Q–I am writing with a sense of urgency because my wife and I are about to close on a new condominium and I am concerned about certain provisions of the contract.
What bothers us is the tax proration sections of the agreement. I understand that Cook County generally takes two to three years to subdivide a new construction condominium.
My wife and I were given an estimate of real estate taxes per month by the real estate agent for the developer, but this estimate was computed at 2 percent of the purchase price.
It seems certain to me that the real estate tax bill will come in at substantially less than this estimate for 1998. That makes it appear that the developer will collect, at closing, an amount that will not be due until September, 1999.
One clause in the contract suggests that the developer will not be responsible to pay back any excess amounts he collects at closing if the real estate tax bill for 1998, payable in 1999, comes in at less than what was collected.
What angers me is that the developer intends to mark up his already overstated estimate by 10 percent.
The contract also calls for funds to be held by the developer in a segregated account.
Although I have tried to get straight answers to my concerns, I have received no cooperation from the developer or his attorney.
Is the language in this contract legal?
Is there some agency in Cook County or Chicago to whom I can complain to get some results?
Unfortunately, we are sold on this condominium, and these issues are not big enough to walk away from the deal.
A–At this point, you don’t have a problem. The language in your contract is a standard real estate tax provision. The developer is obligated to re-prorate the taxes and repay to you any excess amounts collected at closing.
Your contract states that the developer will collect from you a share of the 1998 taxes, because the seller will pay the 1998 tax bill in 1999. The amount the seller will collect is based upon an expected tax increase of 10 percent multiplied by your percentage of ownership and prorated as of the closing date.
Because the seller will pay the entire bill for 1998, he is collecting your share of these taxes for your period of ownership on the basis of the 10 percent increase. The funds will be held in a segregated account.
The key sentence in your contract is the statement that the developer will re-prorate the taxes when he receives the actual tax bill for 1998 taxes in 1999. Unless association members receive separate tax bills, the developer will repay each owner the amount of any excess funds collected on the basis of the actual bill.
If separate tax bills are issued to each owner, they must deliver a copy of their final tax bill to the developer, who then will pay them any excess amounts collected, plus any additional sums the developer may owe for 1998 taxes before closing.
This contract provision is a matter solely between the developer and each individual buyer. The condominium association has no involvement; nor is it necessary for the title company to escrow any funds, because collection of real estate taxes is not a condition for recording a deed or issuing a title insurance policy.
There always is a risk that the developer will not repay any sums owed to a purchaser for 1998 real estate taxes. Given the fact that the developer has agreed to pay the 1998 tax bill, he has the right to obtain reimbursement for your share of the taxes. His calculation of a 10 percent tax increase is reasonable.
Accordingly, there is no basis for you to complain to a municipal or county agency. As yet, you have no grievance.
Q–I would like to know if windows in a five-story 32-condominium-unit building are the responsibility of the unit owners or the association.
Twice in the last seven years the association has replaced the windows of an owner that needed replacement. Has this fact set a precedent?
Nothing in the bylaws states that windows are repaired by the association.
Are windows of a unit owner common property? We live on the third floor and the third, fourth and fifth floor windows are very difficult to reach.
A–The exact answer to your question is stated in the declaration and bylaws of the association. Windows are, generally, classified as limited common elements. Limited common elements are those portions of the common elements that are reserved exclusively for use by unit owners.
Declarations vary on the responsibility for repair or replacement of windows. If your declaration is silent, the association is responsible to repair or replace the windows.
Some declarations state that unit owners are responsible for repairs, while the association bears the cost for window replacement. The past practice of your association to replace windows indicates that the declaration assigns this responsibility to the association.
Carefully review the declaration to determine the cost responsibility for window repair and replacement. Given the high cost of window projects, these expenses are often the source of controversy, particularly in high-rise associations.
Associations can avoid this “war of the windows” by having the board of directors review and explain to the owners the basic guidelines in the governing documents.
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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.
