Adding amendments to meet new laws
Q. You recently wrote about all the amendments to the Condominium Property Act that went into effect on Jan. 1. In doing some research, it's come to the attention of the board of our association that there have been about 20 changes to the Condominium Property Act since the date our declaration was recorded. As a result, the provisions of our declaration are woefully out of date. Can the declaration be easily amended to address this?
A. The Condominium Property Act provides a procedure whereby the board of managers, by two-thirds vote, without unit owner approval, can amend the declaration to bring it into compliance with the Condominium Property Act. There is a similar procedure available to common interest community associations under the provisions of the Common Interest Community Association Act.
Note that both of these laws provide a procedure for owners to potentially vote to reject the amendment; however, unless the board has used this procedure to overstep its authority, it is unlikely that the owners would effectively implement that process.
Q. The reserve account for our condominium association is not adequate to fund a very large project without using money needed for other upcoming work. Can the board borrow money to pay for these repairs?
A. The board can borrow money. Further, the Condominium Property Act expressly provides that the board can pledge the assessments as collateral for the loan. Depending on the agreement with the lender, the loan is repaid through a line item in the annual budget or through a multiyear special assessment levied against the owners.
Borrowing money has been a very successful option for many associations whose owners could not afford a large lump sum special assessment to fund a project.
Q. Our condominium association hired a contractor to perform common element painting work. The contractor and the board are now in a dispute over the work. The contractor was not paid and he filed a lien against all of the individual units and their interest in the common elements. I am supposed to close the sale of my unit shortly. Will this lien prevent me from closing the sale?
A. The lien should not prevent you from closing on the sale of your condominium. Typically, in these situations, the association will provide a "hold harmless" letter to the title company that is handling the closing. This would permit your unit to close despite the lien, because the association is agreeing to make the title company whole for any loss it may suffer.
Q. The declaration for our association refers to concepts like "units," "common elements," "limited common elements," and "percentage of ownership." These are all terms that sound like those found in a declaration for condominium association. How can I tell if we are a condominium, or some other type of association?
A. The Illinois Condominium Property Act is very specific about what language must be included in a declaration to submit the property to the Illinois Condominium Property Act. The declaration must expressly state the intent of the developer to submit the property to the provisions of the Illinois Condominium Property Act. An example would be "The declarant hereby submits the property to the Illinois Condominium Property Act." If that, or similar, language is not included, and the specific intent to submit the property to the provisions of the Illinois Condominium Property Act is not expressed in the declaration, the property is not a condominium and would be some other type of association. This is the case regardless of the similarity to a condominium of other terms used in the declaration..
• 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.