Q. I live in a newly constructed townhouse condominium that has been plagued by numerous construction problems. While the developer has resolved some problems in the interior, he has ignored issues concerning the exteriors and common elements.
The developer controls the association and has been managing our development since the first sale last spring. Many owners who are unhappy with the construction of their homes have not been paying assessments. Others have been charged incorrect assessment amounts or did not receive credits for assessments they paid.
The developer just notified the owners that turnover of the association will occur within the next 60 days, because 75 percent of the homes have been closed. Many of us are concerned about the construction problems and the potential mismanagement of the association finances.
How can we as individual owners make sure that the turnover is properly conducted, that construction issues are resolved and that association financials are in order?
A. Make sure the turnover meeting is held on schedule. Elect directors who are focused on the issues. Hire the right professionals to obtain and review the required information from the developer, and promptly notify the developer of the construction and accounting issues.
Before the turnover meeting takes place, owners should meet and determine individuals who are best qualified to serve the association as the first unit owner board. Determine the date that 75 percent of the units were sold and make sure the developer calls the turnover meeting within 60 days after that closing date.
Once the owners elect the first board, the new directors must obtain required information from the developer within 60 days of the turnover meeting; hire an engineer to review the plans and specifications for the property; and retain an accountant to review the association books and records.
The developer must deliver to the new board, within 60 days of the turnover meeting, certain required information. The most important items are the construction plans and specifications approved by the local government, copies of all association contracts, and an accounting of income and expenses from the first closing until the turnover meeting date.
The developer also must transfer all association funds, including operating and reserve accounts.
The engineer or accountant will determine whether the construction complies with the plans and prepare a report indicating any deficiencies. This report should be sent to the developer with a request or demand that the corrections be made within a reasonable time. The accountant will determine whether assessments were properly collected and spent on association matters unrelated to construction.
The accountant will also review the collection of assessments and determine whether owners owe additional funds or should receive necessary credit adjustments.
Owners who have withheld assessments are merely creating additional financial problems for the association. These owners have no legal basis to withhold assessments for maintenance of the property because of disagreements with either the construction or management of the association.
Q. We live in a gated condominium community in an unincorporated portion of the northwest suburbs. Our building is approximately 30 years old, but the motto of this association has been “don’t fix it until it breaks.”
Our roof is in questionable condition and may not survive the winter. What responsibility does the board have in preventing damage to the building or a unit from a roof that we believe is near the point of replacement? We are concerned that owners could suffer major damage from water infiltration caused by this old roof.
A. The board of directors must maintain the common elements. This responsibility means that the board must make periodic repairs to all surfaces, including the roof. A new roof has a warranty. When the warranty expires, the board has to be particularly vigilant to maintain and identify a future date for roof replacement. The term of most roof warranties is 10 to 15 years. Unless the roof of your building has been superbly maintained, experience indicates the roof should be replaced soon.
Owners who sustain damage to their units may have a claim that the board was negligent in maintaining the common elements.
Q. I own a condominium unit as an investment and rent it out. I recently renewed a lease with a long-term tenant. The condominium association charged me a $100 release fee. Because I handled the new lease and sent the association a copy, they didn’t have to do anything. Isn’t this fee excessive or illegal?
A. I do not see a justification for the release fee, because the Illinois Condominium Property Act merely requires the owner to send a copy of the lease to the association. If your tenant remains the same and association records do not have to be changed, it is difficult to understand any expense the association has incurred.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law. Write to him c/o Condominiums, Real Estate Section, 4th Floor, Chicago Tribune, 435 N. Michigan Ave., Chicago, IL 60611. You may e-mail questions to realestate@tribune.com. Sorry, he can’t make personal replies.
