January 2018 - State Of Illinois

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January 2018TheCondo Unit Owner’sRights andResponsibilitiesHandbookwww.idfpr.com/CCICO/

Since the first Declaration ofCondominium Ownership in Illinoiswas recorded on January 31,1963, condominiums havebecome a very popular form of homeownership in Illinois. By one estimate, 3.7million Illinoisans resided within acondominium development in 2015– a number equal to nearly thirty percent ofthe State’s population that year.“Condominium” refers to a method ofownership and not a physical style or typeof building. New and existing high-risebuildings, townhouses, duplexes and threeflats can all be condominiums. Homeownership in a condominium association isdecidedly different compared to a singlefamily home.The information contained in thispublication is a brief overview of the duties,rights and responsibilities of unit owners incondominium developments. Theinformation is intended to provide generalinformation and is not a substitute forobtaining legal advice to address specificsituations. Since this publication may notcontain subsequent changes in the law, itshould only be used as a general source ofinformation. The complete text of theIllinois Condominium Property Act (“Act”)(765 ILCS 605/1, et. seq.) as well as theGeneral Not for Profit Corporation Act (805ILCS 105/1, et. seq.) can be obtained onthe website of the Illinois Condominium andCommon Interest CommunityOmbudsperson at s to a method ofownership and not aphysical style or typeof building.Condominium living is accompaniedby distinct duties and responsibilities, aswell as certain rights for unit owners. Aspleasant and convenient as living in acondominium association can be, this typeof housing presents its unique set ofchallenges.A condominium association is, afterall, a sort of highly-local mini-governmentwith its own set of internal “laws.” But justas there are rules with which condominiumunit owners (“unit owners”) must comply,so, too, do unit owners have rights. Thepurpose of this publication is to discuss thebasic rights and responsibilities of unitowners.www.idfpr.com/CCICO/The General Not for Profit CorporationAct is relevant to those associations that haveelected to become not-for-profit corporationsand have registered with the Illinois Secretaryof State; associations, whether or notincorporated, have those powers andresponsibilities specified in the General NotFor Profit Corporation Act that are notinconsistent with this Act or the condominiuminstruments.Legal Basis for the CondominiumThe Illinois Condominium Property Actprovides the framework for the creation andgovernance of condominium associations.Condominium associations may choose toincorporate as Illinois not-for-profitcorporations, pursuant to Section 18.1 of theAct, but are not required to do so. Anassociation, whether or not it is incorporated,has the powers and responsibilities specifiedin the General Not for Profit Corporation Actof 1986 that are not inconsistent with the Actor the condominium instruments (as definedin the Act).2

In the context of associations, theterms “board of directors” and “board ofmanagers” are frequently usedinterchangeably. "Board of Directors" is theusual name for the group of unit ownersgoverning an association that hascorporation status, including a not-for-profitcondominium association. "Board ofManagers" is the usual name for the groupof unit owners governing an association thatis unincorporated.Every unit ownerautomaticallybecomes a member ofthe unit owners’associationEvery unit owner automaticallybecomes a member of the unit owners’association --the association of all the unitowners, acting pursuant to bylaws throughits duly elected board of managers.Throughout this publication, the term “unitowner” and “member” will be usedinterchangeably, “association” will refer tothe condominium association and “board”will refer to the board of managers or boardof directors, whichever is applicable.Governance DocumentsJust as the operator of a motor vehiclemust be knowledgeable about the “rules ofthe road,” so must unit owners becomefamiliar with the documents that control theoperation and administration of thecondominium association. These are:Declaration: The declaration is the documentwhich creates and defines the association. Itessentially contains the “ground rules” for theassociation. It is recorded against the entireproperty so that all owners who buy property inthe association after the date on which thedeclaration is recorded will be bound by itswww.idfpr.com/CCICO/provisions. Thus, the declaration “runs with theland,” i.e., is found in the chain of title to theproperty, and affects all subsequent owners ofthe property. The declaration will alsocommonly contain various restrictions againstowners using the property or the units in acertain way. The declaration may beconsidered the “constitution” for the operationand administration of the condominiumassociation. As a general rule, if there isa conflict between the provisions of thedeclaration and the bylaws or othercondominium instruments, the declarationprevails except to the extent it is inconsistentwith the Act.Bylaws: The Bylaws, often an exhibit to thedeclaration or incorporated within the body ofthe declaration, contain the proceduralframework under which the association/corporation will run. The bylaws tell the boardof directors how to run the corporation, i.e. howmany people should sit on the Board, how oftento meet, notice requirements, the power of theBoard, the manner in which board membersmay participate in a board meeting and themethod of filling vacancies on the board, forexample. An association’s bylaws must set forththe method by which the association adoptsand amends rules and regulations governingthe use and operation of the common elements.Rules and Regulations: Rules (or “ rules andregulations”) are sometimes referred to as the“dos and don’ts” of a community association.The rules assist the association in meetingobligations and terms imposed by or restrictionswithin an association’s declaration. It is a boardfunction to adopt or amend rules.There is a hierarchy of authority betweenthe association's governing documents and theAct. In any situation where the governingdocuments and the Act conflict (for instance,where the governing documents limit theBoard's ability to pass special assessments ormake certain expenditures), the Act will controland trump any inconsistent provision within thegoverning documents.3

