Condo law to get new version governing townhouse groups

I never thought I would see the day where such an animal existed, but yes readers, a new statute was enacted buy both houses in the General Assembly and is just awaiting the governor's signature before it becomes law.

In the past, there was never any statutory authority for the governance of a non-condominium, townhouse or homeowners association (Common Interest Communities, or CICs). Legal interpretations of powers and duties had to rely on the governing documents and case law decisions, primarily, as well as parts of Section 18.5 of the Condominium Act and the limited grant of power in the Illinois General Not for Profit Corporation Act. No longer; CICs now have their very own statute to provide guidance.

Not too dissimilar to the Illinois Condominium Property Act, there are very slight differences beyond the mere ownership interest. Known as of the date of this column as SB 3180 (a full text can be downloaded at www.ilga.gov and soon our firm website, ksnlaw.com), here is a brief summary of the highlights in the new act, when it officially takes effect after the governor's signature.

• There is a detailed definition of what constitutes a common interest community, and the main thing is that the covenants have to be recorded. Those communities with bylaws and rules, but no recorded documents, are still considered voluntary, and have no applicable statute.

• Amendments to bylaws must now be recorded. Previously, declaration amendments always had to be recorded, but often it was not required for bylaws alone.

• The terms of at least one-third of the directors must expire annually and all directors must be elected at large.

• Units owned by a nonprofit 501 (c) (3) corporation are not bound by declaration provisions prohibiting leasing.

• There is a limit to the term of office of three years, although one can run for re-election indefinitely. There are no term limits.

• Two-thirds of the remaining directors can vote to select a replacement director in the event of a resignation or removal, and owners can petition for a special election to fill the vacancy.

• Ballots for election can be mailed in and secret ballot rules can be adopted.

• Contract purchasers can vote unless that right is retained by the contract seller.

• The board shall meet at least four times per year.

• Contractual conflicts of interest must be fully disclosed, and the owners can follow certain procedures to overturn the contract.

• There shall be only one class of membership.

• The board shall have the power to levy late fees, and after notice and an opportunity for a hearing, to levy fines.

• The board must make certain records available to owners upon request, for review and/or copying, and disclosure upon resale.

• Twenty percent of the owners shall now constitute a quorum. (This is highlighted because it has been a constant source of trouble for associations trying to conduct an election in the past, when elections required a majority.)

• All business meetings of the board are open to the members upon no less than 48 hours advance notice.

• Proposed budgets must be sent out to all owners 30 days before the board adopting same, subject to notice to the owners.

• Every owner is to receive a year-end financial statement.

• Boards now have expanded assessment authority identical to condominiums; any special assessment, et al. can be adopted unless it exceeds 115 percent of the previous year's collections and 20 percent of the owners petition for a meeting to hold a referendum.

• The board can now adopt amendments or revised declarations by a two-thirds vote, if there is an error or substantive change in the law, without owner approval, as long as the changes are not material.

• Associations of 10 units or less with annual operating budgets less than $100,000 are exempt from the new law.

Experienced owners, directors and mangers can see that obviously these are all provisions of the Condominium Act, now applicable to CICs. However, as an attorney in advising homeowners associations, I can soon say there is a statute and no longer do we have to make it up as we go along.

• Jordan Shifrin is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at jshifrin@ksnlaw.com. This column is not a substitute for consultation with legal counsel. Past columns can be read at www.ksnlaw.com.