Money from clubhouse rentals should lower assessments

Q: Our common interest community association includes a large clubhouse. The declaration permits the association to lease the clubhouse to third parties for events. Would the income from these third-party events have to be distributed to the members of the association?

A: Monies received from the lease of the clubhouse to third parties would be income to the association. This income would not have to be distributed to members of the association. Many associations in a similar position use, and rely on, such income to offset expenses to keep assessments payable by association members lower.

Do note such income would not be considered "exempt function income" and would be taxable to the association. The tax rate for such income may depend on the tax form used by the association. That is an issue that should be discussed with the association's accountant.

Q: We are an "over 55" community. No one under 18 years of age may reside in any unit; however, they may stay as a guest for no more than 30 days. The children and young grandchildren of one of our owners have moved into one of the units, due to a financial issue. The problem with this occupancy has been brought to the attention of the owner who ignores the association.

The board is sympathetic to the owner's family issue; however, neighbors have threatened to take legal action against the association if it does not resolve this. What can the association do to remedy this situation?

A: The owner's family situation is certainly unfortunate. However, the board is at risk of being in breach of its fiduciary duty to owners generally if it ignores the age restriction covenants of the declaration. Depending on the situation, the association's status as "housing for older persons" could also be jeopardized.

The association could file a suit to enjoin the conduct that violates the declaration, and to require residents who do not meet the age restriction covenants of the declaration to move out of the unit.

Q: I purchased a limited common element parking space from the developer when I purchased my unit about six years ago. I am selling my unit, and the title company has advised me there is no record of the parking space being assigned to my unit. Apparently, the developer neglected to include the limited common element assignment on the deed conveying me my unit. I have been using the parking space, and no one disputes that it is "mine." Can the board of directors of the association correct this problem?

A: Initially, the attorney, if any, handling the closing of the purchase of your unit should have caught the omission in the deed. However, the association cannot generally correct this problem. This is an issue that you need to address with the developer.

In theory, the developer could issue a quitclaim deed to you at this time for the unit that includes the limited parking space assignment. At the end of the day though, you need to speak with the title company to see what it requires in order to ensure the title to your unit includes the assignment of this limited common element parking space.

Q: I emailed the property manager assigned to our property at 2 a.m. one morning about an active water leak into my unit. I did not hear from the property manager until after 9 a.m. the next day. Shouldn't I have received an immediate response to my email about such an emergency issue?

A: The individual property manager assigned to your property is not the 911 operator, and I trust was in deep sleep at 2 a.m. and away from any email receiving device.

It would not be reasonable to expect this individual to respond to you at that hour (or after business hours in general). Rather, most property management companies do have an after-hours emergency phone number to call in the event of these types of situations. That would have been the appropriate way for you to seek relief for a middle of the night water leak.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.