Wednesday, February 8, 2012
TAX TIME
Condo and townhome associations must file a tax return. Here is the link: http://www.irs.gov/pub/irs-pdf/f1120h.
Monday, January 9, 2012
Foreclosure and Debt Forgiveness
If you had your primary residence foreclosed on, the bank could declare the difference between your loan and the value of the home (underwater, like most of us) as income. There is a newer law that helps, and can save that tax hit to have that debt forgiveness on a primary residence be a non-taxable event. http://www.irs.gov/newsroom/article/0%2C%2Cid=174034%2C00.html
Home Foreclosure and Debt Cancellation
www.irs.gov
Update Dec. 11, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage ...
Home Foreclosure and Debt Cancellation
www.irs.gov
Update Dec. 11, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage ...
Sunday, April 3, 2011
Why do your meetings take so long?
A condo meeting often parrots the second week of kindergarten; everyone feels comfortable enough to yell and yet does not want to share or back down.
A regular Board meeting should last no more than one hour. Period.
Run meetings with an iron fist. Create an agenda that is iron clad, and limit comments to a specific time period of no more than 10 minutes. Resist the temptation to address every single question and move the meeting along. Begin by approving prior Board minutes, addressing motions, comments on them and voting as the case may be. As the Board, it is incumbent on you to create leadership in the Association. Don't be afraid to do so.
A regular Board meeting should last no more than one hour. Period.
Run meetings with an iron fist. Create an agenda that is iron clad, and limit comments to a specific time period of no more than 10 minutes. Resist the temptation to address every single question and move the meeting along. Begin by approving prior Board minutes, addressing motions, comments on them and voting as the case may be. As the Board, it is incumbent on you to create leadership in the Association. Don't be afraid to do so.
Fiduciary Duty and Assessment Forbearance
An Association can settle a lawsuit against a delinquent unit owner without violating the ICPA prohibition on forbearing assessments. This is so because the Board is bound by its fiduciary duty and enabled by the ICPA to settle lawsuits, a power which trumps the forbearance prohibition. Think of the forbearance prohibition as one which really only applies to exchanging work or other value for assessment payment, but not something that prohibits the Board from settling delinquent suits.
Any questions, email me at dbuetow@frltd.com...
Any questions, email me at dbuetow@frltd.com...
Thursday, August 27, 2009
Ruling the Roost
Many people who live in condominiums find out that there are rules and regulations for how they live, what they can do, what their pet can do, what rental periods they can allow.
After they get fined.
So, let's look at how rules are written, who writes them and who enforces them.
Rules and regulations are the complete province of the Board of Directors. Condominium rules must be adopted in conformance with Section 18.4(h) of the ICPA. That means that the proposed text of the rules must be written by the Board, must be provided to each unit owner and must be accompanied by the notice to have a meeting to discuss the same. The owners' meeting that is to occur must not be sooner than 10, nor later than 30 days from the issuance of the notice and must be plainly set forth the meeting date on the notice along with the purpose of the meeting.
The unit owners then go to that meeting and discuss with the Board what should be enacted and what should not be enacted. The Board can choose to listen, or, they can choose to disregard your being offended at Rule #45 which imposes a fine for the display of your Ozzfest poster in the hallway, or your opposition to Rule #23 which disallows half eaten burritos being left in the vestibule; the passage of rules is completely left to the Board.
Once the Board adopts the rules and regs, they are posted for all to see and the Board must insure that a copy get into each unit owner's hands. The Board would also wise to accompany that set of rules and regs with a proposed enforcement framework so that everyone knows what types of fines fit each defense such that the rules and regs are more immune from challenge.
Enjoy your burrito.
DB...
After they get fined.
So, let's look at how rules are written, who writes them and who enforces them.
Rules and regulations are the complete province of the Board of Directors. Condominium rules must be adopted in conformance with Section 18.4(h) of the ICPA. That means that the proposed text of the rules must be written by the Board, must be provided to each unit owner and must be accompanied by the notice to have a meeting to discuss the same. The owners' meeting that is to occur must not be sooner than 10, nor later than 30 days from the issuance of the notice and must be plainly set forth the meeting date on the notice along with the purpose of the meeting.
