Q. Recently, our developer turned over control to the unit owners. Owners were asked to submit their name if they wanted to be on the board. Since the developer retained one unit, he was eligible for a place on the board. At the meeting to elect the first owner board, only two residents and the developer ran. We were told there was no reason for a formal election and the board would consist of the developer and the two other residents.
After the election meeting, the owners were advised that the officers would consist of the developer as president and treasurer and one owner would be the vice president and secretary. We also found out that the management company for the association was a relative of the developer. I see nothing but conflicts of interest. What do you think?
A. If the number of announced candidates for the board equals the number of positions and all candidates will serve the same term, the nominees may be elected by acclamation. This form of selecting the directors must be done by a motion adopted by the unit owners at an open meeting. The election of officers must be done at an open meeting. Since the unit owners represented a majority of the board, I do not understand why these new directors would elect the developer as president. The purpose of the turnover process is to enable the owners to control the association.
Under Section 18(a)(16) of the Condominium Act, the board cannot enter into a contract with a company owned by a board member or whose family members have 25 percent or more interest without notifying the ownership. The owners must be given an opportunity to request a vote on the contract. If the owners were not advised of the relationship between the developer/board member and the management company, the management agreement is not valid.
Q. After the transfer to unit owner control, our new board adopted a rule to impose a $500 fee for moving into the building and a $500 fee to move out of the building. The fee is non-refundable if the unit is not sold but is fully refundable if the unit sells to a new owner. In effect, this rule makes it more expensive for renters.
This charge seems to create two classes of ownership and discriminates against those who rent.
Is there any way to avoid this fee?
A. Moving fees are not illegal if they are reasonable and apply equally to resident owners and investors. If your information is correct, the rule clearly discriminates against investor owners if the fee is not refundable after a change in occupancy arising from a lease. You have a valid basis to contest the fee.
Q. My wife and I purchased a condo. The building’s 35 units were sold except for one the developer was using as a sales office.
In September 2006, we were advised in writing regarding the need for owners to sign a lengthy document to replace the initial declaration. The new declaration encompasses more units than originally planned. We objected to the proposed change because it represents a significant departure from the organizational structure in our original declaration. This past year, we received a letter from the management company stating the terms of the new declaration were in effect.
Can this new declaration be valid if it was not approved by 100 percent of the ownership?
A. Under the Condominium Act, a developer may reserve the right to add more units to the condominium project and change the percentages of ownership for each unit. Owners do not approve this “add-on” amendment to the declaration because the developer has the legal right to add the units.
The only other type of amendment that does not require owner approval is a change to the document made solely to conform with current law. If the declaration does not conform to Illinois law in some respect under Section 27 of the Condominium Act, the board may amend the declaration as necessary.
Q. I own a condo in Chicago. Seventeen of the building’s units have balconies.
At the last meeting, the board announced that owners with balconies were responsible for repainting them.
Though I felt balconies were common elements, I got three estimates to paint my balcony and then asked management to arrange for the payment of my contractor. Management has refused to become involved in this project.
What is your advice?
A. The board may determine whether balconies must be repainted. Balconies are limited common elements. If the declaration makes owners responsible for limited common element repairs, the board should retain one contractor, determine the scope of work and bill each unit owner for his share of the project.
———-
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.