All persons who use or occupy acondominium unit are subject to the Act, aswell as the declaration, bylaws and rules andregulations. (Act, Section 18(n)).All persons who useor occupy acondominium unit aresubject to the Act, aswell as thedeclaration, bylawsand rules andregulations.Unit Owners’ Rights andResponsibilitiesAvailability of Condominium Documents:Any member of an association has the right toinspect, examine, and make copies of: (1) theassociation’s declaration, bylaws, and plats ofsurvey and all amendments to thesedocuments; (2) the association’s rules andregulations, if any; (3) if the association isincorporated, the association’s articles ofincorporation and all amendments to thearticles; (4) minutes of all meetings of theboard for the immediately preceding 7 years;(5) all current policies of insurance of theassociation; (6) all contracts, leases and otheragreements then in effect to which theassociation is a party or under which theassociation or the unit owners have obligationsor liabilities; and (7) the books and records forthe association’s current and ten immediatelypreceding fiscal years, including but not limitedto itemized and detailed records of all receipts,expenditures and accounts. In order toexercise this right, an association membermust submit a written request to the board orits authorized agent, stating “with particularity”the records being requested. An associationmust generally provide such records within 10business days.www.idfpr.com/CCICO/The Act also gives associationmembers the right to inspect, examine, andmake copies of another subset of documents,but with respect to these, the member mustnot only identify the records “with particularity”but also state “a purpose that relates to theassociation” for requesting them. Thesedocuments are (1) a current listing of thenames, addresses, email addresses,telephone numbers and weighted vote of allmembers entitled to vote; and (2) ballots andproxies related to ballots for all matters andvoted on by the members of the associationduring the immediately preceding 12 months,including but not limited to the election ofmembers of the board. An association mustgenerally provide such records within 10business days. The board may require themember to certify in writing that s/he will notuse the information for any commercialpurpose (that is, for sale, resale or solicitationor advertisement for sales or services) or anypurpose that does not relate to the associationand may impose a fine upon any person whomakes a false certification.The association may charge therequesting member the actual cost to theassociation of retrieving and making requestedrecords available for inspection and examinationand, if a member requests copies of therecords, the association shall charge its actualcosts of reproducing the records to therequesting member.4

