The Illinois Condominium Property Act 2020

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The Illinois CondominiumProperty Act2020Includes a summary and detailedexplanation of all new condominiumlegislation taking effect in 2020

FOREWORDWith the decriminalization of recreational marijuana and the increase in assistanceanimal requests, the Illinois legislature passed new laws to address condominiumassociation issues in both realms. Additionally, with deconversions of condominiumproperties on the rise, the City of Chicago enacted an additional hurdle for citycondominiums to jump prior to approving a bulk sale/deconversion transaction.Likewise, the Illinois courts had an active year addressing other issues relevantto community associations, including an important decision regarding developerlitigation. Each of these topics and other developments are discussed below.LEGISLATIVE CHANGESMarijuana in Residential UnitsWith the decriminalization of recreational marijuana in Illinois as of January 1, 2020,the Illinois Legislature enacted Section 33 of the Illinois Condominium PropertyAct (“ICPA”) to address restricting use of recreational marijuana on associationproperty. That section allows an association’s unit owners to amend its Declarationof Condominium to prohibit recreational smoking (that is, burning) of cannabiswithin residential units; however, “smoking” is defined narrowly and does notinclude “vaping” of cannabis using an e-cigarette or similar device. Although only“smoking” cannabis may be prohibited within residential units, Section 33 allows anassociation to adopt rules that ban smoking, vaping and other forms of cannabisconsumption in an association’s common elements and limited common elements.Although not addressed in new ICPA Section 33, even if an association prohibitssmoking recreational marijuana in residential units, a resident may still smokemarijuana in his or her unit if the resident has a medical marijuana card and a validletter from a medical professional establishing that the resident needs to smoke(rather than otherwise consume) marijuana.Now that recreational marijuana use is lawful, many associations are takinga second look at banning all forms of smoking in all areas of their properties,including residential units. However, prohibitions on the smoking of marijuana (orsmoking in general) within residential units must be achieved by an amendment toan association’s declaration, which will typically require approval by 2/3rds or 75%of unit ownership. Where there is unit owner support to address the smoke, odor,and negative health effects of second-hand smoke, associations should pursue adeclaration amendment prohibiting all smoking within residential units.The Illinois Assistance Animal Integrity ActThe new Illinois Assistance Animal Integrity Act provides guidance to condominiumassociations and property managers in complying with housing disability laws.Under federal law, an association must reasonably accommodate the needs of anyresident who has a physical, mental, or emotional disability and needs an assistanceanimal to help cope with that disability. Even if an association otherwise prohibitsanimals, a disabled person must be allowed to keep an emotional support animal orother assistance animal if certain requirements are satisfied.SAUL EWING ARNSTEIN & LEHR LLP312.876.7100

Unless the disability or the disability-related need is readily apparent or alreadyknown to an association, a resident seeking a disability accommodation mustsubmit supporting documentation from a person with whom the resident has a“therapeutic relationship,” which is defined expressly to exclude an entity that issuesdisability certifications “without conducting a meaningful assessment of a person’sdisability.” However, the request need not come from a medical provider; anyonewho, after conducting a meaningful assessment, is in a position to know about theresident’s disability and need for an assistance animal can provide documentationin support of an assistance animal request. The request must also describe theresident’s disability-related need for the assistance animal, though it need notprovide a specific diagnosis. Associations that receive requests for assistanceanimals should carefully review such requests and involve legal counsel wherenecessary.The Assistance Animal Integrity Act also makes clear that an association cannotcharge a pet fee or pet deposit for an assistance animal, even where it would chargesuch a fee or deposit for a resident with a pet outside of the disability context.Finally, the Assistance Animal Integrity Act provides that an association will notbe liable for injuries caused by an assistance animal allowed on the property as adisability-based accommodation.Because no-pet buildings do not have rules regarding pets, associations that donot allow pets should consider enacting a policy or rule to ensure that assistanceanimals do not create noise nuisances or unsafe conditions for other residents.Chicago Condominium Ordinance and DeconversionSection 15 of the ICPA governs the sale of a condominium building in its entiretyand requires approval of not less than 75% of ownership before a property can besold. In response to complaints from condominium owners who were forced tosell their homes as part of a Section 15 bulk sale, the City of Chicago exercisedits home rule powers to increase the level of unit owner approval required for aSection 15 bulk sale in the City of Chicago from 75% to 85%. Associations outsideof Chicago are not protected by this increased approval level for a bulk sale anddeconversion. Accordingly, suburban associations that feel they are being targetedfor deconversion may wish to consider amending their declarations to raise theapproval level beyond 75%, restrict rentals, or restrict ownership of units in an effortto deter deconversion.FHA Approval for Individual UnitsEffective October 15, 2019, the FHA issued regulations and policy implementationguidance, which establish a new condominium approval process. Prior to thesechanges, an entire condominium had to be FHA-certified in order to obtain FHAfinancing for any unit. Under the new regulations, individual condominium units maybe eligible for an FHA mortgage even if the entire building is not FHA approved.Additionally, the regulations extend the recertification requirement for previouslyapproved condominium buildings from two years to three years. These regulationsshould make it easier for first-time home buyers to obtain FHA financing forcondominium unit purchases.SAUL EWING ARNSTEIN & LEHR LLP312.876.7100

