By: Michael C. Kim
Michael C. Kim & Associates
ACTHA Legislative Committee Co-Chair
The 2017 legislative session produced only a handful of new laws that affected community associations (condominium, master and common interest community associations). All bills were signed into law by the Governor and, except for one, take effect on January 1, 2018.
A summary of the bills (and applicable Section references to the Condo Act or CICA Act) is set forth below:
HOUSE BILL 189 (now Public Act 100-0292, effective January 1, 2018) amends the Condominium Property Act (“Condo Act”) and the Common Interest Community Association Act (“CICA Act”) as follows:
BOTH CONDO AND CIC’s
1. Mortgagee/lienholder deemed consent. If the declaration/by-laws or other governing documents require approval of a mortgagee or lienholder of record, and if that mortgagee/lienholder receives a request to approve or consent to an amendment to those governing documents, then that mortgagee/lienholder shall be deemed to have approved or consented to the request unless it delivers a negative response to the requesting party within 60 days after mailing of the request by certified mail.
(Condo Act Sec. 27(a)(ii); CICA Act Sec. 1-20(e))
2. Requirement to use GAAP. An association subject to either the CICA Act or the Condo Act and having 100 or more units, must use generally accepted accounting principles when fulfilling any accounting obligations under the CICA Act or Condo Act, as the case may be.
(Condo Act Sec. 18.10; CICA Act Sec. 1-45(i))
1. Handling Year End Surplus/Deficits. If at the end of its fiscal year, the association has approved an end-of-year fiscal audit (if applicable), and if the fiscal year ended with a surplus of funds over actual expenses (including budgeted reserve fund contributions), then “to the extent that there are not any contrary provisions” in the association’s declaration/bylaws, the board of directors (managers) has the authority in its discretion to dispose of the surplus in one or more of the following ways;
(i) contribute the surplus to the reserve fund, (ii) return the surplus to the unit owners as a credit against the remaining monthly assessments for the current fiscal year; (iii) return the surplus to the unit owners in the form of a direct payment to them; or (iv) maintain the funds in the operating account, in which case the funds shall be applied as a credit when calculating the following year’s annual budget. If the fiscal year ends in a deficit, then “to the extent that there are not any contrary provisions” in the association’s declaration/by-laws, the board has the authority in its discretion to address the deficit by incorporating it into the following years’ annual budget. However, if 20% of the unit owners deliver a petition objecting to the board’s action within 30 days after notice to the unit owners of such action, then the board must call a unit owner’s meeting within 30 days of the date of delivery of petition and at that meeting, the unit owners may vote to select “a different option than the option selected by the board.” Unless a majority of the total votes of unit owners are cast at the meeting to reject the board’s selection and select a different option, the board’s decision is ratified (Condo Act Sec. 9c(5))
2. Sale of entire condo property. A unit owner who does not vote in favor of such a sale and files a written objection within 20 days after the meeting at which the sale was approved, shall be entitled to receive from the sale proceeds an equivalent to the greater of (i) the value of his/her interest as determined by an appraisal (less the amount of any unpaid assessments or charges due and owing from that owner) or (ii) the outstanding balance of any bona fide debt secured by that owner’s interest which debt was incurred by the owner in the purchase or refinancing of the unit owner’s interest (less the amount of any unpaid assessments or charges due from that owner). The objecting owner is also entitled to receive from the sale proceeds, reimbursement for “reasonable relocation costs, determined in the same manner as under the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, and any implementing regulations under the Act. This change applies to any sale that is pending or commenced on or after January 1, 2018. (Condo Act Sec. 15(a) and (b))
3. Petition for unit owners’ referendum vote on special assessment or budget increase. The time period for delivery of a petition to the board of directors (managers) is increased from 14 to 21 days. (Condo Act Sec. 18(a)(8)(i))
4. Petition for unit owners’ referendum vote on board of directors’ (managers) adoption of rule for absentee ballot voting to elect directors. The time period to delivery of a petition to the board is increased from 14 to 30 days. (Condo Act Sec. 18(b)(9)C))