The unit owners then go to that meeting and discuss with the Board what should be enacted and what should not be enacted. The Board can choose to listen, or, they can choose to disregard your being offended at Rule #45 which imposes a fine for the display of your Ozzfest poster in the hallway, or your opposition to Rule #23 which disallows half eaten burritos being left in the vestibule; the passage of rules is completely left to the Board.
Once the Board adopts the rules and regs, they are posted for all to see and the Board must insure that a copy get into each unit owner's hands. The Board would also wise to accompany that set of rules and regs with a proposed enforcement framework so that everyone knows what types of fines fit each defense such that the rules and regs are more immune from challenge.
Enjoy your burrito.
DB...
Wednesday, July 1, 2009
Enforcing Rental Restrictions
I have gotten a lot of questions on how rental restrictions are enforced. Seems renters everywhere have been having loud barbecues, have been allowing pets to go where they don't belong and have been leaving half eaten burritos in the hallways of condominiums everywhere.
So, what can the Board of Directors do to enforce the rental restrictions they have enacted to allow owner-residents to rule their domain?
Lots.
This question initially deals with, that is incorporates, whether any such rental restrictions are reasonable. Restrictions on rentals are presumed valid if they are incorporated as an amendment to the Declaration and Bylaws, however, they still may be viable if passed as a rule of the Board of Directors (but will have to withstand a test of reasonableness). See: Apple II Condominium Ass’n. v. Worth Bank & Trust Co., 277 Ill. App. 3d 345, 659 N.E.2d 93 (1st Dist 1995).
As you know, this has been an equally hot topic in Springfield, where HB 5189 sought to statutorily provide a rental restriction of no more than 20%.
In either scenario, the Board can enforce these restrictions in the same way that they can enforce a violation of any provision of the Declaration and Bylaws and/or the Rules.
When any rule is enforced, the Board may simply abide by the following three step process: a) warning, b) notice, c) hearing.
That is, they can employ the warning, notice, hearing and fine provisions in Section 18 of the Illinois Condominium Property Act (the "ICPA"). The moral of that story is to provide unit owners copies of the Rules and even issue a notice of a possible rule violation or a warning as soon as the violation occurs. If the Board want to progress from here, they must simply issue a notice of a hearing date for the accused to come before the Board of Directors to explain their side of the story. Note that any notice should be directed to the owner of the unit as well as to the unit occupants. Once that notice is issued and the hearing date arrives, the Board merely conducts a fair hearing in which the accused can explain their side of the story. Once that happens, the Board can levy a fine that must be "reasonable" which means that it must fit the offense (i.e., fining someone $1,000.00 for being loud is likely not going to withstand a court challenge).
Once that fine is levied, it can become a lien on a unit just like an unpaid assessment can. This can lead to a collection proceeding and remedies up to and including a forced sale. But that is the easy answer. How about something more sexy to enforce a fine against a unit owner?
Many Declarations and Bylaws condition privileges on unit owners being in “good standing.” If there is a juicy privilege, like a pool or clubhouse or fitness room, Section 9.2 of the ICPA can step in to allow an argument that the breach of the Declaration and Bylaws in rental amounts to a violation of this provision and therefore, a sound argument to deprive that unit owner of that privilege.
In the extreme, violations of the ICPA and/or the recorded documents can become a “Default” under Section 9 of the ICPA which treats such defaults as grounds for summary eviction proceedings. However, if one proceeds down this road, they are faced with a heavy burden of proof and the cold realities of a crowded docket and a judge that may not be sympathetic to your action.
Enforcement can be as creative as your attorney can be with the Declaration and Bylaws in hand. As always, you are best served to contact him or her for express guidance while armed with knowledge to keep your fees down.
Have a great week!
DRB...
So, what can the Board of Directors do to enforce the rental restrictions they have enacted to allow owner-residents to rule their domain?
Lots.
This question initially deals with, that is incorporates, whether any such rental restrictions are reasonable. Restrictions on rentals are presumed valid if they are incorporated as an amendment to the Declaration and Bylaws, however, they still may be viable if passed as a rule of the Board of Directors (but will have to withstand a test of reasonableness). See: Apple II Condominium Ass’n. v. Worth Bank & Trust Co., 277 Ill. App. 3d 345, 659 N.E.2d 93 (1st Dist 1995).
As you know, this has been an equally hot topic in Springfield, where HB 5189 sought to statutorily provide a rental restriction of no more than 20%.
