Tax purchaser still bound by condominium covenants

Q: A tax deed was issued to a tax purchaser for a condominium unit in our association. The tax purchaser has been telling our property manager that he is not subject to the covenants set forth in our declaration of condominium. Specifically, he says he is not subject to the leasing restriction in our declaration, and that he may lease his unit despite the prohibition in the declaration. That doesn't sound right. Is it?

A: The tax purchaser is wrong on this issue. The tax deed extinguished the condominium association's lien for the unpaid assessments that were due when the tax deed was issued. However, the tax purchaser acquires the unit subject to the covenants set forth in the condominium declaration. That would include the lease restriction in the declaration.

This issue is governed by Section 11 of the Illinois Condominium Property Act. That section provides that "(i) n the event any person shall acquire or be entitled to the issuance of a tax deed conveying the interest of any unit owner, the interest so acquired shall be subject to all the provisions of this Act and to the terms, provisions, covenants, conditions and limitations contained in the declaration, the plat, the bylaws or any deed affecting such interest then in force."

Q: The board of managers of our condominium association enters into numerous contracts each year with various contractors. These contracts typically require the contractor to maintain insurance. However, the board seldom asks for proof of that insurance. Should the board be obtaining proof that the contractor has the required insurance?

A: The board should require each contractor performing work for the association to deliver documentation showing insurance coverage of the types and in amounts required by the contract. Such documentation may include an endorsement page from the policy.

Further, Section 12(i) of the Illinois Condominium Property Act states that "(c)ontractors and vendors (except public utilities) doing business with a condominium association under contracts exceeding $10,000 per year must provide certificates of insurance naming the association, its board of directors and its managing agent as additional insured parties."

The board should speak with its insurance agent about the types and amounts of insurance that should be maintained by the association's contractors.

Q: I live in a common interest community association. The declaration provides for an annual meeting to elect board members each July. The board has not called the annual meeting. When asked, the board simply says it will get around to it. Do the owners have any remedies?

A: The owners do have a remedy. If no election is held to elect board members within the time period specified in the bylaws, or within a reasonable amount of time thereafter (not to exceed 90 days), then 20% of the members may bring an action (meaning a lawsuit) to compel compliance with the election requirements specified in the bylaws. If the court finds that an election was not held to elect members of the board within the required period due to the bad faith acts or omissions of the board, the members that bring the lawsuit to compel an election are entitled to recover their reasonable attorney's fees and costs from the association.

Do note that if the relevant notice requirements for the annual meeting have been met by the association and an election is not held solely due to a lack of a quorum, then this remedy is not applicable. This is all described in Section 1-25(g) of the Illinois Common Interest Community Association Act.

• 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.