrict the consumption of marijuana throughout the common elements, the board need only adopt a rule to such effect.

Legal recreational marijuana use is coming to Illinois, and condominium associations will be forced to consider how, if at all, they want to regulate the activity within the association. While the board of directors will have broad discretion in regulating and restricting the use of marijuana upon the common elements, the question of whether to prohibit the smoking of marijuana within the actual units will need to be left to the owners. Our office has already begun drafting rules related to the consumption of marijuana within the common elements for some of our associations. If your condominium association is curious about how the new law will affect the association specifically, or is considering adoption of a rule restricting the consumption of marijuana, please feel free to contact our office. We are happy to assist you.

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.

 

DEADLINE APPROACHING FOR OMBUDSPERSON ACT – JANUARY 1, 2019

As stated in our “The Ombudsperson: 2016 Amendments and Updates” article, by Governor Rauner’s signing of Public Act 99-0776, several changes were made to the Condominium and Common Interest Community Ombudsperson Act (“Act”).

One of those changes requires all associations to adopt a written dispute resolution policy. Pursuant to the Act, all associations, including master associations, that are subject to the Condominium Property Act must adopt a policy. Similarly, any association subject to the Common Interest Community Association Act must adopt a policy.  However, associations exempt for the Common Interest Community Association Act do not need to adopt this policy.

The policy must be adopted on or before January 1, 2019 and the effective date of the policy must be no later than January 1, 2019. Any association established after January 1, 2019 shall have 180 days from date of establishment to adopt its written dispute resolution policy.

The policy is for resolving complaints submitted by the owners of the association. The policy must include a sample form for owners to submit their complaints, provide a description on how owners can submit the complaint to the association, provide a description of how the association will make its determination of the complaint, and how and when the association’s final determination for the complaint shall be given.

If your association has questions about whether it is required to adopt one of these written policies, the written policy itself, or would like assistance in preparing a written policy, please feel free to contact our office and one of our attorneys would be happy to assist you.

 

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. 

 

TIME TO UPDATE RULES AND REGULATIONS REGARDING

CONDOMINIUM ASSOCIATION RECORD REQUESTS AND USES FOR COMMERCIAL PURPOSES

With the adoption of Public Act 100-0292, which will take effect on January 1, 2018, several significant changes will take place with respect to the rights of owners within condominium associations to inspect and copy records of a condominium association as outlined in the Condominium Property Act (765 ILCS 605/19).  One significant change that will occur is that owners will be entitled to obtain from their condominium association the e-mail addresses and telephone numbers of their fellow owners, in addition to those owners’ names and addresses.  Accordingly, it is important for condominium association boards to review their procedures for handling such requests.

An owner requesting the names, addresses, e-mail addresses and telephone numbers of their fellow owners, as well as requesting to see copies of ballots and proxies from recent owner votes, may only make such a request for a purpose that relates to the association.  To help make sure that owners are not requesting this information for purposes unrelated to the association, Section 19(e) of the Condominium Property Act provides that a condominium association may require an owner requesting this information to certify in writing that the information contained in the records will not be used by the owner for any commercial purpose or any other purpose that does not relate to the association.  Additionally, condominium association boards of directors are authorized to establish and impose a fine against any owner that makes a false certification.

Therefore, in anticipation of these statutory changes that will take effect on January 1, 2018, condominium association boards may want to consider taking a couple of steps before then.  The first step a condominium association board should consider taking is establishing a standard written certification form they will require any owner requesting the aforementioned information to fill out.

The second step a condominium association board should consider is adopting a fine structure that they will impose on any owner that make a false certification and uses the information provided by the condominium association for commercial purposes or other purposes unrelated to the association.  While the Condominium Property Act permits an association board to fine owners for making such a false certification, in order to impose a fine a board must first take the steps necessary to vote to establish and adopt a fine for this purpose.  While the statutory changes will not take effect until January 1, 2018, boards can act now to put a fine structure in place prior to January 1, 2018.

If your condominium association has questions about the changes that will take effect on January 1, 2018 and/or would like assistance in preparing a certification form and/or fine structure as outlined in this article, please feel free to contact our office and one of our attorneys would be happy to assist you.

 

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. 

 

 

OMNIBUS REVISION TO COMMON INTEREST COMMUNITY ASSOCIATION ACT AND ILLINOIS CONDOMINIUM PROPERTY ACT

With the recent votes in the Illinois Legislature, it appears that the current legislative session is coming to a close.   As of August 24, 2017 only one significant piece of community association legislation has passed both houses and was signed by the Governor.  PA-100-0292 (formerly HB0189) consolidated several other bills into a single omnibus act.  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.

 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. 

 

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. 

 

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. 

 

 

THE OMBUDSPERSON:  2016 AMENDMENTS AND UPDATE

On August 12, 2016 Governor Rauner signed Public Act 99-0776 which makes several significant changes to the original Ombudsperson Act.  This article will provide quick highlights of certain changes contained in P.A. 99-0776.

Registration of Community Associations

Critical to all associations, the requirement that all common interest communities and condominium associations register with the Department of Financial and Professional Regulations has been removed.  No registration is required.

Association Internal Dispute Resolution Policies

All associations subject to the Condominium Property Act and the Common Interest Community Association Act must adopt their own policies for resolving complaints made by owners no later than January 1, 2019.  The original bill required the policies to be in place by January 1, 2017 so associations have been afforded two additional years to develop these policies.  The Act current provides that these policies must include a form on which an owner may make the complaint, a description of the process by which the complaint must be submitted, the timeline in which the Association will resolve the complaint, and the requirement that the Association make its “final” decision within 180 days.

