Q-I own and lease a condominium unit in Chicago. The board of directors recently changed the rules to require a $300 security deposit to cover the cost of any damages to the common elements when residents move in or out of a unit.
Since the board can put a lien on the unit if my tenant or I cause damage, I do not think the security deposit rule is necessary. Is the rule legal? Should the association pay me interest on the deposit? Should the board put the deposits in a segregated bank account?
A-If the security deposit applies to resident and non-resident owners, it is a valid charge. The test for association rules is whether they reasonably relate to the operation of the association and comply with the declaration and by-laws. Unit owners are responsible for any damage by residents to the common elements and damage frequently occurs during moving.
Thus, it is reasonable for the board to ensure that funds are available for prompt repairs caused by moving residents.
The association can file a lien against a unit for property damages, but the lien is worthless if a resident unit owner leaves the building after a sale and there is no reason for the board to chase individuals for damage repair costs.
The board is not required to pay interest on these security deposits because it is not holding the funds as a landlord. The board does not have to put the funds in escrow if the association can separately account for each deposit.
Q-There has been considerable debate in our association as to where the common unit walls end and the unit walls begin. The outside wall is constructed of two layers of brick or masonry. The inside wall is two inches thick and consists of wood furring strips, fiberglass insulation, a moisture barrier and one-half inch of drywall attached to the furring strips.
The plat of survey recorded with the declaration appears to show that the boundary between the common wall and unit wall is the plane formed by the inside of the cinder block wall.
The declaration states that to the extent that partition walls are designated as boundaries of the units, all decorating, wall and floor coverings, etc., and any other materials constituting part of the finished surface are part of the units, while all the other portions of the walls are part of the common elements.
Where is the boundary between the common wall and unit wall? If the drywall, moisture barrier, furring strips and insulation are part of the common wall, does the association have to pay for repairs to these areas or are the owners responsible for this cost?
A-The unit boundaries begin at the drywall and the unit owner is responsible for all decorating on the finished surfaces of the units. Most association documents require the owners to be responsible for all areas after the drywall and the first coat of paint or primer.
Section 4.1(a)(2) of the Illinois Condominium Property Act also states that if perimeter and partition walls are designated as the boundaries of the units, all decorating, including wall or floor coverings, are part of the units. Thus, the owners are responsible for all the finished surfaces on the drywall, and the common elements consist of the areas outside the drywall.
Q-I need help desperately and do not know where to turn because our condominium association is not being run properly. I live in a 17-unit association where the people are too passive. Rules are not enforced and even the officers fail to pay attention to our documents. Our declaration does not permit signs on the common elements and also prohibits individuals from moving out of the front entrance of the building. The association secretary and now the president have posted sales signs on their units.
The secretary sold her unit to an individual, moved out the front entrance and we do not have the purchaser’s name or his sales contract.
A-If association officers are ignoring the rules, they have breached their fiduciary duty to the unit owners and it will be difficult for the association to enforce the rules. The board cannot levy a fine against the former secretary. If the association has a right of first refusal, how could the secretary sell her unit without the board reviewing the sales contract and issuing a waiver of this right?
The lender and the owner must obtain title insurance and the title company would not issue these policies without assurance that the parties comply with association sales requirements.
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Mark Pearlstein, is a Chicago attorney who specializes in condominium law. Write to him c/o Condo Log, Real Estate Section, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611. Sorry, he can’t make personal replies.