5. Petition for unit owners’ referendum vote on intention to contract with director/director’s immediate family. The time period for delivery of a petition to the board is increased from 20 to 30 days. (Condo Act Sec. 18(a)(16))
6. Unit Owners list. Under Section 19 of the Condo Act, a current list of unit owners to be provided to a requesting owner must include e-mail addresses and telephone numbers. (Condo Act Sec. 19(a)(7))
7. Books and records available to Unit Owners under Section 19 of the Condo Act. Under Section 19 of the Condo Act, a unit owner’s right to inspect/copy books and records is not limited to “books and records of account” but now includes all books and records of the association, including all account records. No “proper purpose” need be given by an owner to inspect or copy contracts, leases or other agreements and the association’s other books and records to the requesting unit owner is reduced from 30 days to 10 “business” days. Failure to make the requested record available within 10 business days shall be deemed a denial by the board. A unit owner’s right to inspect and copy the unit owners’ list (names, addresses, e-mail address, phone numbers and weighted vote) and ballots and proxies for matters voted on by the membership must be for a purpose “that relates to the association” and not for a “commercial purpose” (defined as use for “sale, resale, or solicitation ro advertisement for sales or services”). The association or its management agent “may require the member to certify in writing that the information contained in the records shall not be used by the member for any commercial purpose or for any purpose that does not relate to the association” and for a false certification, the board may impose a fine on the violating unit owner (after notice and opportunity for a hearing). Finally, the charge back of actual costs of retrieving, making available or copying the records, to a requesting unit owner is not mandatory but only permissive. (Condo Act Sec. 19(a)(9), (d-5), (e), and (f))
8. Combinations of units. It is now made clear that if there is a combination of units (being reflected in a amended plat of survey), then the exclusive use of adjacent common elements to and by that combined unit is expressly permitted. Such exclusive use would be as a limited common element, provided that area in question is “not necessary or practical for use by the owners of any other units.” Such creation of a limited common element does not require unanimous consent of all unit owners or any other percentage requirements in the declaration/by-laws or any amendment under the Condo Act apart from Section 31. (Condo Act Sec. 31(a), (e) and (f))
HOUSE BILL 3359 (now Public Act 100-0173, effective January 1, 2018) amends the Illinois Code of Civil Procedure (and other statutes) to change references to “forcible entry and detainer actions” to “eviction actions” (which is the more commonly understood terminology). The term “eviction” replaces “terminate the right of possession” and “eviction order” replaces “judgment for possession”. In addition, a standardized residential eviction order form is to be determined by the Illinois Supreme Court for statewide use. Overall, no substantive changes are made.
HOUSE BILL 3855 (now Public Act 100-0201, effective August 18, 2017) amends the Community Association Manager Licensing and Disciplinary Act and the Common Interest Community Association Act by making various stylistic changes and corrections, but no substantive changes.
SENATE BILL 885 (now Public Act 100-0416, effective January 1, 2018) creates a new “Installment Sales Contract Act” , and changes the Condominium Property Act’s reference to “installment contract” to “installment sales contract” (as defined in the new statute); those sections of the Condominium Property Act deal with the ability of contract purchasers to be counted toward a quorum for membership meetings, voting in election of board members and serving on the board of directors (manager), unless such rights are reserved in writing by the contract seller. This change affects condominium and master associations. To determine whether an installment contract qualifies for this treatment, the association needs to check the definition of “installment sales contract” under that new Installment Sales Contract Act. (Condo Act Sec. 18(b)(11) and 18.5(e)(5))
The results (especially in House Bill 189) are quite a mixture of good, bad and mediocre, and obviously a curious sausage produced by the efforts of the House Judiciary Committee.
Upcoming Legislative Dates
Election Day: Nov. 7
Veto Session: Oct. 24-26 and Nov. 7-9