News & Announcements

JANUARY 2018 STATUTORY UPDATE

A number of statutory changes relevant to Illinois community associations became effective on January 1, 2018. A summary of recent statutory changes is provided below.

Condominium Association Record Requests

Controversial record retention and disclosure requirements for condominium associations have been added to Section 19 of the Illinois Condominium Property Act (“Condominium Act”).

First, condominium associations must keep as part of the association records unit owner email addresses and telephone numbers. As discussed below, this information must be disclosed to unit owners who submit record review requests, so long as the information will be used for a purpose that “relates to the association” and not for any “commercial purpose.”

Second, under revised Condominium Act Subsection 19(a)(9), condominium associations must maintain “books and records” (as opposed to the previous requirement of “books and records of account”) for the current and 10 immediately preceding fiscal years. The practical significance of this language change is not clear, but the change arguably broadens the types of records which legally must be retained and disclosed.

Third, the proper purpose requirement for reviewing condominium association contracts and leases, lists of unit owner information (unit owner names, contact information and weighted vote), ballots and proxies from the preceding year and “books and records” has been largely eliminated. Unit owners need not state any purpose when making a request to review association contracts and leases or the “books and records.” As for reviewing lists of unit owner information, ballots and proxies, unit owners may only review this information for a purpose which “relates to the association” and not for a “commercial purpose” (defined as use “for sale, resale, or solicitation or advertisement for sales or services”). The association may require the requesting unit owner to certify in writing that lists of unit owner information, ballots and proxies will not be used by the unit owner for any commercial purpose or for any purpose which does not relate to the association. The association may (after providing notice and an opportunity for a violation hearing) impose a reasonable fine against a unit owner who makes a false certification.

Fourth, the time frame for making records available has been reduced to 10 business days.

Fifth, if a unit owner successfully files a lawsuit due to a condominium association’s failure to disclose association contracts, leases or “books and records,” a unit owner no longer must establish bad faith on the part of the association in order to recover reasonable attorneys’ fees and costs from the association.

Sixth, a condominium association’s chargeback of record review and copy expenses to unit owners is optional, rather than mandatory.

[Changes to Condominium Act Section 19 became effective on January 1, 2018.]

Condominium Association Budget Surpluses

If, at the end of a condominium association’s fiscal year, the association has approved an end-of- year fiscal audit, and the fiscal year has ended with a surplus of funds over actual expenses (including budgeted reserve fund contributions), then, to the extent there are no contrary provisions in the declaration and bylaws, the board has the authority, in the board’s discretion, to dispose of the surplus in one or more of the following ways:

(i) Contribute the surplus to the reserve account;

(ii) Return the surplus to the unit owners as a credit against the monthly assessments for the current fiscal year;

(iii) Return the surplus to the unit owners in the form of a direct payment; and/or

(iv) Maintain the funds in the operating account and apply the funds as a credit when calculating the following year’s annual budget.

If the fiscal year ends with a deficit, to the extent there are no contrary provisions in the declaration and bylaws, the board has the authority, in the board’s discretion, to incorporate the deficit into the following year’s budget.

If at least 20 percent of the unit owners deliver a petition objecting to any of the foregoing actions within 30 days after notice to the unit owners of the action, the board must call a meeting of the unit owners within 30 days of the date of delivery of the petition. At the unit owners’ meeting, the unit owners may vote to select a different option than that chosen by the board. The board’s decision is ratified unless the unit owners representing a majority of the total vote in the association vote to reject the board’s choice and to select a different option.

[New Condominium Act Subsection 9(c)(5) became effective on January 1, 2018.]

Condominium Association Unit Owner Petition Deadlines

Several provisions in the Condominium Act give unit owners designated time periods for delivering petitions to overturn certain board actions. Some of these time periods have been extended. The time period for petitions to overturn large assessment increases set forth in Subsection 18(a)(8) of the Condominium Act has been increased from 14 to 21 days. The time period for petitions to overturn association contracts with board members and related entities established in Subsection 18(a)(16) of the Condominium Act has been increased from 20 to 30 days. The time period for petitions to overturn the adoption, for the purposes of board elections, of a mail-in ballot system or electronic voting system allowed by Subsection 18(b)(9)(C) of the Condominium Act has been increased from 14 days to 30 days The time period for petitions to overturn large common element improvement expenses contained in Subsection 18.4(a) of the Condominium Act has been increased from 14 to 21 days. [Changes to Condominium Act Subsections 18(a)(8), 18(a)(16), 18(b)(9)(C) and 18.4(a) became effective on January 1, 2018.]

