Installment buyers usually have voting rights

Q. Several owners in our condominium association are selling their units through the use of an installment contract. What is this?

A. An installment contract is a legitimate type of transaction, and the Condominium Property Act permits their use and grants significant rights to a contract purchaser in possession of the unit.

An installment contract is a form of sales agreement wherein the sales price is payable in installments after the purchaser takes possession of the unit and wherein the seller retains legal title to the unit until the purchase price is paid in full. Title to the unit transfers to the purchaser only after the sales price is fully paid.

The seller of the unit would continue to be the owner of the unit until the terms of the installment contract are completed and the title transfers to the purchaser. The seller would continue to be responsible for all “owner” obligations in the association until the deed is conveyed to the purchaser.

However, there are certain rights afforded to the purchaser under an installment contract. That is, the installment purchaser shall, during such times as he or she resides in the unit, have the right to vote for the election of members of the board of managers and to be elected to and serve on the board of managers, unless the seller expressly retains in writing any or all of such rights.

The installment purchaser also shall be counted toward a quorum at meetings of unit owners called for the election of a board.

Note that in no event may the seller and purchaser both be counted toward a quorum, be permitted to vote for a particular office, or be elected and serve on the board. Satisfactory evidence of the installment contract must be made available to the association or its agents.

Q. The board of our condominium association refuses to have the association certified for FHA-guaranteed loans. This has reduced the pool of available buyers of units. Does this create any liability for the association?

A. It is noteworthy to point out that a complaint has been filed against a condominium in Ohio by that state’s civil rights commission. The action stems from a board’s refusal to seek recertification when requested by a single mother who would have used FHA-guaranteed financing to acquire the unit. The case is still pending, so the outcome will have to be monitored as it could be quite instructive.

However, the case reveals that failure to seek FHA certification might be the basis of a discrimination complaint. Given this evolving area of the law, associations should review the pros and cons of FHA certification, and make a reasoned decision.

Of course, there may be some associations that just won’t qualify for FHA certification. Nonetheless, association counsel should be consulted before the board makes a decision not to seek certification.

Q. We own a townhouse-style condominium unit. The front cement porch outside our unit is pulling away from the unit. We have been told by the association that the entire porch repair is our responsibility. We have looked at the rules that we received at closing and the porch is not mentioned. We feel the association should bear the entire cost of the repair. We would like to have your opinion on this matter.

A. The answer to this question depends on the language of the association’s declaration of condominium; not the rules. I can provide you some guidance where to look for the answer.

Initially, you need to review the language of the associations’ declaration that describes the common elements and the limited common elements. Next, you need to review the provisions that describe maintenance, repair and replacement of the common elements and limited common elements.

There are two most likely possibilities. The first is that the porch is a general common element for which the association is responsible to maintain. Or, the porch may be a limited common element for which the association is responsible to maintain, and the association can charge back the cost for to your unit.

Ÿ David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.