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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. 

 

NEW CHICAGO ORDINANCE DETERS OWNERS FROM ENTERING INTO SHORT-TERM AND VACATION LEASES IN VIOLATION OF COMMUNITY ASSOCIATION GOVERNING DOCUMENTS

Many, if not most, community association declarations prohibit owners from leasing their units for transient or hotel purposes.  While these types of restrictions have historically been uncontroversial and infrequently violated, the increasing popularity of peer-to-peer rental services such as AirBnB, VRBO, and HomeAway are quickly changing this.  These services make short-term and vacation leasing by owner very convenient and in turn created enforcement and administrative nightmares for community association boards of directors.

On June 22, 2016, the Chicago City Council passed an ordinance further regulating short-term and vacation leasing, including adding additional registration requirements for owners within community associations leasing looking to lease their units for short-term or vacation purposes.  A link to the text of the ordinance is contained here, and below is an outline of some of the changes that significantly affect community associations:

 The ordinance:

  1. Allows community associations to submit an affidavit stating that short-term and vacation leasing is prohibited within the community association. This affidavit can attest that the prohibition was established be either 1) a vote of the Board (i.e., an amendment to the rules and regulations) or 2) a restrictive covenant contained in the association’s declaration or bylaws.  Upon receipt of this affidavit, the commissioner must maintain a “Prohibited Buildings List,” which shall be posted on the City of Chicago’s website.  In the event a community association is included on this “Prohibited Buildings List,” an owner cannot obtain a license to lease his or her unit for short-term or vacation purposes.

(While it has long been our opinion that most community associations have the right to restrict leasing via a board adopted rule (see Apple II Condominium Association v. Worth Bank & Trust Co.) this provision would appear to be the City of Chicago’s recognition that short-term and vacation leasing can be prohibited by a community association’s board of directors, not soley through a restriction approved by the members.  While this acknowledgement by the City of Chicago is far from an absolute guarantee that a courts will uphold short-term and vacation leasing restrictions adopted via rule, it certainly aids a community association’s efforts to defend such a rule’s validity and enforceability.)

  1. Provides limits on the number of units within a community association building that can be leased for short-term or vacation purposes. In community association buildings with two (2) to four (4) units, only one unit per building can be rented.  In community association buildings with more than five (5) units, short-term and vacation rental leases will be limited to either six (6) units or one-quarter (1/4) of the total number of units, whichever is less.
  1. Requires that any owner seeking to list his or her unit as a short-term or vacation rental first register with the City of Chicago and pay a licensing fee. Further, this application requires the owner to attest that the 1) community association has not adopted prohibitions of vacation rentals, and that that 2) the leasing limits (discussed above) have not been reached.
  1. Prohibits on-line platform companies (i.e., Airbnb, VRBO, HomeAway, etc.) from permitting advertisements of units ineligible to be leased for short-term or vacation purposes, including, advertisements for those units within a community association on the City of Chicago’s “Prohibited Building List.” Further, the ordinance provides penalties for on-line platform companies failing to comply this prohibition on advertising ineligible units.
  1. To ensure compliance, the ordinance establishes certain penalties for those violating the ordinance., including fines of $1,500 to $3,000 per offense, with each day that a violation exists treated as a separate and distinct offense. More egregious violations, such as criminal activity or public nuisance, will be subject to a fines of $2,500 to $5,000 per offense.

The passage of this ordinance is definitely good news for community associations struggling with owners leasing units in violation of short-term and vacation leasing restrictions, as it unquestionably discourages such violations.  That being said, the restrictions created by this ordinance are only enforceable by the City of Chicago, and therefore its effectiveness will be completely dependent upon the City of Chicago’s willingness, and ability, to enforce its provisions.  While community associations located within the City of Chicago which prohibit short-term and vacation leasing should certainly take the necessary steps to be included on the City of Chicago’s “Prohibited Building List,” ultimate enforcement may still fall at the hands of the board.

If you or your community association within the City of Chicago are interested in this topic, please contact me to set up a review of your current governing documents and outline the necessary steps to allow your community association to take full advantage of this ordinance.  I can be reached at ben@keaycostello.com or 630-690-6446 x 11.

 

LEASING RESTRICTIONS AFTER STOBE v. 842-848 WEST BRADLEY PLACE CONDOMINIUM ASSOCIATION

Recently, on February 3, 2016, the Illinois First District Appellate Court, Third Division, issued a ruling in the case of Stobe v. 842-848 West Bradley Place Condominium Association (2016 IL App (1st) 141427) pertaining to certain leasing restrictions within condominium associations.  At this time, this case is binding on all condominium associations within the First Appellate District (e.g. those within Cook County, Illinois) and could be viewed as persuasive as to associations located elsewhere in Illinois.  This Article is a summary of the Stobe case.

