The Illinois legislature recently amended the Illinois Condominium Property Act with several changes designed to protect unit owners. Some of these changes are quite significant and will go into effect beginning on January 1, 2018. These changes include:
Minimum Price of Forced Sales
In recent years, Chicago has seen a trend of real estate investors buying out condominium buildings and “de-converting” them into apartment buildings pursuant to Section 15 of the Act. This Section of the Act is a mechanism for a super-majority of the unit owners to vote in favor of the forced sale of the building. One of the limitations of the prior law was that a unit owner could possibly be forced to sell even if his/her percentage share of the sale proceeds was insufficient to pay off that unit’s existing mortgage debt. Now, pursuant to the revised Section 15(a), an objecting unit owner is entitled to the greater of the appraised value of his/her unit or the outstanding value of the mortgage. Under the new law, an objecting owner is additionally entitled to reasonable relocations costs.
Proper Purpose of Demand for Books and Records
Under Section 19(a) of the Act, there are 9 categories of documents that unit owners are entitled to see from the board of directors. Most importantly, in order to see association contracts and “books and records” of the association, a unit owner would have to first state a “proper purpose” for such request. Often times, associations would deny requests on this technicality or argue over whether or not the purpose stated was truly “proper.” Now, such arguments will not take place as the legislature has removed the requirement to state a proper purpose for the production of contracts and “books and records.” In addition, the amendment further requires the board to respond to any request for documents in 10 business days, rather than 30 days.
Increased Time for Unit Owners to Petition the Board
Illinois law provides condominium boards with significant authority and discretion to make decisions on behalf the association such as budgeting, levying special assessments, etc. However there are several sections in the Act that provide a right for owners to petition the board to bring the decision to a vote of the ownership. The legislature has given unit owners approximately 7-14 additional days to exercise certain petition rights to board actions under Sections 18(a)(8)(i), 18(a)(16) and 18(b)(9)(C). This additional time will give unit owners more opportunity to review the board’s actions and consult with an attorney to determine their rights.
Distribution of Surplus Funds
Under the prior law, associations were supposed to distribute any unaccounted surpluses back to the unit owners at the end of the fiscal year, unless their governing documents provided otherwise. An amendment to Section 9(c)(5) of the Act changes these default rules for associations whose governing documents are silent on the issue. Associations now have the option to either move this surplus to the reserve account or distribute back to the unit owners. Unit owners have a new right to challenge such action within 30 days after notice by a petition of 20% of the ownership.
The above is not an exclusive list or summary of the recent changes to the Illinois Condominium Property Act. For further questions, please contact Rudolph Kaplan LLC.