By Michael C. Kim
Attorney, Michael C. Kim & Associates
Chicago
ACTHA Legislative Committee Co-Chair

As in past years, the Illinois General Assembly ultimately passed legislation affecting the operations of condominium and common interest community (a/k/a townhome and homeowners) associations.  Having been passed by the Legislature, the bills have now been signed into law by the Governor.

A synopsis of these bills is set forth below:

HOUSE BILL 4658 (HB 4658) (now Public Act 0776, effective August 12, 2016) amends the Condominium and Common Interest Community Ombudsperson Act (the “Ombudsperson Act”) by changing the definition of “condominium association” in accordance with Section 2(o) of the Illinois Condominium Property Act (as well as a similar reference for the definition of a “master association”); placing the Ombudsperson’s office within the Real Estate Division of the Department of Financial and Professional Regulation; precluding the Ombudsperson from having any authority to consider matters subject to the Illinois Human Rights Act or brought before the Department of Human Rights or the Illinois Human Rights Commission or comparable local governmental body or a federal agency or commission; changing the date on which the Ombudsperson can offer outreach and educational courses to July 1, 2017 (originally July 1, 2018); including in the Ombudsperson’s website information concerning alternative dispute resolution programs and contacts; permitting use of a statewide toll-free number to provide information and resources; specifying that the association’s policy for resolving complaints by unit owners must include a requirement that the determination of the dispute be made within 180 days after receipt of the original unit owner’s complaint; extending the deadline for establishing and adopting the unit owner’s complaint resolution policy to January 1, 2019 (if the association is created after January 1, 2019, it must establish and adopt its policy within 180 days after its creation); eliminating the potential penalty of an association’s not being able to enforce its common expense/assessment lien rights for failure to adopt a complaint resolution policy (note that the statutory reference to Section 65(g) is probably erroneous); postponing until July 1, 2020 (and subject to appropriation of funds), the Ombudsperson’s assisting a unit owner in resolving that owner’s dispute with his/her association involving either the Condominium Property Act or the Common Interest Community Association Act; providing that the Department shall establish rules describing the time limit, method and manner for dispute resolution by July 1, 2020; stating that a request for information to the Department of Ombudsperson is not a request under the Freedom of Information Act; stating that the confidentiality provisions of the Ombudsperson Act do not extend to educational, training and outreach material, statistical data or operational material maintained by the Department  under  the Ombudsperson Act; requiring  the Department to  submit its first annual report to the General

 

Assembly by July 1, 2018 and thereafter by October 1 of each year, which reports shall include the number of requests for information, the training, education and other information provided, the manner in which education and training was provided, and the time required to provide training, education or other information, and analysis of concerns within condominium and common interest communities; and providing a new effective date of January 1, 2017 (previously July 1, 2016) for the Ombudsperson Act, as well as a “sunset” (repeal) date of July 1, 2022 (previously July 1, 2021).

 

COMMENT:   The Ombudsperson Act is a “work in progress” with good intentions but hampered by lack of state funding.

HOUSE BILL 5696 (HB 5696) (now Public Act 99-0612, effective January 1, 2017) amends the Common Interest Community Association Act and Condominium Property Act to expand the definition of “acceptable technological means” to include “any generally available technology that, by rule of the association, is deemed to provide reasonable security, reliability, identification, and verifiability.”

COMMENT:  Essentially a restatement and reorganization of previously stated concepts in the statutes.  No material changes

SENATE BILL 2354 (SB 2354) (now Public Act 099-0567, effective January 1, 2017) amends the Condominium Property Act and Common Interest Community Association Act and represents a significant “push back” against the 2014 Palm II appellate court ruling.  SB 2354 confirms that an executive session can be held either as a part of an open meeting OR as a “stand alone” event “separately from a noticed meeting”.  Presumably, as a “stand alone” event, there would not be a notice requirement.  Also, SB 2354 expands the subject matter of executive session to include discussion with or about independent contractors, agents or other providers of goods and services.  Thus, the board can interview and meet with contractors or other third party providers in private.  In addition, SB 2354 expressly acknowledges that the board’s consultation with association legal counsel can be had in executive session.

 

COMMENT:  SB 2354 does not amend Section 18.5 of the Illinois Condominium Property Act which applies to master associations; so master association board meetings are NOT affected.  Note that SB 2354 did NOT amend either the Illinois Business Corporation Act or General Not for Profit Corporation Act, both of which corporation statutes have “open board meetings” sections.  It is likely that the overlooked Section 18.5 and the corporation statutes will be addressed in future legislation to make them all alike in this aspect.

 

SENATE BILL 2358 (SB 2358) (now Public Act 99-0567), effective January 1, 2017) amends the Condominium Property Act and the Common Interest Community Association Act to state that any assignment of a developer’s interest in the property to a successor is not effective until such a written assignment is recorded (presumably with the local recorder of deeds).

COMMENT:  Good idea.

SENATE BILL 2359 (SB 2359) (now Public Act 99-0569, effective January 1, 2017) amends the Condominium Property Act to expressly allow the board of directors to pledge the association’s future income (assessments and other sources) and to mortgage other association assets to secure a loan.

COMMENT:  Those declaration/by-laws that require unit owners’ approval of pledge of income (assessments) and other association assets are overridden by this statute, making it much easier to effectuate association borrowing.

SENATE BILL 2741 (SB 2741) (now Public Act 99-0627, effective January 1, 2017) amends the Common Interest Community Association Act to allow correction of errors, omissions or inconsistencies in the governing documents in order to conform with the Common Interest Community Association Act or other applicable law, by only a vote of 2/3 of the board of directors, and negates any provision that requires vote by or notice to the membership.

 

COMMENT:  Assumes that the board of directors is acting properly, but why eliminate notice to the owners?

 

Overall, the passed legislation is positive and helpful.  Of course, legislation is a continuing process year after year.  Some good and bad ideas from the past sessions may come back in 2017.