Q–The roof deck on our five-unit condominium building has stirred a considerable dispute. Recently, the majority of the association voted that the deck would become a limited common element belonging to the owners on the third floor.
Here’s what’s creating our controversy: Is a resolution appended to the bylaws sufficient to allow such a change in what constitutes a common element? Would it be better to amend the bylaws?
Members of the association are hoping to avoid the trouble and expense of amending the bylaws, but we don’t have any desire to pass this question along to future owners. What’s your opinion?
A–To clear up this issue and avoid passing any controversy on to future owners, the association will have to spend a few dollars to amend the declaration and bylaws.
Section 4(g) of the Illinois Condominium Property Act requires a condominium declaration to include the description of common elements and limited common elements. This recorded document must contain a specific reference to all limited common elements in the association.
A resolution of the unit owners is not sufficient because it is not contained in a recorded document. The recorded document is formal notice to all future owners regarding the classifications on the property.
Review the declaration and determine the ownership vote that will be required to amend the declaration. I assume that you will need at least four of the five unit owners to achieve this consent. The declaration will probably require either a meeting or a signed amendment reflecting the classification.
Q–Some of our property was heavily and permanently damaged when flooding struck our storage locker in the basement of our condominium building. The flooding was caused by a leak from a pipe located in a unit above the storage area.
In addition to the damage caused to many items, all the belongings had to be moved out to dry and the area required considerable cleanup.
The association, through its board of directors, is claiming that the owner of the unit is solely liable for the damage. The owner’s insurance company states that the association is responsible because the pipes are association responsibility.
So far, they are passing the buck.
Who is liable for this damage? If the owner is liable, should the association assist in collecting compensation for me for our property damage?
A–If the damaged pipe is located within the unit and only serves that residence, the owner is responsible for the damage. Under Section 9.1 of the Illinois Condominium Property Act, owners are responsible for any damages to another unit or the common elements arising from their unit, regardless of whether the owner was negligent.
The classification of the pipe that caused the flooding must be determined by the board of directors. Like most declarations, I assume your documents state that a board decision in this matter is final.
The association must pay for repairing the common elements and charge that cost to the unit owner. However, the association is not responsible for damage to your furnishings.
The position of your neighbor’s insurance company does not relieve the owner of the unit from liability for damage to an area that is his responsibility under the declaration.
The board of directors may assist you in collecting the compensation only if the declaration requires the board to take such action. Otherwise, you must pursue recovery of your damages against the owner of the unit where the pipe was located.
Bankruptcy overhaul
On June 10, the U.S. House of Representatives passed H.R. 3150, known as the Bankruptcy Reform Act of 1998. The bill seeks to revise federal bankruptcy law to reduce the number of bankruptcy filings.
The significance of the Bankruptcy Reform Act to community associations is the language of the measure, which will enable all types of community associations to collect delinquent assessments from a bankrupt owner.
Changes proposed by the Community Associations Institute are included in H.R. 3150. This language would expand liability of bankrupt owners for assessments due after the date of bankruptcy filing.
To revise current law, the legislation would permit all community associations, not simply condominium associations and cooperatives, to collect these post-petition obligations. The liability of an owner to pay assessments will remain as long as the owner or a bankruptcy trustee has an ownership interest in the property.
The bill also includes language excluding community association assessments as executory contracts that are subject to discharge. The bill will move on to the Senate for consideration.
On a roll
According to the latest statistics from the Community Associations Institute, more than 40 million American live in a condominium, cooperative or homeowner association. Based on the newly published 1998 Community Association Fact Book, there are 205,000 community associations in the United States, which collect approximately $24.6 billion in assessments annually and hold $18 billion in reserve funds.
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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.
