Q–I own a condominium. At the time of my purchase, there were no restrictions concerning the rental of units and 10 percent of the units were non-owner occupied.
After moving to the suburbs, my wife and I decided to rent our condominium. Although we notified members of the condominium board, the minutes of the most recent board meeting reported that the directors are considering an amendment to the association bylaws or the rules to limit the number of units that may be rented.
Can a condominium association legally restrict or prevent units from being rented? If so, can the restriction be imposed on unit owners who took ownership prior to its enactment? What happens if more than the allotted number of units is rented at the time the amendment is passed?
A–Condominium associations can legally restrict the rental of units. In a December 1995 decision entitled Apple II Condominium Association v. Worth Bank and Trust Co., the Illinois Appellate Court ruled that a condominium association may prohibit the rental of units.
The court stated that a leasing prohibition may be done by either an amendment to the declaration and bylaws or the rules and regulations. An amendment to the governing document is presumed to be valid because it represents the vote of a super majority of the owners and becomes part of the recorded covenants.
The court noted that the amendment is binding on unit owners who purchased their condominiums before the recent restrictions became effective. Condominium owners are charged with knowledge that the declaration governing their unit is subject to amendment.
In direct response to your question, the court’s opinion stated that condominium unit owners do not have vested rights in the status quo unless they are specifically exempted from a restriction.
If more than the number of allotted units is rented at the time of the enactment, presumably, no additional units may be leased that year. However, the right of an association to limit rentals to a particular number or percentage hasn’t been decided by Illinois courts. This issue represents an open question on the subject of condominium leasing restrictions. Presumably, the board will submit the amendment to the owners for a vote rather than merely adopt a rule change. Ownership must decide whether a leasing amendment will enhance property values or limit the sales market.
Q–Owners in our condominium complex are concerned about the effect the Fair Housing Amendments Act will have on our bylaws. We have been an adult community for more than 25 years. Our bylaws state that a purchaser must be 45 years of age or older, have no children under 18, and cannot rent his or her unit. We are not a retirement community or a senior home.
Is there any ruling that allows us to enforce our bylaws as they stand without having to comply with the federal act?
We are considering changing the purchase age to 55 years in view of the new federal laws. Will we automatically become a senior building and have to meet the criteria for exemptions under the Fair Housing Amendments Act?
A–Your declaration and bylaws must comply with federal law to impose a valid age restriction. If the leasing restriction is contained in your bylaws, as noted in the question above, you may prohibit rentals.
The Fair Housing Amendments Act prohibits a community association from enforcing a prohibition against children. To enforce minimum age restrictions as housing for older persons, the association must comply with the exemption requirements of the Fair Housing Amendments Act.
The law requires that at least 80 percent of the units be occupied by a person 55 years of age or older and that the association follow policies and procedures showing its intent to become a property for older persons.
The only statutory provision applicable to senior housing, not contained in federal law, is Section 4(c) of the Illinois Condominium Property Act. This state law provides that if the initial declaration limits ownership, rental or occupancy of a condominium unit to persons 55 years of age or older, it is a valid restriction. Section 4(c) became effective Aug. 25, 1986. It appears that your association would not qualify for this exemption under Illinois law, because the age restriction is less than the Illinois requirement.
As noted by the 1996 federal court decision entitled Simovits v. Chanticleer Condominium Association, failure to comply with requirements of the Fair Housing Amendments Act will have serious consequences to the association. In that case, a U.S. District Court in Chicago held that a suburban association was liable to the seller of a unit for unlawfully restricting the sale of a unit to persons without complying with requirements of the Fair Housing Amendments Act. The association attempted to enforce a covenant prohibiting residency by children under the age of 18.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law. Write to him c/o Condominiums, Real Estate Section, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611. Sorry, he can’t make personal replies.
