Board considers a lien on delinquent unit in probate
Q. Our association has one unit which is in probate and is accruing a sizable balance of unpaid assessments. Our management company has suggested that filing a lien against this unit is unnecessary as they indicate that the unpaid balance must be paid to the association prior to a transfer of ownership. Should we move forward by placing a lien to protect our association or is the management company correct?
A. Typically, we would not suggest that the board simply rely on payment at the time of transfer as the association’s only protection in this type of situation. Some other facts about this unit should be investigated. Under the Illinois Condominium Property Act, unpaid assessments generally become a lien on the owner’s interest when they are due and unpaid. The Act also allows the board to record notice of that lien. Recording a Notice of Lien is particularly important if the association may need to foreclose the lien later on. As a result, recording of a lien and foreclosure procedures still need to be considered in order to handle this unit delinquency correctly. As always, the association should also follow its written assessment-collection policy.
The management company may be thinking of the association’s role in a sale where a prospective buyer can request an assessment and lien statement under Section 22.1 of the Act. But that disclosure process is not a guarantee that every transfer will be handled in a way that collects the full balance. For example, the transfer might occur through probate or another route (cash transaction), and a transfer itself is not the same as payment having reached the association.
When probate is involved, the board should try and identify the personal representative of the estate and the probate case number, if one exists. The board should further ask the association’s counsel whether the association should file a creditor claim in the probate case and what deadline applies. A lien against the unit and a claim against the estate are separate steps and probate deadlines matter. Given that the balance is growing and the unit is in probate, the board should discuss with the association’s attorney both the assessment lien against the unit and the probate case steps now, rather than wait for a transfer.
Q. Our condominium association declaration has a provision that allows us to accelerate the total amount of assessments due for the rest of the year if an owner becomes more than 30 days delinquent. Is that legally allowed?
A. Generally, an assessment acceleration clause is allowable if the declaration clearly authorizes it and the association follows the clause’s requirements. Illinois appellate courts have recognized a condominium association’s right to accelerate unpaid assessment installments for the balance of the assessment year. However, the specific language of the association’s declaration and the acceleration clause must be reviewed carefully. The board should check with its attorney to see whether the provision requires an affirmative board vote to accelerate the assessments against this unit, is there any additional written notice to the delinquent owner required, is there a specific waiting period, and whether it covers regular assessments, special assessments, or both. The Illinois Condominium Property Act generally makes a lien attach to the common expenses that are due and unpaid on any unit at a particular time. Acceleration can therefore change what the association claims is currently due. That’s important particularly in a foreclosure proceeding or a resale of the unit. So, an acceleration clause triggered after 30 days’ delinquency is not automatically enforceable and may require additional steps.
• Matthew Moodhe 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.