In either scenario, the Board can enforce these restrictions in the same way that they can enforce a violation of any provision of the Declaration and Bylaws and/or the Rules.
When any rule is enforced, the Board may simply abide by the following three step process: a) warning, b) notice, c) hearing.
That is, they can employ the warning, notice, hearing and fine provisions in Section 18 of the Illinois Condominium Property Act (the "ICPA"). The moral of that story is to provide unit owners copies of the Rules and even issue a notice of a possible rule violation or a warning as soon as the violation occurs. If the Board want to progress from here, they must simply issue a notice of a hearing date for the accused to come before the Board of Directors to explain their side of the story. Note that any notice should be directed to the owner of the unit as well as to the unit occupants. Once that notice is issued and the hearing date arrives, the Board merely conducts a fair hearing in which the accused can explain their side of the story. Once that happens, the Board can levy a fine that must be "reasonable" which means that it must fit the offense (i.e., fining someone $1,000.00 for being loud is likely not going to withstand a court challenge).
Once that fine is levied, it can become a lien on a unit just like an unpaid assessment can. This can lead to a collection proceeding and remedies up to and including a forced sale. But that is the easy answer. How about something more sexy to enforce a fine against a unit owner?
Many Declarations and Bylaws condition privileges on unit owners being in “good standing.” If there is a juicy privilege, like a pool or clubhouse or fitness room, Section 9.2 of the ICPA can step in to allow an argument that the breach of the Declaration and Bylaws in rental amounts to a violation of this provision and therefore, a sound argument to deprive that unit owner of that privilege.
In the extreme, violations of the ICPA and/or the recorded documents can become a “Default” under Section 9 of the ICPA which treats such defaults as grounds for summary eviction proceedings. However, if one proceeds down this road, they are faced with a heavy burden of proof and the cold realities of a crowded docket and a judge that may not be sympathetic to your action.
Enforcement can be as creative as your attorney can be with the Declaration and Bylaws in hand. As always, you are best served to contact him or her for express guidance while armed with knowledge to keep your fees down.
Have a great week!
DRB...
Friday, April 17, 2009
What Flag Can I Fly?
Ah yes. Spring is here.
Sunburn, lakefront runners, unique large softball games, outdoor cafes and the ubiquitous "W" flags on condominium balconies laud our hometown National League Team. Although my fandom lies off 35th, it got me to thinking that residents probably need to know what flags they can fly outside their condominium units.
Many condominium documents restrict flag displays. However, the Illinois General Assembly responded in favor of the display of the Red, White and Blue. Long ago, Illinois joined many other states that enacted a special piece of legislation to ensure that the residents of a condominium or townhome can display the American Flag.
Indeed, §18.6 to the Condominium Property Act prohibits condominium associations from adopting or enforcing rules or declaration provisions that prevent an owner or resident from installing a flagpole or displaying the American flag and/or a U.S. military services flag (i.e., a flag of any branch of the U.S. armed forces or the Illinois National Guard) on a unit's limited common element areas or on the exterior of the building adjacent to the unit. I have reproduced the text of that section of the Act for you below.
The Association can still reasonably regulate that flag placement or the flagpole placement, but it cannot be outlawed. Moreover, depictions of the flag, plastic flags and landscaped flag renditions are not protected.
Of course, federal law will also come into play.
Now what about that "W" flag?
Sorry folks, you get no special exemption. You are subject to the Board Rules and Regulations for ANY display of flags of sports teams, foreign countries or other governmental bodies. So, check those condominium documents before you celebrate a Cub win. As always, a thorough condominium attorney can answer these and any other questions you have about those very same docs.
Have a great week.
DRB...