Anti-Discrimination: Federal law prohibitsdiscrimination in housing by associations andtheir agents and employees on the basis ofrace, color, national origin, sex, religion,disability, and familial status (children in theassistance animals in any housing contextincluding private residential associations, mustbe considered under the Federal Fair Housingact’s “reasonable accommodation”requirements.The Illinois HumanRights Act prohibitsdiscrimination on thebasis of ancestry,marital status, sexualorientation or order ofprotection status.Boards have a responsibility toreasonably accommodate the needs of a unitowner who is a person with a disability asrequired by the federal Civil Rights Act of 1968,the Illinois Human Rights Act and anyapplicable local ordinances in the exercise of itspowers with respect to the use of the commonelements or approval ofmodifications in an individualunit. The individual whoseneeds are being thusaccommodated may be askedto pay the costs of any suchmodifications.family). In addition, the Illinois Human RightsAct prohibits discrimination on the basis ofancestry, marital status, sexual orientation ororder of protection status. Examples ofdiscriminatory rules are those that prohibitchildren from using recreational areas orother services, such as using the swimmingpool.Just as it is illegal to discriminateagainst persons because of their race, it isillegal to discriminate against them becausethey have children. Also, physically disabledunit owners may have a right to installphysical accommodations (at the disabledperson’s own expense) such as ramps,handrails and similar improvements to enablethen to have full use of the condominiumproperty or their unit.An association with rules limiting petsmust generally exempt “assistance animals” –a broad term used by the U.S. Department ofUrban and Housing Development (“HUD”) toencompass not only “service animals” whichare exclusively dogs that have been speciallytrained to perform specific tasks or do work forthe benefit of a disabled individual, but also“emotional support animals” which includesany animal (including, but not limited to, dogs,cats, birds, reptiles, etc.) which providesdisability-related assistance to its owner butneed not have been specifically trained orcertified in any way. HUD makes clear that allwww.idfpr.com/CCICO/Association Meetings: There are two typesof meetings: board meetings and membershipmeetings. Membership meetings are oftenreferred to as unit owner meetings. Unitowners have the right to attend both types ofmeeting.Board MeetingsAn association board must meet at leastfour times annually and a quorum (as defined inthe by-laws) of board members is required, butboard members may participate in and act atany meeting of the board in person, bytelephonic means, or by use of acceptabletechnological means enabling all personsparticipating in the meeting to communicatewith each other.Notice of every board meeting must beposted in entranceways, elevators or otherconspicuous places in the condominium at least48 hours prior to the meeting; if there is nocommon entranceway for 7 or more units, theboard may designate alternate locations; andprovide by mail or delivery to each unit owner, ifrequired by the bylaws or otherwise required bythe Act. If a unit owner has provided writtenauthorization, such delivery may be made byacceptable technological means.5

Meetings must be open to all unitowners. At the option of board members,others may be invited, such as themanagement company representative orothers presenting information aboutassociation business. Unit Owners do nothave the right to comment at board meetings.However, many condominiumassociation boards have a unit ownercomment period, subject to the discretion ofthe board. Any unit owner may record aboard meeting by tape, film, or other means.The board may adopt reasonable rules togovern the making of such recordings.Membership/Association MeetingsA membership meeting must be held atleast once a year and requires a quorum of unitowners which, by default under the Act, isdefined as 20% of the unit owners. Writtennotice must be mailed or delivered to all unitowners, giving no less than 10 days and no morethan 30 days’ notice of the time, place andpurpose of the meeting. If the unit owner hasprovided written authorization, such delivery maybe made be acceptable technological means. Ifa proposed rule is to be discussed at amembership meeting called for that specificpurpose, the notice must contain the full text ofthe proposed rule.discussing the appointment, employment,engagement, or dismissal of an employee,independent contractor, agent, or other providerof goods and services; (3) interviewing apotential employee, independent contractor,agent, or other provider of goods and services;(4) discussing violations of the association’s rulesand regulations; (5) discussing an owner'sunpaid assessments; and (6) consultation withthe association's legal counsel. Minutes of theboard meeting should not reflect the mattersdiscussed in closed session, and any vote onmatters discussed in closed session must takeplace in an open portion of a board meeting.Some or all of the members of a condominiumassociation board may also meet privately (thatis, without holding a board meeting) for thosesame six purposes.A “closed session”is a portion of anopen board meetingduring which theboard discusses—but does not voteon—certainsensitive mattersAssessments: Members of a condominiumassociation are legally obligated to collectassessments from the unit owners. Each unitowner has a duty to pay his share of commonexpenses in a timely manner. This share ofClosed Meetingscommon expenses is collected through theA “closed session” is a portion of an open process of “assessment” and arises from the factboard meeting during which the board discusses that every unit owner shares common element– but does not vote on – certain sensitive matters ownership in an undivided manner. Unit ownersare responsible for paying “assessments”specified by Illinois law, without any ownersincluding both assessments for day to daypresent. A closed session occurs when theboard votes to go into closed session at any time operating expenses, reserve assessments forexpenses relating to long-term maintenance andduring a board meeting or when a quorum ofany “special assessments.” Assessments areboard directors meeting privately outside of aboard meeting to discuss one (1) of the following determined according to the percentage ofsix (6) matters that may lawfully be addressed in ownership in the common elements set forth inclosed session: (1) discussing pending or likely the association’s declaration.litigation by or against the association; (2)Special meetings of the members can becalled by the president, the board or by 20% ofunit owners.www.idfpr.com/CCICO/6

