Q. We live in a small condo complex. Since we moved here in 2003, the developer has been in control of the association. He is finally giving lip service to turning things over to us.
The owners had a meeting to bring together individual concerns before the transition. No one seemed to be aware of the state law governing condominium ownership. How do we obtain a copy of it and how does it affect the transition?
I am in favor of hiring a manager who can assist with the needs of the community. A. Condos are governed by the Illinois Condominium Property Act. It’s available under legislation at www.ilga.gov, the Web site of the Illinois General Assembly. Section 18.2 of the act, found in the statutes at 765 ILCS 605/18.2, governs the transition from the developer to unit-owner control.
Under that section, the developer must hold a meeting to elect the first unit-owner board within 60 days after the three-year anniversary of the recording date of the declaration or after 75 percent of the units are sold, whichever is earlier. I suspect that either should have happenedlast year. The owners may hold a meeting if the developer does not act within a timely manner.
After the election of the first owner board, the developer must deliver certain documents, information and association funds so the board can operate the association, review the developer’s actions and make claims relating to construction or accounting issues.
If the owners cannot manage the property themselves, it would be prudent for a group to hire a property manager. Local real estate management firms can provide a condo property management contract, which should list the duties the manager will perform, his fee and provisions for terminating the agreement. The community association manager should provide you with a fidelity bond to cover theft of funds and have a working knowledge of community association management. Based on the due diligence of the board, the manager should not have been convicted of financial crimes.
Q. Thirty percent of our units are rented by the same owner. There is discussion among several owners that they may want to rent their units and do not want to limit the number of rentals. Is there a percentage of rentals that would no longer allow the association to be considered a condo? Also, with a larger percentage of rentals, is there generally a negative effect on insurance rates?
A. The status of your building as a condo association is not subject to the number of rentals. The property became a condo upon recording of the declaration and bylaws.
Insurance underwriters have considered the percentage of rental units in determining rates for an association. Consult your insurer to learn the effect of leasing in the current market.
Q. I live in a townhouse association that is legally considered a condominium. The board is asking all residents to provide their mortgage company contact and detailed information concerning our loans. Management has sent a letter stating we are required to provide this information under the Illinois Condominium Property Act. Is this true?
A. Section 22.1(c) requires a unit owner to advise the association of the identity of a lender. This section states that within 15 days of the recording of a mortgage, the owner must inform the board of the identity of the lender, with a mailing address at which the lender can receive notices from the association. The statute does not specifically require the owner to disclose detailed information, such as the loan number or amount.
Q. I am a unit owner in a self-managed condo. About two years ago, two board members got into a spat that resulted in a slander suit. The court ruled that the defendant did indeed defame the plaintiff, and ordered him to pay $5,000, plus attorneys’ fees. The plaintiff has since resigned from the board. The defendant is still a board member. Without a meeting, but with the approval of the other board members, the former defendant has stated this judgment should be paid from the association’s assessment fund. Is this legal?
A. Absolutely not. Defamation suits are disputes between individuals, and the judgment entered by the court should have been against the individual and not the association. Association funds should not be used to pay the judgment. Owners should attend the next board meeting and advise the directors of this. Perhaps it also is time for some professional supervision of your association.
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Mark Pearlstein is a Chicago lawyer who specializes in condominium law and is chairman of the legislative committee of the Illinois chapter of the Community Associations Institute. Write to him c/o Condominiums, Real Estate, 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. Answers will be supplied only through the newspaper.