(765 ILCS 605/18.6) Sec. 18.6. Display of American flag or military flag. (a) Notwithstanding any provision in the declaration, bylaws, rules, regulations, or agreements or other instruments of a condominium association or a master association or a common interest community association or a board's construction of any of those instruments, a board may not prohibit the display of the American flag or a military flag, or both, on or within the limited common areas and facilities of a unit owner or on the immediately adjacent exterior of the building in which the unit of a unit owner is located. A board may adopt reasonable rules and regulations, consistent with Sections 4 through 10 of Chapter 1 of Title 4 of the United States Code, regarding the placement and manner of display of the American flag and a board may adopt reasonable rules and regulations regarding the placement and manner of display of a military flag. A board may not prohibit the installation of a flagpole for the display of the American flag or a military flag, or both, on or within the limited common areas and facilities of a unit owner or on the immediately adjacent exterior of the building in which the unit of a unit owner is located, but a board may adopt reasonable rules and regulations regarding the location and size of flagpoles. (b) As used in this Section: "American flag" means the flag of the United States (as defined in Section 1 of Chapter 1 of Title 4 of the United States Code and the Executive Orders entered in connection with that Section) made of fabric, cloth, or paper displayed from a staff or flagpole or in a window, but "American flag" does not include a depiction or emblem of the American flag made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component. "Board" includes a board of managers or a board of a master association or a common interest community association. "Military flag" means a flag of any branch of the United States armed forces or the Illinois National Guard made of fabric, cloth, or paper displayed from a staff or flagpole or in a window, but "military flag" does not include a depiction or emblem of a military flag made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component. (Source: P.A. 93‑481, eff. 1‑1‑04.)
Sunburn, lakefront runners, unique large softball games, outdoor cafes and the ubiquitous "W" flags on condominium balconies laud our hometown National League Team. Although my fandom lies off 35th, it got me to thinking that residents probably need to know what flags they can fly outside their condominium units.
Many condominium documents restrict flag displays. However, the Illinois General Assembly responded in favor of the display of the Red, White and Blue. Long ago, Illinois joined many other states that enacted a special piece of legislation to ensure that the residents of a condominium or townhome can display the American Flag.
Indeed, §18.6 to the Condominium Property Act prohibits condominium associations from adopting or enforcing rules or declaration provisions that prevent an owner or resident from installing a flagpole or displaying the American flag and/or a U.S. military services flag (i.e., a flag of any branch of the U.S. armed forces or the Illinois National Guard) on a unit's limited common element areas or on the exterior of the building adjacent to the unit. I have reproduced the text of that section of the Act for you below.
The Association can still reasonably regulate that flag placement or the flagpole placement, but it cannot be outlawed. Moreover, depictions of the flag, plastic flags and landscaped flag renditions are not protected.
Of course, federal law will also come into play.
Now what about that "W" flag?
Sorry folks, you get no special exemption. You are subject to the Board Rules and Regulations for ANY display of flags of sports teams, foreign countries or other governmental bodies. So, check those condominium documents before you celebrate a Cub win. As always, a thorough condominium attorney can answer these and any other questions you have about those very same docs.
Have a great week.
DRB...
(765 ILCS 605/18.6) Sec. 18.6. Display of American flag or military flag. (a) Notwithstanding any provision in the declaration, bylaws, rules, regulations, or agreements or other instruments of a condominium association or a master association or a common interest community association or a board's construction of any of those instruments, a board may not prohibit the display of the American flag or a military flag, or both, on or within the limited common areas and facilities of a unit owner or on the immediately adjacent exterior of the building in which the unit of a unit owner is located. A board may adopt reasonable rules and regulations, consistent with Sections 4 through 10 of Chapter 1 of Title 4 of the United States Code, regarding the placement and manner of display of the American flag and a board may adopt reasonable rules and regulations regarding the placement and manner of display of a military flag. A board may not prohibit the installation of a flagpole for the display of the American flag or a military flag, or both, on or within the limited common areas and facilities of a unit owner or on the immediately adjacent exterior of the building in which the unit of a unit owner is located, but a board may adopt reasonable rules and regulations regarding the location and size of flagpoles. (b) As used in this Section: "American flag" means the flag of the United States (as defined in Section 1 of Chapter 1 of Title 4 of the United States Code and the Executive Orders entered in connection with that Section) made of fabric, cloth, or paper displayed from a staff or flagpole or in a window, but "American flag" does not include a depiction or emblem of the American flag made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component. "Board" includes a board of managers or a board of a master association or a common interest community association. "Military flag" means a flag of any branch of the United States armed forces or the Illinois National Guard made of fabric, cloth, or paper displayed from a staff or flagpole or in a window, but "military flag" does not include a depiction or emblem of a military flag made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component. (Source: P.A. 93‑481, eff. 1‑1‑04.)
Monday, March 9, 2009
Turning Over
When does the new Association take over from the Developer?
