Q–As the representative of a 39-unit condominium building of which 28 units have been sold, we are preparing for the turnover of the board to unit owner control. We realize that the developer may still own unsold units and will have the voice on the board. However, we need advice on several matters.
There have been problems in the building since the first owner moved in during July, 1996. These defects have been communicated to the developer in writing, show up on his punchlist, but have not been corrected.
How much time does the developer have to correct these identified defects? If the warranty is for one or two years, when does that date begin?
Our elevator breaks down on the average of once a week since the first move-in date. We call the developer, he calls a repairman to fix the problem, and the next week another problem occurs. Is the developer responsible for the costs of these repairs or can he use funds collected from assessments?
Several owner representatives have accompanied the builder through periodic inspections of the building and grounds. The developer has created an official punchlist, but if he disagrees with the defect, the problem is not included on his list. Can the developer be the sole determiner of what is on the punchlist? While the developer has asked us to sign off on various punchlists, we have refused to do so. Are we using the right approach?
We do not wish to sue our developer, but what other advice do you have for our turnover? Should we have an attorney represent us at the turnover meeting or a certified building inspector?
A–Warranties covering the units and the common elements are part of the sales contract. A certificate of warranty, issued by the developer, will generally not contain a specific time period to correct the defects. Most warranty certificates state that the developer will correct identified defects within a reasonable time. As you can imagine, there is often a substantial difference between a developer and a unit owner/board of directors as to what is a reasonable time to correct a problem.
Based upon the language of a standard warranty, the time period beg/ ins for the unit on the date of closing; and begins for common elements upon completion of the particular area claimed under the warranty. Thus, it is difficult to determine the commencement date for a common element warranty problem. The best advice for unit owners is to send the developer written notice of common element warranty problems as they occur.
Elevators are part of the common elements and, thus, elevator repair costs are generally a common expense paid by assessments. With the frequent problems you are reporting, however, these charges should be covered by a warranty without cost to the association.
The developer is not the sole determiner of what is included in the punchlist. The developer has simply determined which defects he chooses to correct. For warranty purposes, the punchlist is determined by problems identified through written notice from the owners. Your group is using the right approach in refusing to sign off on any punchlist items.
If the developer does not call a turnover meeting within 60 days after 75 percent of the units are sold, Section 18.2 of the Illinois Condominium Property Act permits the owners to call the meeting upon a petition to the developer.
It is not essential that you have an attorney present at the turnover meeting. The main purpose of the meeting will be to elect directors from a majority of the unit owners. Following that meeting, however, the new board may need counsel to enforce your rights to the documents and information required by the Condominium Act. The board should also consider hiring an engineer to review the developer’s plans and specifications with the construction of the property. The primary legal obligation of the developer is to build the project in accordance with the government-approved plans and specifications.
Q–I am a resident of a large condominium complex in the northwest suburbs. The president of our board has shown a consistent disregard for the rules and regulations. On two occasions he has voted on matters affecting his own property as the deciding vote.
His most recent decision was to disregard the declaration which states that repairs to a deck or patio are the responsibility of an individual unit owner. He authorized management to have the association pay half of the repair cost. This decision violates a previous resolution of the board.
How can an individual board member place himself above the law? What recourse do we have against the board and its president?
A–If the deck or patio is a limited common element, the board of directors may have the authority to require the owner to pay all or part of th//
e cost for limited common element repairs. Review the declaration to determine the scope of the board’s discretion in this matter. Your declaration may permit the board to have the association pay part of the cost for limited common element repairs. The directors should be guided by a consistent approach for previous repairs of the same nature.
While a director should not vote on any resolution in which he or she has a particular financial interest, the transaction will not be void under the Illinois General Not-For-Profit Corporation Act if it is fair to the corporation; the facts are fully disclosed in the minutes; and the matter is approved by a majority of disinterested directors.
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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 cannot make personal replies.