Each association’s bylaws mustspecify the method of estimating the amountof the annual budget, and the manner ofassessing and collecting from the unitowners their respective shares of suchestimated expenses.They must also explicitly provide thatthe association has no authority to forbearthe payment of assessments by any unitowner—to permit a unit owner to refrainfrom paying assessments. Therefore, unitowners may not either withholdassessments or pay them into an escrowaccount.If there are unplanned repairs or othersituations where additional funds are neededto support the association, then the primarytool at the board's disposal is a specialassessment. A special assessment allowsthe Board to collect additional funds from theunit owners above and beyond the normalmonthly assessments.Each unit owner has aduty to pay his shareof common expensesin a timely manner.Special assessments can bearranged in whatever manner the boardwould like in terms of timing and number ofpayments. For example, a specialassessment may call for a single lumppayment or may require smaller paymentsover months or even years. Owners may beissuing two payments each month; one fortheir normal monthly assessment andanother for the special assessment. The unitowners are not included in the vote and maynot veto the board's decision if the specialassessment has been adopted foremergency or legally mandated purposes(discussed further herein). Unite owners dohave recourse to reject special assessmentsadopted by the board for all otherexpenditures.www.idfpr.com/CCICO/If the board of directors adopts a specialassessment that results in the total assessments(regular and special) in a given year exceedingone hundred and fifteen percent (115%) of thetotal assessments in the prior year, then ownerscan petition the board for a meeting of owners tovote on such special assessment. The petitionmust be signed by owners with at least twentypercent (20%) of the total votes and presentedto the board within fourteen (14) days of theboard’s approval of the special assessment. Ifsuch a petition is presented, the board must calla meeting of owners within thirty (30) days, andat the meeting owners with a majority of the totalvotes in the association must vote to reject thespecial assessment, or else it is ratified.Pursuant to Section 18(a)(8) of the Act,separate assessments for expenditures relatingto emergencies or mandated by law may beadopted by the board of managers withoutbeing subject to unit owner approval."Emergency" is defined as an immediatedanger to the structural integrity of the commonelements or to the life, health, safety or propertyof the unit owners.The Act provides that all specialassessments related to emergencies (defined as“an immediate danger to the structural integrityof the common elements or to the life, health,safety or property of the unit owners”) ormandated by law are not subject to veto by theowners. Assessments for additions andalterations to the common elements or toassociation-owned property not included in theadopted annual budget, must be separatelyassessed and are subject to approval of twothirds of the total votes of all unit owners.Condo unit owners may not withholdassessments even if the condo association failsto make repairs and perform maintenance. If aunit owner does not pay his or her assessment(or of any other expenses lawfully agreed uponor any unpaid fine) to the association, theassociation may file for relief under the ForcibleEntry and Detainer Act. (735 ILCS 5/9-101).7

