Amendments to declarations are legal
Q. You recently responded to a concern about a number of owner-occupied units that must be maintained, and once the maximum number of units permitted to be leased is reached, others are put on a waitlist. This was predicated on the association's having adopted an amendment to the declaration to limit the number of units that could be leased.
To my way of thinking, the association, even if the declarations were amended properly, would be stripping me of a valuable right of ownership midway through my ownership of the unit. I'm thinking that such an amendment could not apply immediately to existing owners. As a purchaser, do I not have a right to expect that the terms of the covenants will prevail during my term of ownership?
A. In a 1995 case referred to as Apple II, the appellate court of Illinois established that Illinois associations have the right to amend their declaration to restrict leasing of units. In that case, an owner argued principally that the association lacked legal authority to restrict the rental of units to those who acquired title to the property prior to the amendment. The owner further argued that the amendment constituted an ex post facto modification of the owner's contractual rights made without consideration.
The appellate court rejected that argument. The Condominium Property Act specifically states that amendments to the declaration "shall be deemed effective upon recordation unless the amendment sets forth a different effective date." In the court's view, the fact that there were no restrictions on the property when the owner purchased his unit was not relevant. As purchasers of the condominium property, the owners are charged with knowledge of the Condominium Property Act and that the declaration governing their unit was subject to amendment.
That is, an owner acquires their unit subject to the declaration, and the ability of the association to amend the declaration. If the amendment procedures set forth in the declaration are followed, leasing can be prohibited.
Most courts that have reviewed this issue have adopted the position that changes to a condominium declaration are binding upon both current and subsequent unit owners.
Q. In January a pipe burst, leaving our condominium without hot water for days. An owner in the building relocated his tenants during this time and is now demanding that the association compensate for the expense. Is the association responsible?
A. While an association may be responsible for maintenance, repair and replacement of a common element water pipe that breaks, an association is generally not responsible for the cost of temporarily housing residents while the repair is made. That said, there may be circumstances where the loss is the result of an association's negligence, and an association may have liability exposure to payment of temporary housing expenses in those limited circumstances. Nonetheless, owners and tenants alike should have insurance that covers housing expenses when the unit is uninhabitable.
Q. I understand there are statutes that govern Illinois condominiums, master associations and common interest community associations. I live in a residential housing cooperative in which I am a shareholder in a corporation that owns the building, and I have a lease with the corporation for my apartment. Is there a statute that governs housing cooperatives?
A. Housing cooperatives (co-ops) are not subject to a similar stand-alone statute dedicated to co-ops. However, depending on whether the co-op is established as a for-profit corporation or as a nonprofit corporation, the co-op would be governed by the Business Corporation Act or the General Not for Profit Corporations Act. However, those statutes would apply to all types of corporations and are not directed solely to co-ops. The corporation's governing documents, like the articles of incorporation, bylaws and proprietary lease, provide the essential framework for a housing cooperative.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. 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.