The Illinois Condominium Property Act addresses the Developer’s turnover to the new regime.
The turnover of control from Developer to owners must take place within the sooner of the sale of 75 percent of the units or three years from the recording of the declaration. 765 ILCS 605/18.2(b)(i).
Turnover itself is really nothing more than the Developer conducting a meeting after one of the two above has occurred. At that meeting (which must be properly noticed to each unit owner) the Developer will hand over his or her books and records, and the Association will elect its first Board of Directors and officers from that initial Board. Each of these actions must occur in conformance with the condominium declaration and bylaws.
Within 60 days of the election of the Board, the Developer is required to turn over all funds, books, records, and documents that pertain to the Association itself. These include, among other items, cash and ledgers for and from operating accounts including all records of assessment collection and any contracts that Developer entered into (before the unit owners elect a Board, the Developer or its constituents most often acts as the Board). 765 ILCS 605/18.2(d).
Once that occurs, the new Board can begin the operation of the building. It may do so with a very unique and empowering tool provided by the ICPA; the new Board may cancel any contracts made by the developer before the owner-governed Board took over and enter into new contracts in its own right. These contracts most often include bulk cable and maintenance contracts and is an especially good way to get better rates as that new Board takes control. This right lasts for 180 days from the date of turnover. 765 ILCS 605/18.2(e).
Turnover equally triggers the running of the statute of limitations for suing the Developer, which is a critical thing to be aware of in condominium conversions when developers do things on the cheap resulting in building issues immediately on turnover (frequently boilers, rooftops and tuckpointing issues come up). With regard to construction defects, the statute of limitations for any actions shall not begin to run until “the unit owners have elected a majority of the members of the board of managers.” 765 ILCS 605/18.2(f).
If a given Developer is stubborn, the unit owners can demand turnover. A Developer who fails or refuses to turn over all records in accordance with 765 ILCS 605/18.2(d) can be subject to court sanction and the payment of attorneys’ fees for failure to comply within 60 days after a 10-day written demand. 765 ILCS 605/18.2(g).
As always, consult your condominium attorney who can guide you through turnover and the initial election of your Board of Directors and Officers.
Have a great week!
DRB...
The Illinois Condominium Property Act addresses the Developer’s turnover to the new regime.
The turnover of control from Developer to owners must take place within the sooner of the sale of 75 percent of the units or three years from the recording of the declaration. 765 ILCS 605/18.2(b)(i).
Turnover itself is really nothing more than the Developer conducting a meeting after one of the two above has occurred. At that meeting (which must be properly noticed to each unit owner) the Developer will hand over his or her books and records, and the Association will elect its first Board of Directors and officers from that initial Board. Each of these actions must occur in conformance with the condominium declaration and bylaws.
Within 60 days of the election of the Board, the Developer is required to turn over all funds, books, records, and documents that pertain to the Association itself. These include, among other items, cash and ledgers for and from operating accounts including all records of assessment collection and any contracts that Developer entered into (before the unit owners elect a Board, the Developer or its constituents most often acts as the Board). 765 ILCS 605/18.2(d).
Once that occurs, the new Board can begin the operation of the building. It may do so with a very unique and empowering tool provided by the ICPA; the new Board may cancel any contracts made by the developer before the owner-governed Board took over and enter into new contracts in its own right. These contracts most often include bulk cable and maintenance contracts and is an especially good way to get better rates as that new Board takes control. This right lasts for 180 days from the date of turnover. 765 ILCS 605/18.2(e).
Turnover equally triggers the running of the statute of limitations for suing the Developer, which is a critical thing to be aware of in condominium conversions when developers do things on the cheap resulting in building issues immediately on turnover (frequently boilers, rooftops and tuckpointing issues come up). With regard to construction defects, the statute of limitations for any actions shall not begin to run until “the unit owners have elected a majority of the members of the board of managers.” 765 ILCS 605/18.2(f).
If a given Developer is stubborn, the unit owners can demand turnover. A Developer who fails or refuses to turn over all records in accordance with 765 ILCS 605/18.2(d) can be subject to court sanction and the payment of attorneys’ fees for failure to comply within 60 days after a 10-day written demand. 765 ILCS 605/18.2(g).
As always, consult your condominium attorney who can guide you through turnover and the initial election of your Board of Directors and Officers.
Have a great week!
DRB...
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