State of Illinois Parking TaxBeginning January 1, 2020, the State of Illinois will impose a tax on parking at arate of 6% for hourly, daily, or weekly parkers, and 9% for monthly parkers. The newState of Illinois parking tax is on top of already in-place parking taxes from the Cityof Chicago and Cook County. There is an exception for parking fee payments byresidents pursuant to a written agreement.Associations with parking facilities need to ensure that they (or their parkingoperator) are collecting and properly remitting all applicable taxes, including thenew State of Illinois parking tax. It is also critical that associations ensure that theyhave written agreements in place for all resident parkers to avoid taxation of theirparking payments.Cook County “Just Housing” OrdinanceThe Cook County “Just Housing” Ordinance amends the Cook County HumanRights Ordinance and prohibits inquiry into a potential buyer or renter’s criminalbackground during initial screening. Under the new law, a landlord or associationcannot inquire about or require disclosure of a person’s criminal history, unless anduntil that person has otherwise qualified for the housing. Thereafter, a person maynot be discriminated against based upon his or her criminal history. The amendmentdoes not apply, however, to convicted sex offenders. Additionally, a landlord oran association may deny residency to a person based upon his or her criminalconviction if an individualized assessment is conducted and that assessmentshows that there is a demonstrable risk to personal safety or property of others. Ifa landlord or an association intends to deny housing to an individual because he orshe poses a demonstrable risk, the applicant must be given sufficient notice and anopportunity to dispute the accuracy and relevance of the conviction.Associations in Cook County whose rules require criminal background checks onunit renters or buyers will need to amend those rules to comply with this ordinance.Extension of the Community Association Manager Licensing and Disciplinary ActWhen it was first enacted, the Community Association Managers Licensing andDisciplinary Act included a “sunset clause” that called for its automatic repeal aftera trial period that was scheduled to expire on January 1, 2020. This automatic repealdate has now been extended by two years to January 1, 2022.COURT DECISIONSPurchasers of Newly Constructed Condominium Units Have No Claim for Breachof the Implied Warranty of Habitability Against Subcontractors who PerformDefective WorkIn Sienna Court Condominium Association v. Champion Aluminum Corporation,the condominium association of a newly-constructed condominium building inEvanston sued subcontractors who performed allegedly defective constructionwork on the building. Specifically, the association asserted claims against thosesubcontractors for breach of the implied warranty of habitability under the IllinoisAppellate Court’s prior decision in Minton v. the Richards Group, 116 Ill. App. 3d 852(1st Dist. 1983), which allowed a purchaser of a new home to assert a claim forSAUL EWING ARNSTEIN & LEHR LLP312.876.7100