Summary of Stobe case

In Stobe, the plaintiff owners purchased a condominium unit within the defendant condominium association for purposes of renting out the unit.  The association’s declaration did not contain any express right of owners to lease their units, but rather included restrictions on owners leasing their units such that no units could be leased for transient or hotel purposes or for terms of less than six (6) months.  The article in the association’s declaration pertaining to leasing did not include a specific right of the association board to adopt further rules pertaining to leasing.  The association’s declaration and bylaws did contain elsewhere general language regarding the board’s ability to adopt rules and some specific language regarding the board’s ability to adopt rules pertaining to other types of restrictions.

The plaintiffs in Stobe purchased their condominium unit in late 2005, and then the association board adopted rules in July 2010 that placed a cap on the number of units that could be leased at any given time of thirty percent (30%).  In 2012, the association sought to enforce its leasing cap and evict the plaintiffs’ tenants which prompted the plaintiffs to file a lawsuit against the association declaring the board adopted leasing cap invalid.

The court in Stobe decided that the board adopted rule placing a cap on leasing was invalid because it conflicted with the association’s declaration.  While the association’s declaration did not contain an express right for owners to lease their units, the court determined that owners did have a right to lease their units because the association’s declaration contained certain restrictions related to leasing (i.e. the prohibition on leasing for transient or hotel purposes or for less than six (6) months) and these restrictions would be meaningless if owners did not have the right to lease their units.  Thus, the court reasoned that because the association’s declaration granted owners the right to lease their units, a board adopted rule could not take away this right.

Additionally, the court focused on the fact that elsewhere in the association’s declaration where restrictions were enumerated there was express language included that the board could adopt rules related to those particular restrictions, but there was not similar language in the article of the declaration that included the leasing restrictions.  Thus, the court held that because “the declaration has spoken on the matter of leasing, any augmentation or diminution of plaintiffs’ right to lease their unit must be accomplished through an amendment to the declaration, not a rule promulgated by the Board.”

For the past couple of decades, the seminal case in Illinois regarding leasing restrictions adopted by associations has been Apple II Condominium Ass’n v. Worth Bank & Trust Co., 277 Ill.App.3d 345 (1995).  For our summary of this case, please visit our website at (http://www.keaycostello.com/board-operations/the-return-of-leasing-and-restrictions-at-associations).  The Stobe court discussed the Apple II case but found it inapplicable because Apple II addressed a leasing restriction adopted by an amendment to a declaration as opposed to a leasing restriction adopted by a board which, in the Stobe court’s determination, conflicted with the association’s declaration.  While the Apple II court discussed the possibility of a board adopting leasing restrictions, the Stobe court found this discussion non-binding on it since Apple II did not actually involve a leasing restriction adopted by a board rule.

The Stobe court also discussed the case of Board of Directors of 175 East Delaware Place Homeowners Ass’n v. Hinojosa, 287 Ill.App.3d 886 (1997), which dealt with a board adopted rule prohibiting owners from having additional dogs.  The Stobe court reasoned that the Hinojosa case did not apply because in Hinojosa the association’s declaration did not contain any language related to dog ownership and therefore the board’s rule to prohibit new dogs did not conflict with any language within the declaration.

Going Forward

For some associations, the Stobe case provides clear guidance going forward.  For other associations, though, the Stobe case potentially raises more questions than it does provide answers.

For those associations that have any language or restrictions related to leasing within their declaration, if the articles/sections related to leasing do not have language specifically permitting the board to adopt rules related to leasing, the Stobe case would indicate that the boards for these associations are not permitted to adopt any rules or regulations related to leasing.  Any further restrictions related to leasing would need to be adopted through an amendment to the association’s declaration.

For those associations that have language or restrictions related to leasing within their declaration, if the articles/sections related to leasing do have language specifically permitting the board to adopt rules related to leasing, the Stobe case would indicate that the boards for these associations could adopt additional rules and regulations related to leasing as long as such rules and regulations do not conflict with the terms of the declaration.

On the other hand, if an association’s declaration contains no language related to leasing, the Stobe decision would seem to indicate that associations could adopt leasing restrictions through either a declaration amendment or through rules adopted by the board as further discussed in the Apple II case.

Additionally, the Stobe case raises questions regarding whether the court’s ruling could extend beyond just leasing restrictions.  For example, if an association’s declaration contains restrictions on a particular topic (such as pets, recreational activities, parking, storage of items, etc.), and does not contain language within such sections specifically providing that the board may adopt rules on these particular topics, the Stobe decision raises the question of whether or not the board would be able to adopt any rules on such topics.  The Stobe case solely dealt with leasing restrictions, so it cannot conclusively be applied to other types of restrictions at this point, but this does nevertheless put associations on notice that future courts could expand the reasoning from Stobe to other types of restrictions besides leasing restrictions.

As we did before the Stobe case was decided, our firm continues to highly recommend that any association seeking to adopt restrictions on leasing do so through an amendment to the declaration as opposed to a rule adopted by the board.  If your association is considering adopting restrictions on leasing, or already has such restrictions in place and would like them reviewed, 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. 

