Condominium Property Act Revamp Could Give Owners Needed Support
Condominium owners and families residing in homeowner associations (HOAs) who are battling disputes and struggling for financial clarity received a major shot of support from the Illinois Legislature with the recent passage of two important bills.
The Omnibus Condominium bill (House Bill 189), sponsored by Rep. Andre’ Thapedi (D-Chicago), is a long-awaited major rewrite of parts of the Illinois Condominium Property Act and Common Interest Association Act. Experts say the bill especially targets finances of associations and will make access to documents and records easier and quicker for owners. HB 189 passed the legislature by a unanimous vote of 114-0. The bill is expected to be passed by the Illinois Senate.
House Bill 3755, a major amendment to the Illinois Condominium Property Act sponsored by Rep. Scott Drury (D-Highwood), gives legal protection in any litigation or arbitration between a unit owner and the association, or its board of managers, or any individual member of the association or its board of managers regarding specified disputes.
The bill states: “If the unit owner is deemed by the court or arbitrator to be the substantially prevailing party, then the court or the arbitrator shall award to the unit owner from the non-prevailing party reasonable attorney fees and costs incurred by the unit owner in the litigation or arbitration.” The law further provides that certain attorney fees shall be excluded from the demand given under specified provisions of the Code of Civil Procedure. HB 3755 passed by a vote of 60-49. It also must be passed by the Senate.
If signed into law, HB 3755 would create harmony and improve the lives of millions of Illinois residents living in association-governed housing, condominium experts say.
“We’re supporting HB 3755 because it allows for the possibility of an award of attorney’s fees and costs to a unit owner being deemed to be the prevailing party in litigation with their association,” said Ralph Schumann, president of the Illinois Real Estate Lawyer’s Association (IRELA), comprised of more than 2,500 practicing attorneys statewide.
“Part of our mandate includes protecting members of the consuming public,” Schumann said. The IRELA is a subsidiary of the Illinois State Bar Association.
“For decades, condominium owners have experienced more abuse of power, selective enforcement of rules and regulations, discrimination, and rampant breaches of fiduciary duties in association-governed communities than anyone could ever imagine,” said condominium owner Sara E. Benson, managing broker of Benson Stanley Realty, and president of Association Evaluation, LLC, a Chicago-based real estate data-analysis firm.
“With the exception of going to court, there are absolutely no viable resources available to homeowners who seek to live in harmony with their neighbors,” Benson noted. “The constant threat of association-born legal fees being passed on to a homeowner when filing suit in a court of law creates tremendous strife and trauma.” Further, “the current system perpetuates an environment for associations to file frivolous suits against homeowners—tacking on more and more legal fees that owners simply cannot afford,” Benson said.
A key opponent of HB 3755 is the Community Associations Institute (CAI), a powerful trade group. “CAI solely promotes legislation that favors property management companies and the attorneys who consistently prey on homeowners,” Benson said.
“HB 3755 is a significant step in Illinois condominium law reform because it levels the playing field in disputes between unit owners, on the one hand, and association board members and/or associations on the other,” agreed Brian Connolly, a River North condo owner. “The fee shifting provision creates risk for associations and board members if they take unreasonable and/or abusive positions and then lose in court.”
Under existing Illinois law, condominium associations, board members and property managers have their attorney fees paid, generally, by insurance companies, or out of the associations’ reserves. Currently, condo associations are allowed to recover monies from unit owners arising out of any default—encompassing fines and fees, including attorney’s fees.
In more than 90 percent of the Illinois litigation between a unit owner and their association, the association recovers attorney fees even when the unit owner won some of the issues and compromised on other issues because the unit owner can’t afford to continue to litigate.
In Illinois, an estimated 60 percent of association-governed communities are involved in litigation, experts say. “Provisions in HB 3755 would remedy this imbalance and injustice,” Connolly said. Under current law, board members and property managers have no personal risk for attorney fees. In contrast, unit owners bear the entire burden of paying their attorneys in any type of litigation even when the association takes unreasonable positions, is abusive, or unnecessarily prolongs a horrible situation for the unit owner.
“The new provisions of HB 3755 would not increase litigation, but reduce the number of cases litigated in court,” Connolly said.
The Omnibus Condominium bill (HB 189) includes the following financial and record-examination provisions:
• Associations with 100 or more units must use generally acceptable accounting principles in fulfilling accounting obligations.
• Up to 10 years of association books and records—including the declaration, bylaws, plats of survey, board-meeting minutes, rules and regulations, articles of incorporation and insurance policies—must be made available for examination by owners within 10 days of a request. Currently a period of 30 days was required for examination.
• Names, addresses, email addresses and telephone numbers of all condominium owners and members entitled to vote must be made available for inspection. Names of owners and other personal information may not be used for commercial purposes. • No longer will the right to inspect documents and records require a “proper” purpose. For any purpose that relates to the association, it must make documents and records available for examination within 10 days, instead of the former 30 days.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.