breach of the implied warranty of habitability against a subcontractor where thepurchaser had “no recourse” against the builder of the home. In Sienna Court, thedeveloper and general contractor of the condominium building were bankrupt, sothe association sought recovery from the subcontractors pursuant to Minton. Thesubcontractors argued that they were not liable because the association did haveother recourse, as it could recover from the developer’s insurance policy and hadrecovered from a City of Evanston warranty fund.Relying on Minton, the trial court and the Illinois Appellate Court ruled that theassociation could pursue its claims against the subcontractors, but the IllinoisSupreme Court disagreed. The Supreme Court overruled Minton and found that apurchaser of a new home may not pursue a claim for breach of the implied warrantyof habitability against a subcontractor even where there is no possibility of recoveryagainst the developer and even where the subcontractor’s defective work causedthe home purchaser’s damages.Condominium Unit Sellers Have no Private Right of Action under 22.1 of the ICPAIn Horist v. Sudler & Company, the U.S. Seventh Circuit Court of Appeals held that aseller of a condominium unit has no cause of action against a property managementcompany for allegedly charging unit sellers more than actual costs to provide Section22.1 disclosures. Section 22.1 of the ICPA requires that condominium boardsprovide unit sellers with certain information and documents, so that the seller canprovide that information to a prospective purchaser. ICPA Section 22.1 allows anassociation to charge a “reasonable fee covering the direct out-of-pocket cost ofproviding such information” to the unit seller. In Horist, as in many professionallymanaged associations, the property management company processed Section22.1 disclosures through an online service provider that collected a fee from unitsellers.In the Horist case, three unit sellers brought a proposed class action lawsuit againsta property management company and its online provider claiming that each hadviolated Section 22.1 of the ICPA by charging fees that exceeded the direct outof-pocket cost incurred by the association. The U.S. District Court dismissedthe lawsuit and the Seventh Circuit Court of Appeals upheld that dismissal, withboth courts holding that ICPA Section 22.1 did not establish a cause of action forunit sellers. The Seventh Circuit looked to the purpose of 22.1, finding that it wasdesigned to protect the interests of condominium purchasers, not sellers. Becausethe purpose of that section was to protect purchasers, condominium sellers hadno right to bring a claim for an alleged violation of that section concerning the feescharged for a Section 22.1 disclosure.Court Reconfirms that Post-Foreclosure Buyer Must Pay Post-ForeclosureAssessments in Full to Extinguish Lien for Pre-Foreclosure AssessmentsIn Hometown Condominium Association No. 2. v. Mohammed, the Illinois AppellateCourt held that a foreclosure purchaser’s failure to make full payment of postforeclosure assessments did not extinguish a condominium association’s lienfor pre-foreclosure assessments. In Mohammed, the defendant purchased acondominium unit at a judicial foreclosure sale. Substantial pre-foreclosureassessments were unpaid at that time. After the defendant purchased the unit, hedid not pay subsequent assessments. The association brought an eviction actionSAUL EWING ARNSTEIN & LEHR LLP312.876.7100

against him, seeking payment of not only the post-foreclosure assessments, butalso the pre-foreclosure assessments. On the eve of trial, the defendant paidassessments for the six months prior to the judicial sale and just one month of postsale assessments, even though more than one month was owed. The defendantargued that by paying just the first month of post-foreclosure assessments, he hadextinguished the association’s lien for pre-foreclosure assessments, but the courtdisagreed. The Appellate Court reconfirmed that to extinguish the condominiumassociation’s lien for pre-foreclosure assessments, the purchaser must pay allpost-foreclosure assessments. Because the defendant had not done so, he had notextinguished the lien for pre-foreclosure assessments.Amendments to Declarations Do Not Take Effect Until RecordedIn Siena at Old Orchard Condominium Association v. Siena at Old Orchard, LLC, acondominium association wished to pursue construction defect claims againstits developer, but the association’s declaration contained a provision requiring thatall disputes between the developer and the association be resolved via arbitration.After discovery of the construction defects but before filing suit, the associationamended its declaration to delete the arbitration requirement. When the developermoved to compel arbitration, the association argued that the amendment removingthe arbitration provision rendered the arbitration provision in the original declarationunenforceable. Though the court found that the amendment was effective, becausethe association’s claims arose prior to the amendment being recorded with theCook County Recorder of Deeds, it did not govern the parties’ dispute. Instead, thearbitration provision from the original declaration applied, and the matter was notproperly before the court.Saul Ewing Arnstein & Lehr LLP is pleased to make this 2020 edition of our IllinoisCondominium Property Act booklet available to you, and we hope you find it useful.For more information about Saul Ewing Arnstein & Lehr LLP’s Condominium andCommunity Association Practice Group and the full range of legal services weprovide to condominium associations, homeowners associations, and residentialcooperatives, please visit us at munity-associations or contact us directly.David Sugar312-876-6656David.Sugar@saul.comLaura Lau beth A. cent M. Canale312-876-6940Vincent.Canale@saul.comThomas Goodwyn312-876-6923Thomas.Goodwyn@saul.comSAUL EWING ARNSTEIN & LEHR LLP312.876.7100