This law allows the association to ask acourt for a money judgment and possession ofthe unit for which assessments have not beenpaid. The law only allows the association totake possession of the unit; the owner will stillown the unit. Once the association haspossession of the unit, it may rent out the unitand use the rental income to pay the past dueassessments.Each year the board mustprepare and distribute aproposed annual budgetA full discussion of the Forcible Entryand Detainer Act is beyond the scope of thispublication and any unit owner against whomsuch an action is filed is encouraged topromptly seek legal advice.Budget: Each year the board must prepareand distribute a proposed annual budgetindicating with particularity: all anticipatedcommon expenses by category (line item);capital expenditures or repairs; payment ofreal estate taxes, if any; the amountdesignated for reserves; each unit owner’santicipated assessments; and otheranticipated income.Unit owners must beprovided with a copy of theproposed annual budget atleast 25 days before thedate of the board meetingat which the board willadopt the proposed annualbudget. Notice of the boardmeeting at which the boardwill adopt the proposedannual budget must bemailed or delivered to all unit owners not lessthan 10 days and not more than 30 daysbefore the date of that board meeting. Noticeof the board meeting must also be posted atleast 48 hours before the date of that boardmeeting. “Notice” means, with certainwww.idfpr.com/CCICO/exceptions, posting in entranceways, elevators orother conspicuous places in the condominium.Notice must also be given to: (i) each unit ownerwho has provided the association with writtenauthorization to conduct business by acceptabletechnological means, and (ii) to the extent that thecondominium instruments of an associationrequire, to each other unit owner by mail ordelivery.The budget must be approved by at least amajority of the board members present at aproperly noticed open board meeting, at which aquorum of the board is present during the entiremeeting.Unless an association has expressly waivedthe Act’s reserve requirements by a vote of 2/3 ofthe total votes of the association, all budgets mustprovide for “reasonable reserves” for capitalexpenditures and deferred maintenance for repairor replacement of the common elements. Todetermine the amount of reserves appropriate foran association, the board must consider thefollowing: (i) the repair and replacement cost, andthe estimated useful life, of the property which theassociation is obligated to maintain, including butnot limited to structural and mechanicalcomponents, surfaces of the buildings andcommon elements, and energy systems andequipment; (ii) the current and anticipated returnon investment of association funds; (iii) anyindependent professional reserve study which theassociation may obtain; (iv) the financial impact onunit owners, and the market value of thecondominium units, of any assessment increaseneeded to fund reserves; and (v) the ability of theassociation to obtain financing or refinancing.Each unit owner has the right to receive anitemized accounting of the common expenses forthe preceding year actually incurred or paid,together with an indication of which portions werefor reserves, capital expenditures or repairs orpayments of real estate taxes and with atabulation of the amounts collected pursuant to thebudget or assessment, and showing the netexcess or deficit of income over expenditures plusreserves.An association that consists of 100 or moreunits must use generally accepted accountingprinciples in fulfilling any accounting obligationsunder the Act.8

Disclosures to prospective purchasers:The Act grants rights not only to unit owners,but to prospective purchasers buying acondominium unit from an owner other thanthe developer (who are subject to morerigorous disclosure requirements). If theprospective purchaser asks for them, the unitowner/seller is required to obtain from theboard and make available for inspection, thefollowing: (1) a copy of the declaration,bylaws, other condominium instruments andany rules and regulation; (2) a statement ofany liens, including a statement of theaccount of the unit setting forth the amountsThe Act grants rightsnot only to unit owners,but to prospectivepurchasersof unpaid assessments and other chargesdue and owing; (3) a statement of any capitalexpenditures anticipated by the unit owner’sassociation within the current or succeedingtwo fiscal years; (4) a statement of the statusand amount of any reserve for replacementfund and any portion of such fund earmarkedfor any specified project by the board; (5) acopy of the statement of financial condition ofthe unit owner’s association for the last fiscalyear for which such a statement is available;(6) a statement of the status of any pendingsuits or judgments in which the unit owner’sassociation is a party; (7) a statement settingforth what insurance coverage is provided forall unit owners by the unit owner’sassociation; (8) a statement that anyimprovement or alterations made to the unit,or the limited common elements assigned tothe unit, by the prior (selling) unit owners arein good faith believed to be in compliancewith the condominium instruments; and (9)the identity and mailing address of theprincipal officer of the unit owner’sassociation or of the other officer or agent asis specifically designated to receive notices.www.idfpr.com/CCICO/The association must provide this informationwhen requested to do so in writing and within30 days of the request. These are oftenreferred to as “Section 22.1 Disclosures,”referring to the Section of the Act whichrequires them.Elections: The most important role and rightof a unit owner is electing directors to theassociation’s board, which has a great deal ofpower over the day-to-day operations of theassociation.The bylaws of every condominiumassociation must provide for the election fromamong the unit owners of a board of managers.Once elected, board members have broadauthority to act on behalf of the association andits members subject to the Act, the declarationand bylaws including filling vacancies on theboard until the next annualmeeting of unit owners andelecting the association’sofficers.The Act requires that the members holdan annual meeting, one of the purposes ofwhich is the election of board members fromamong the unit owners. The Act generallyprovides unit owners the right to vote in personor by a proxy executed in writing by the unitowner or his duly authorized attorney.However, it is important for unit owners to befamiliar with the declaration, bylaws and rulesof their association, which may prohibit the useof proxies or provide for alternative votingmethods (i.e. electronic voting or absenteeballots).The board may distribute to unitowners biographical and backgroundinformation about candidates for election tothe board if reasonable efforts are made toidentify all candidates, all candidates aregiven an opportunity to include thisinformation in the materials to be distributedto unit owners, and the board does notexpress a preference in favor of anycandidate.9