Condominium Association Unit Combinations

If condominium units are being combined under Section 31 of the Condominium Act, under revisions to Section 31, it is permissible for the unit combination to create new limited common elements from existing common elements without obtaining a unanimous vote of the unit owners, so long as the area at issue “is not necessary or practical for use by the owners of any other units.” The use of a portion of an adjacent common hallway for these purposes is expressly cited in the revised Section 31 as an acceptable example of such action. This change appears to be a direct response to the 2011 Illinois Appellate Court decision Picerno v. 1400 Museum Park Condominium Association. [Changes to Condominium Act Section 31 became effective on January 1, 2018.]

Condominium Deconversions

Over the past few years, there has been a trend of “deconverting” Chicago-area condominium properties into apartment buildings under Section 15 of the Condominium Act. This already-complicated process has become more challenging due to changes favoring the interests of unit owners who may object to the deconversion. Under the changes to Section 15, a unit owner who objects to the deconversion is entitled to the following proceeds from the sale of the entire condominium property to a single purchaser: the greater of (i) the appraisal value of the unit owner’s unit, less unpaid common expenses; or (ii) the outstanding balance of any bona fide mortgage debt secured by the unit, less unpaid common expenses. The objecting unit owner also is entitled to relocation costs. [Changes to Condominium Act Section 15 became effective on January 1, 2018.]

Condominium and CICAA Association Accounting Requirements

New provisions have been added to the Condominium Act and the Illinois Common Interest Community Association Act (“CICAA”) requiring that associations subject to either of those statutes and having 100 or more units use generally accepted accounting principles (GAAP) in fulfilling any accounting principles under those statutes. [New Condominium Act Section 18.10 and new CICAA Subsection 1-45(i) became effective on January 1, 2018.]

Condominium and CICAA Association Governing Document Amendments

Some condominium or CICAA association condominium/community instruments require mortgagee/lien holder consent in connection with amendments to those documents. Such consent will be deemed to have been given unless a mortgagee/lien holder delivers a negative response to the association within 60 days after the association’s mailing of the request for consent by certified mail. [Changes to Condominium Act Subsection 27(a) and CICAA Subsection 1-20(e) became effective on January 1, 2018.]

Eviction Statute

Illinois community associations utilize the forcible entry and detainer (eviction) provisions of the Illinois Code of Civil Procedure to collect delinquent common expenses. The revised provisions use the term “eviction” in place of the term “forcible entry and detainer.” The revisions also incorporate certain other technical changes. [Changes to Article IX of the Illinois Code of Civil Procedure became effective on January 1, 2018.]

Installment Contracts – Condominium and Master Associations

A new Illinois Installment Sales Contract Act has been adopted. Most aspects of this new statute are not directly relevant to community associations. However, references to new statute’s definition of the term “installment sales contract” have been added to Condominium Act Subsections 18(b)(11) and 18.5(c)(5). [Changes became effective on January 1, 2018.]

Manager Licensing Act and CICAA Clarifications

Minor language clarifications have been made to the Illinois Community Association Manager Licensing and Disciplinary Act and CICAA. [Changes became effective on August 18, 2017.]

Previous News & Annnouncements:

ILLINOIS APPELLATE COURT RULES IN FAVOR OF FRA ASSOCIATION CLIENT

FRA Shareholder Stuart Fullett Quoted in the Chicago Tribune

FRA Shareholder Scott Rosenlund Presents at CBA Condominium Subcommittee Meeting

FRA Shareholder Scott Rosenlund Quoted in The Chicagoland Cooperator

FRA Shareholder Scott Rosenlund Authors Article for ACTHA

FRA Shareholder Scott Rosenlund Authors Legal Update

FRA Attorneys Attend 2017 National CAI Law Seminar

FRA Shareholder Scott Rosenlund Quoted in The Chicagoland Cooperator

LEGISLATIVE UPDATE

Condominium and CICAA Association Board Meeting Requirements

Ombudsperson

Condominium Association Loan Authority

Board Size

Successor Developers

CICAA Association Community Instrument Amendments

Technology Clarification

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