How to handle rules violations
Q. We are a single-family homes homeowners association. The rules state that homeowners cannot park their work trailers/construction equipment trailers on the streets or driveways. A homeowner has reported a violation to the board. When receiving a complaint from a homeowner about a violation of the rules, does the board simply take their word for it and send the violator a notice of violation?
A. The board can generally issue a notice of violation when there is credible evidence of a violation.
The extent of the investigation required before issuing a notice of violation will depend on the nature of the violation. For example, a report that a person parked a trailer in a "no parking" zone should not require further investigation if the report comes from a credible source, as this is pretty objective.
However, noise complaints can be rather subjective, and may require substantial investigation and/or evidence before issuing a notice of violation. Complaints can be made by another resident, a board member or the managing agent. The hearing will be the forum in which the facts will be reviewed by the board and a determination made as to whether or not a violation has occurred.
Q. What are some of the pros and cons of a leasing restriction?
A. The typical lender through which a condominium owner obtains a mortgage will "bundle" that loan with others and sell these loans on the secondary mortgage market. Fannie Mae and the Federal Housing Administration have strict lending guidelines that must be met in order for a loan on a condominium unit to qualify for sale by a lender to the secondary mortgage market. If the loan does not meet those requirements, the lender will often not provide condominium unit financing.
Many associations adopt leasing restrictions because it can increase the pool of lenders that will provide unit financing. This is because such an amendment will typically permit an association to comply with the owner-occupancy ratio established by the secondary mortgage market, which requires a certain amount of owners vs. renters living in a condo community.
If an association does not meet the owner-occupancy ratios, a purchaser will have to look to a local lender that does not bundle and sell units into the secondary mortgage market. Such loans are typically more expensive (higher interest/points) than a loan that meets secondary mortgage market guidelines.
Leasing restrictions may also reduce transient populations in an association.
Some associations do not like leasing restrictions because they can limit the pool of potential buyers who do intend to occupy the unit. Some owners are fearful that a leasing restriction, although a concept they favor, could limit their ability to lease their unit if their circumstances change.
Q. I own a condominium unit in Illinois, but spend much of the year in an apartment in Arizona. My son is not an owner of my unit, but because he lives in Illinois I gave him a power of attorney to manage my affairs, including my condominium, when I am away. Does the power of attorney permit my son to serve on the condominium board?
A. Your son may not serve on the board of your Illinois condominium association. Board members are elected from among the unit owners. Your son is not a unit owner. A power of attorney may grant your son rights to act on your behalf concerning your Illinois real estate, and this could include permitting your son to vote on your behalf at meetings of the owners. However, a power of attorney does not grant an ownership interest in your unit to your son.
Case law update: The Illinois Supreme Court has denied the Lake Shore association's petition for leave to appeal in the case of Palm v 2800 Lake Shore Drive Condominium Association. As such, the appellate court opinion stands. In Palm, the Fifth Division of the First District Appellate Court of Illinois issued an opinion earlier this year concerning the validity of many common association practices.
The case involves a suit by a unit owner challenging a laundry list of conduct by the board of managers of his condominium association. The court's conclusions were startling on some issues, and confirms what should have been common practice on other issues.
• 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.