The Current Role of the Ombudsperson

No later than July 1, 2017, the ombudsperson is to begin offering training, outreach and educational materials to the public and it may also offer courses related to the management and operation of community associations, the Condominium Property Act and the Common Interest Community Association Act.  The ombudsperson is to also offer a toll-free number for contact and inquiry purposes in addition to providing information regarding alternative dispute resolution providers (arbitrators, mediators) and methods available to communities and their members.  The ombudsperson does not have authority to consider any matters involving claims under the Illinois Human Rights Act or that are properly brought before the Department of Human Rights or the Illinois Human Rights Commission.  The amendments to the Act provide that certain information reported to the Ombudsperson is not be subject to certain Freedom of Information Act requests.

Reporting to the General Assembly

The Department of Financial and Professional Regulation is required to provide its first written report of the ombudsperson’s activities to the General Assembly no later than July 1, 2018 and beginning in 2019, annual reports of the office’s activity are to be filed no later than October 1st. It is expected that the General Assembly and administration will use these reports to evaluate the proper, future role of the ombudsperson.

Public Act 099-0567 was signed into law by Governor Rauner on July 15, 2016.  This Public Act made a few significant changes to both the Illinois Condominium Property Act (765 ILCS 605/1 et. seq. and herein referred to as the “Condo Act”) and the Illinois Common Interest Community Association Act (765 ILCS 160/1-1 et. seq. and herein referred to as the “CICAA”) related to the closed portion of board meetings, often referred to as the executive session portion of board meetings.  These changes will take effect on January 1, 2017.

Currently, Section 18(a)(9) of the Condo Act provides that those matters which can be discussed by a board of a condominium association within executive session are limited to discussion of litigation, either then pending or that the board finds to be probable or imminent, discussion of the appointment, employment or dismissal of an employee, the violation of the association’s rules and an owner’s unpaid assessments.  Similarly, Section 1-40(b)(5) of the CICAA currently contains these same limits on what can be discussed within executive session by a board of a common interest community association subject to CICAA, with the addition of permitting a board to consider third party contracts within executive session as well.

Beginning January 1, 2017, Section 18(a)(9) of the Condo Act, as amended by Public Act 099-0567, will permit the board of a condominium association to meet in executive session for the following matters:

(1)      Discussion of litigation that is either pending or that the board finds to be probable or imminent;

(2)      Discussion of the appointment, employment, engagement or dismissal of an employee, independent contractor, agent or other provider of goods and services;

(3)      To interview a potential employee, independent contractor, agent or other provider of goods and services;

(4)      Discussion of violations of the association’s rules and regulations;

(5)      Discussion of an owner’s unpaid assessments; and

(6)      To consult with the association’s attorney.

So, for condominium associations, this new language creates the right of a board to discuss within executive session matters related to retaining or dismissing contractors and agents, such as property management companies, landscape contractors, maintenance contractors, etc., and not just employees of the association as the Condo Act currently provides.  This new language also permits the board to interview potential employees, property management companies and other contractors outside of an open meeting.  Additionally, the changes grant a board the specific right to have discussions with the association’s attorney outside of an open meeting.

Furthermore, the changes that will take effect on January 1, 2017 will also permit a board executive session to take place during an open board meeting, which is already permitted, but also separately outside of an open board meeting.  Thus, if a board solely wants to engage in those types of discussions that may take place during executive session, as of January 1, 2017 it will no longer be necessary to call an open board meeting, with all required notice of same provided to owners, and then call the open board meeting to order and then immediately adjourn into executive session, which is what is required now if a board solely wants to hold an executive session.

However, as a reminder, all votes of the board must take place at an open board meeting, notice of which has been provided to the owners.  This requirement is not changed by Public Act 099-0567, so all of the additional matters which may as of January 1, 2017 be discussed within executive session by a board still need to be voted upon by the board at an open board meeting.  Therefore, if a board elects to forego an open board meeting and hold just an executive session without notice to owners, as boards will be permitted to do beginning on January 1, 2017, no votes of the board will be able to be taken at such executive sessions.  If a board wants to vote on a matter that is discussed at an executive session, it will then either need to call a subsequent open board meeting with the required notice, or else continue to hold executive sessions during a portion of open board meetings as is currently required.

Beginning January 1, 2017, Section 1-40(b)(5) of the CICAA will also include all of the items listed above for condominium associations which may then be discussed within executive session, and will also still include the ability of a board of a common interest community association subject to CICAA to discuss third party contracts within executive session.  As with condominium association boards, the board of common interest community associations subject to CICAA will also, beginning on January 1, 2017, be able to meet in executive session that is held separate from an open meeting.  However, all votes by such association boards will still need to be taken at an open board meeting with the required notice provided to owners.

Therefore, as of January 1, 2017, Public Act 099-0567 will give boards of associations subject to either the Condo Act or CICAA several additional topics that they may discuss within an executive board session.  Moreover, these boards will also have the option of meeting for purposes of discussing matters that may be discussed within executive session without the requirement of holding an open board meeting with notice to owners.  This should provide such boards greater flexibility to meet to discuss such items and potentially result in a cost savings for those associations who have previously been holding open meetings, and incurring the costs of providing notice for same, solely for the purpose of then adjourning into executive session.  Additionally, the new changes expressly provide that a board may meet and have discussions with the association’s legal counsel during executive session, which eliminates a potential grey area under the current open meeting language within the Condo Act and CICAA.  However, these new changes do not give boards the right to hold general “workshops” on all matters that the board may want to discuss; rather, the items that may be discussed by the board outside of an open portion of board meetings are limited to only those items that will specifically be included within the Condo Act and CICAA as amended by Public Act 099-0567, as outlined above.  Board discussion of items not specifically included within these statutes, as amended, must continue to be held at open board meetings.

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. 

July 22, 2016