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...
