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...
Monday, March 9, 2009
Monday, February 2, 2009
Rental Restrictions
One of the most common questions I get is whether an Association can restrict or prohibit rentals in the building. It seems, that the battle between renters and owners whether it occurs in Chicago, Lake Geneva, WI, or Marco Island, FL, is one that will never change.
Many concerns pervade the ownership which have solid aims and motivations. Seemingly (but not always), most owners in most buildings do take more time to care for their units than those who reside there on a rental basis. This "pride of ownership" translates into a desire to prohibit rentals, outright.
The Board of Directors can enact a regulation in its normal rules to limit or prohibit rentals. However, that does not have nearly the force and effect of such a regulation that is made part and parcel of an amendment to the Bylaws and Declaration and which is then approved by a majority of the unit owners in conformance with the Illinois Condominium Property Act and the Bylaws themselves.
However, the Illinois General Assembly is currently back to committee on revising a bill that will place an important limitation on this power.
That bill, HB 5189, is a possible response to a fluctuating real estate market and would amend the act to statutorily provide that owners can rent up to 20% of the properties and that no condo board can enact rules to the contrary.
Moreover, there is even better news if a charitable organization is the record owner of your condominium unit. A proposed law in the form of House Bill 821 (Pihos, R-Glen Ellyn) amends the Condominium Property Act. If a unit owner is a Sec. 501(c)(3) corporation and the association's bylaws change to prohibit leasing, then the unit owner may continue to rent the unit until it voluntarily sells the unit. No fine or fee may be assessed against the unit owner for leasing its unit. Makes the same change to the General Not For Profit Corporation Act of 1986 for common-interest community or homeowners' association.
Make certain that whether you are Board member that wants to prohibit rental activity or an owner that wants to foster it, that your attorney has conducted a thorough review of all the condominium documents for you to properly guide you through your best course of action.
Many concerns pervade the ownership which have solid aims and motivations. Seemingly (but not always), most owners in most buildings do take more time to care for their units than those who reside there on a rental basis. This "pride of ownership" translates into a desire to prohibit rentals, outright.
The Board of Directors can enact a regulation in its normal rules to limit or prohibit rentals. However, that does not have nearly the force and effect of such a regulation that is made part and parcel of an amendment to the Bylaws and Declaration and which is then approved by a majority of the unit owners in conformance with the Illinois Condominium Property Act and the Bylaws themselves.
However, the Illinois General Assembly is currently back to committee on revising a bill that will place an important limitation on this power.
That bill, HB 5189, is a possible response to a fluctuating real estate market and would amend the act to statutorily provide that owners can rent up to 20% of the properties and that no condo board can enact rules to the contrary.
Moreover, there is even better news if a charitable organization is the record owner of your condominium unit. A proposed law in the form of House Bill 821 (Pihos, R-Glen Ellyn) amends the Condominium Property Act. If a unit owner is a Sec. 501(c)(3) corporation and the association's bylaws change to prohibit leasing, then the unit owner may continue to rent the unit until it voluntarily sells the unit. No fine or fee may be assessed against the unit owner for leasing its unit. Makes the same change to the General Not For Profit Corporation Act of 1986 for common-interest community or homeowners' association.
Make certain that whether you are Board member that wants to prohibit rental activity or an owner that wants to foster it, that your attorney has conducted a thorough review of all the condominium documents for you to properly guide you through your best course of action.
Subscribe to:
Posts (Atom)