Written notice of the meeting at whichthe election will be conducted must be mailedor delivered to all unit owners, giving no lessthan 10 days and no more than 30 days’notice of the time, place and purpose of themeeting. If the unit owner has providedwritten authorization to receive delivery byacceptable technological means (most often,email), such delivery may be made by anAssociation.Fiduciary Duties: Unit owners have a rightto expect that members of the board will “doright by them” or in legal terms, fulfill theirfiduciary duties. The Act specifically requiresthe officers and members of the board (thedirectors) to exercise the care required of afiduciary of the unit owners. In general,these fiduciary duties require undividedloyalty and the exercise of reasonablebusiness judgment in conductingA unit owner may not doanything in his or her unitthat will jeopardize otherproperty in thecondominiumthe business affairs of the association. Evenif a unit owner doesn’t believe that the boardhas made the “right” decision, if the boardand its members follow the correctprocedures and act in the interest of theassociation, they generally will not bepersonally liable for their actions on behalf ofthe association.Improvements and Alterations: A unitowner has the right to “make his home hiscastle” but must do so in accordance with theassociation’s governing documents.Generally speaking, a unit owner may not doanything in his or her unit that will jeopardizeother property in the condominium orinterfere with the use and enjoyment of theproperty by other unit owners.www.idfpr.com/CCICO/Moreover, the association’s declarationgenerally prohibits unit owners from makingalterations to any common limited commonelement (including those located within the unitowner’s unit) w ithout written board approval,thereby limiting the unit owner's ability to takeunilateral action in certain cases. The boardalso has the right, under the Act, to access anyunit if necessary for the maintenance, repair orreplacement of common elements or for makingemergency repairs necessary to preventdamage to the common elements or to otherunits."Emergency" is defined in the Act tomean an immediate danger to the structuralintegrity of the common elements or to the life,health, safety or property of the unit owners.To the extent possible, it is a good practice forassociations to notify unit owners if it plans tomake access for non-emergency purposes.Leases: A properly adopted declarationprovision can restrict renters within anassociation. If the association does permitrenters, the unit owner leasing the unit mustdeliver a copy of the signed lease to the boardor if the lease is oral, a memorandum of thelease, not later than the date of occupancy or10 days after the lease is signed. All personswho use or occupy a condominium unit aresubject to the Act, as well as the declaration,bylaws and rules and regulations. Since therenter will be required to complywith the provisions of thesedocuments, the unit ownershould provide the renter with acopy of those documents or, atmin

January 2018 . The Condo Unit Owner’s Rights and . become a very popular form of home ownership in Illinois. By one estimate, 3.7 million Illinoisans resided within a condominium development in 2015 –a number equal to nearly thirty percent of . must be knowledgeable abou

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