 

Senate Bill 1374 Signed Into Law: Developers’ Loophole Closed

On July 14, 2015, Governor Rauner signed Senate Bill 1374 (Public Act 99-0041), which was sponsored by Senator Mike Hastings and Representative Kelly Burke, and authored by Douglas Sury of Keay & Costello, P.C., as a member of the Association of Condominium, Townhouse and Homeowners Association’s (ACTHA) Legislative Action Committee. The bill closed a loophole that was being exploited by developers when establishing non-condominium communities. Over the past couple of years, Doug had seen a number of new townhome communities formed by developers not as not-for-profit corporations, but rather as limited liability companies. Forming associations as limited liability companies allowed developers to avoid subjecting their communities to the governance of the Common Interest Community Association Act (CICAA) and the mandatory turnover provisions found within Section 1-50(b). A plain reading of CICAA appears to only subject communities formed as not-for-profit corporations to its governance. Since the newly formed communities were not subject to CICAA, a developer could record a declaration that allowed it to retain control of the board and the association’s finances for whatever time period it deemed appropriate. That is no longer the case, as now associations formed as not-for-profit corporations and limited liability companies are subject to CICAA and its mandatory turnover provisions. In addition to amending CICAA, Senate Bill 1374 amended portions of the Forcible Entry and Detainer Act to clarify that common interest communities formed as limited liability companies may use the Forcible Act to collect unpaid assessments.

Public Act 99-0041 is effective immediately and a link to the entirety of the Public Act is below. Doug would like to extend his thanks to Senator Hastings, Representative Burke, ACTHA, ACTHA’s lobbyist John Carr and the Illinois Chapter of CAI for their hard work and support of this bill that will have a significant impact for all newly-formed common interest communities.

 http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0041

 

How to implement electronic voting and notices within your association

Public Act 98-1042 took effect on January 1, 2015. This Public Act contains changes to both the Illinois Condominium Property Act (“Condominium Act”) and the Illinois Common Interest Community Association Act (“CICAA”) concerning associations’ ability to utilize electronic communications in sending notices and voting. Prior to adoption of the Public Act, an association wishing to send notices via email or take votes of the membership online were typically forced to amend their declarations and/or bylaws to do so, which often required approval of the members. Thanks to the recent changes in the law, associations can now take advantage of modern technology (and the efficiency and costs savings that come with it) without the need to obtain the approval of the membership. While many board members are aware of these recent changes to the law and the advantages of utilizing technology, many also have questions on how to actually implement these procedures within their association. This article will provide a general outline as to what steps must be taken before an association can begin sending notices and conducting elections electronically.

Step One: Preparation of the Rule

First, the association must prepare a rule which authorizes the board to send out notices to the members electronically. The rule should include such details as how a member may authorize the association to send notices electronically (email, fax, text, etc.) and that a member may revoke the authorization at any time. Further, the rule should provide that the member may also include an electronic address or a physical address to serve as the member’s address on any list of members which the association is required to provide upon request.

Next, the rule should set forth that proxies are not allowed for elections, but that a member is only allowed to vote either i) in person at the election meeting or ii) by the electronic system adopted by the association. The rule should also provide that instructions regarding the use of electronic means for voting are to be distributed to all unit owners not less than 10 and not more than 30 days before the election meeting, and that unit owners should have at least 21 days’ prior written notice of the deadline for a member to give the association notice of their candidacy.

Step two: Adopting the Rule

For a condominium, the association must first hold a meeting of the unit owners called for the specific purpose of discussing the proposed rule. The meeting should be called and held in the same manner as any other member meeting except that the notice of this meeting must contain the full text of the proposed rule, and no quorum is required at the meeting unless the declaration, bylaws or other condominium instrument expressly provides to the contrary. Once the meeting is held, the Board should vote to approve the rule at a duly called board meeting. For an association subject to CICAA, the meeting of the members is not required, and the rule can simply be voted on at a meeting of the board. But, a common interest community will need to review its own governing documents to determine if any specific procedures have been established concerning rule adoption. If the association is subject to the Condominium Act, any rule allowing elections to be conducted via electronic means must have been approved at least 120 days prior to the board election for it to be effective for that particular election.

Step three:         Obtaining owner consent and information

Both the Condominium Act and CICAA provide that, in order for an association to conduct business with an owner via electronic transmission or other technological means, the owner must give his or her written authorization. If an owner does not give his or her written authorization, the association must, at the association’s expense, conduct its business with the owner without using electronic transmission. As such, once the rule allowing electronic notices and elections is approved, the association should distribute forms to the owners allowing them to 1) authorize and consent to the use of electronic notices and 2) provide the association with the address/number to which notices should be directed.

With the adoption of a rule providing for electronic notices and voting, associations can operate much more efficiently and cost effectively, as well as potentially alleviating many of the concerns regarding how to conduct business in light of the decision in Palm v. 2800 Lake Shore Drive Condominium Association, et. al.

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.

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0996

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.

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-1068

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.

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0735

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.

http://www.ilga.gov/legislation/publicacts/98/PDF/098-1042.pdf

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.

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0762

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.

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0842&GA=98

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.

http://ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0966

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.

http://ilga.gov/legislation/publicacts/fulltext.asp?Name=098-1135

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.