Owners required to provide mortgage holder's name and address to board
Q. Our condominium association declaration requires the board to give notice of proposed amendments to the mortgage holder of each unit. The board has requested owners to provide the name and address of their mortgage holder; however, many have refused. Are owners required to provide this information?
A. Yes. This is governed by Section 22.1(c) of the Illinois Condominium Property Act. Within 15 days of the recording of a mortgage against a unit given by the owner of that unit to secure a debt, the owner is required to inform the board of the identity of their lender, together with a mailing address at which the lender can receive notices from the association. If a unit owner fails or refuses to inform the board, then that unit owner is liable to the association for all costs, expenses and reasonable attorney's fees incurred by the association as a result of such failure or refusal. So, if the owner dos not voluntarily provide the mortgage holder information, the association can retain counsel to obtain the information from a title company, and charge the attorney's fees and costs to the owner.
Q. The condominium unit located next to mine is for sale at way below market value. If I buy it, can I open up the wall between the units to create one large living space?
A Yes. This is governed by Section 29 of the Illinois Condominium Property Act. A unit owner who owns two or more units does have the right to remove or otherwise alter any intervening partition. This can be done, so long as the action does not weaken, impair or endanger any common element or unit. The unit owner must notify the board of managers of the nature of the removal or alteration at least 10 days prior to commencing work. This right is subject to such reasonable limitations as the association's condominium instruments may impose. Therefore, before acquiring the second unit, you need to review the association's declaration, bylaws and related rules to determine what limitations and procedures are imposed by those documents.
Q. I heard that the Condominium Property Act prohibits an association from exercising a right of first refusal to purchase a unit. Is this correct?
A. That is not correct. Although Section 22.2 of the Illinois Condominium Property Act does impose a limitation on the association's ability to exercise its right of first refusal, if any, an association is not prohibited from exercising its right of first refusal. That section provides that in the event of a sale of a condominium unit by a unit owner, the association cannot exercise any right of refusal on the basis that the purchaser's financing is guaranteed by the Federal Housing Administration. Of course, the right of first refusal is a creature of an association's condominium instruments. If the right is not established by the declaration or bylaws, it does not exist.
Q. I just paid a large deposit to a developer for a new condominium unit. Can the developer use these funds before I close on the purchase?
A. Any deposit, payment or advance in the payment of the purchase price for the initial sale of a unit, received by the developer or his agent, is required to be held in an escrow account until title is conveyed to the purchaser. This does not apply, however, to any payment made for extra work ordered in writing by the purchaser of a unit. Those payments for extras can be used immediately the developer. Note that the escrow funds must be segregated in a separate account designated for this purpose. Importantly, the escrow funds are not subject to attachment by any creditor of a purchaser or of the developer or by the holder of a lien against any portion of the property.
• 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.