Condominiums, large or small, generally are viewed as equals under the law in Illinois. But that’s not the case in Wisconsin, where there are “condominiums” and “small condominiums,” according to the state’s Condominium Ownership Act.
Basically, condominiums with 12 or fewer units can use streamlined operational procedures that “make condominium governance more transparent and simpler for small condominiums,” said attorney Jonathan Levine of Milwaukee. The Illinois Condominium Property Act does not differentiate between small condominiums and larger ones.
Among Wisconsin’s provisions for small condominiums:
– All unit owners serve on the board. “You don’t have to worry about elections,” said Levine. “You can elect a president, but the ones I’ve seen typically don’t.”
– Meeting notices are made in a way that best assures the owners receive them. “If two of the owners winter in Florida, you can post notices all over their units and they won’t hear about the meeting,” said attorney Pharis Horton of Madison. “Maybe registered mail is the best way for that association to make sure that the people who ought to get notice do get notice. Maybe knocking on doors is the best way.”
– Instead of bylaws, a written agreement will suffice. “Bylaws can be very stiff,” said Horton. “You can have a page and a half that deals with nothing but how the budget is to be developed. An agreement could be drafted by the people themselves. They could say, `We’ll meet mid-December to arrange the budget for the next calendar year.’ It allows a flexibility and neighborliness that lawyers sometimes get in the way of.”
– Arbitration is required when an owner disputes an expenditure. The owner and the association share the cost. “Let’s say you have two units,” said Levine. “One of the problems is the person who says no all the time is running the show because a `no’ vote is a veto. This arbitration provision doesn’t allow that to occur. You have to submit the disagreement to an arbitrator, who decides what is best to preserve the physical plant of the condominium.”
Required arbitration doesn’t work as well in larger associations because it can slow down the decision-making process, he said.
“I don’t think a board running 150 units should have to go into arbitration every time somebody disagrees with a decision,” he said. “Here we’re talking about a small condominium and everyone is closer to the problems at hand and should have a say.”
Property manager Bill Huettner of Prospect Management Co. in Milwaukee and president of the Wisconsin Chapter of the Community Associations Institute said that because small associations have smaller budgets, they tend to be self-managed. Smaller government can help them run more effectively.
“From the developer’s point of view, the cost savings of setting up a small condominium association has got to be huge because of reduced legal fees,” he said. “That encourages new developments and small conversions, which result in home ownership versus rentals.”
Whether a similar small condominium designation would transfer–or is needed–in Illinois is a matter of debate. The Chicago Bar Association Real Estate Subcommittee on Condominiums reviewed Wisconsin’s small condominiums statues but decided not to advocate similar legislation, said subcommittee co-chair and attorney Ryan Shpritz of Kovitz Shifrin Nesbit in Buffalo Grove. Shpritz also is resident of his three-unit condominium in Chicago.
“My thought is, for the most part, the Illinois condo act suffices,” he said. “Small condominiums have the same problems as large condominiums, just with fewer resources.”
However, Shpritz added: “I do see the mandatory arbitration as a very good thing.”
The Wisconsin legislature created small condominiums in the mid-1980s. In November, the definition was expanded to 12 units from 4 units and to include non-residential condominiums.
Seminar
A one-day educational workshop for new board members, Achieving Better Communities, will be presented by the Illinois Chapter of the Community Associations Institute from 9 a.m. to 4 p.m. Feb. 19 at the Schaumburg Marriott, 50 N. Martingale Rd. The curriculum reviews the nuts and bolts of running an association and basic concepts of association law. The cost is $65 for members and $75 for non-members and includes a handbook with sample forms.
Registration is required. Call 630-307-0659.