TABLE OF CONTENTSSEC. 1.SHORT TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1SEC. 2.DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1SEC. 2.1.APPLICABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3SEC. 3. SUBMISSION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4SEC. 4.DECLARATION — CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4SEC. 4.1. CONSTRUCTION, INTERPRETATION, AND VALIDITY OFCONDOMINIUM INSTRUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5SEC. 5.PLAT TO BE RECORDED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6SEC. 6.RECORDING — EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7SEC. 7.DESCRIPTIONS IN DEEDS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7SEC. 8.PARTITION OF COMMON ELEMENTS PROHIBITED. . . . . . . . . . . . . . . . . . 8SEC. 9.SHARING OF EXPENSES — LIEN FOR NONPAYMENT. . . . . . . . . . . . . . . . 9SEC. 9.1.OTHER LIENS; ATTACHMENT AND SATISFACTION. . . . . . . . . . . . . . . . . 12SEC. 9.2.OTHER REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13SEC. 9.3.EMINENT DOMAIN PROCEEDINGS; STANDING. . . . . . . . . . . . . . . . . . . . . 14SEC. 9.4.EMINENT DOMAIN PROCEEDINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . . . 14SEC. 9.5.SUCCESSOR DEVELOPERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14SEC. 10.SEPARATE TAXATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15SEC. 11.TAX DEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15SEC. 12.INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15SEC. 12.1.INSURANCE RISK POOLING TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19SEC. 13. APPLICATION OF INSURANCE PROCEEDS TORECONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20SEC. 14.DISPOSITION OF PROPERTY WHERE INSURANCEPROCEEDS ARE INSUFFICIENT FOR RECONSTRUCTION. . . . . . . . . . . . 20SAUL EWING ARNSTEIN & LEHR LLP312.876.7100

SEC. 14.1. DISPOSITION OR REMOVAL OF ANY PORTION OFTHE PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22SEC. 14.2.STREET AND UTILITIES DEDICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23SEC. 14.3. GRANTING OF EASEMENT FOR LAYING OF CABLETELEVISION OR HIGH SPEED INTERNET CABLE. . . . . . . . . . . . . . . . . . . . 23SEC. 14.4. GRANTING OF EASEMENT TO A GOVERNMENTAL BODY FORPROTECTION AGAINST WATER DAMAGE OR EROSION. . . . . . . . . . . . . 23SEC. 14.5.DISTRESSED COMMUNITY PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . .23SEC. 15.SALE OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26SEC. 16.REMOVAL FROM PROVISIONS OF THIS ACT. . . . . . . . . . . . . . . . . . . . . . . 27SEC. 17.AMENDMENTS TO THE DECLARATION OR BYLAWS. . . . . . . . . . . . . . . . 27SEC. 18.CONTENTS OF BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28SEC. 18.1.INCORPORATION AS NOT-FOR-PROFIT CORPORATION . . . . . . . . . . . . . 38SEC. 18.2. ADMINISTRATION OF PROPERTY PRIOR TO ELECTIONOF INITIAL BOARD OF MANAGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38SEC. 18.3.UNIT OWNERS’ ASSOCIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41SEC. 18.4.POWERS AND DUTIES OF BOARD OF MANAGERS. . . . . . . . . . . . . . . . . . 41SEC. 18.5.MASTER ASSOCIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44SEC. 18.6.DISPLAY OF AMERICAN FLAG OR MILITARY FLAG . . . . . . . . . . . . . .

State of Illinois Parking Tax Beginning January 1, 2020, the State of Illinois will impose a tax on parking at a rate of 6% for hourly, daily, or weekly parkers, and 9% for monthly parkers. The new State of Illinois parking tax is on top of already in-place parking taxes from the City of Chicago and Cook County.

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