Editor's note: This is the final column written by Chicago attorney Mark Pearlstein, who died Tuesday after a long illness. Since 1988, Mark had written a weekly column on condominium and homeowner association law for the Tribune, and we are deeply saddened by his death.
Mark's law firm, Levenfeld Pearlstein LLC, will continue the Condo Adviser column. Howard Dakoff, Mark's partner in their condominium law group, will begin writing Condo Adviser.
Q: I have a client who bought a foreclosed condominium unit at auction. Just before the closing, the seller's attorney claims the buyer is responsible for paying legal fees incurred by the association prior to the foreclosure or he forfeits his earnest money if he does not close. Is this correct? The fees are 25 percent of the unit's value.
A: The seller's attorney is correct. Section 9(g) of the Illinois Condominium Property Act requires the purchaser of a condominium unit in a judicial foreclosure sale or a purchaser who acquires title from the mortgagee, to pay the assessments for the unit during the six months immediately preceding an institution of an action to enforce the collection of common expenses. Because the statute contains the words "common expenses" versus "assessments," common expenses would include the attorneys' fees and costs expended by the association relating to the institution of the action with the collection of such assessments.
Q: Our condominium association just passed an amendment prohibiting parking on the streets, with fines of up to $200 for the third violation, even though the village allows parking on all village streets. Is this legal for the association to do, and can they assess a fine?
A: From the context of the question, it appears the streets are not a private association road, but dedicated streets to the local municipality. Assuming as such, the board of directors of a condominium does not have the authority to prohibit parking on public streets, especially when parking on the streets is allowed by the municipality. Pursuant to Section 18.4(a) of the Illinois Condominium Property Act, the authority of the board of directors of a condominium is to provide for the operation, care, upkeep, maintenance, replacement and improvement of the common elements. The board does not have the authority to adopt restrictions against property that is not part of the common elements.
Q: Most condominium associations distribute a list of unit owners with the agenda for the annual meeting. Our condominium association has refused distributing this list to unit owners on the basis of privacy. Is this legal?
A: Distribution of the names of unit owners with the agenda at annual meetings is not standard practice in the industry. Nonetheless, boards may elect to do so on their own initiative. If a unit owner desires to obtain a list of unit owners prior to the annual meeting, pursuant to Section 19(a)(7) of the Illinois Condominium Property Act, unit owners are entitled to a copy of the names, addresses and weighted votes of all members entitled to vote in the association; however, the unit owner must put such a request in writing and state a proper purpose.
Illinois case law has held a "proper purpose" to be interpreted broadly, thus, a reason such as the requesting unit owner desires to determine which units have the highest weighted averages for campaigning purposes, and the unit owner's name, would be a valid proper purpose. It should be noted that the association has 30 days to respond to requests for documents and/or information pursuant to Section 19. Thus, the unit owner would be wise to make such a request at least 45 days prior to the annual meeting for such information to be utilized.
Q: I am the treasurer of a condominium building with 23 units. The building is about 30 years old. Is there a formula for the amount we should have in reserves?
A: There is no formula mandated by law regarding the amount to keep in reserves. However, Section 9(c) of the Illinois Condominium Property Act requires all budgets to provide for reasonable reserves for capital expenditures and deferred maintenance for repair or replacement of the common elements. Section 9(c) provides guidelines of the factors for the board to take into consideration when determining the amount of reserves appropriate for a specific association, which include: the repair and replacement cost, and estimated useful life, of the property; the current and anticipated return on investment of association funds; any independent professional reserve study; the financial impact on unit owners, and the market value of the condominium units, of any assessment increase needed to fund reserves; and the ability of the association to obtain financing or refinancing.
Q: I live in a 700-plus-unit condominium building. When I moved in, there was a push to purchase new windows, so I put in all new windows (17 of them, as I have a corner unit). The problem is, people were "encouraged" to install the new windows, but there was no building mandate. Now, from the outside, our building looks like a terrible patchwork with the old rusty windows sticking out like a sore thumb. Does the board have the authority to require each unit owner to install the new windows since they affect the outside, thus common beauty of our building?
A: The board of directors' authority to mandate replacement of limited common element windows is contained in the condominium declaration. Legal counsel for the association should review your association's condominium declaration to determine the extent of such authority. Customarily, the board of directors does have the authority to mandate maintenance, repair and replacement of limited common elements, including windows.
Further, most declarations — but not all — allow the board of directors to actually perform the maintenance, repair and replacement of windows and assess the cost thereof back to the units to which the windows are appurtenant.
Q: I moved into a condominium unit in December 2011. We had a board meeting last night and they approved board meeting minutes from September 2011 (before my move-in date). During the minutes' review, it was stated that a former handyman was advised to not visit our building due to a pending lawsuit. I raised a question as to this, as I received a 22.1 disclosure form dated Dec. 22, 2011, stating there were no pending lawsuits. After questioning this, our management company representative stated that it was not a lawsuit, but rather, an administrative hearing. My question is, do I have recourse if it already is or turns into a lawsuit?
A: Section 22.1(a)(6) of the Illinois Condominium Property Act requires board of directors to disclose, upon demand, a statement of the status of any pending suits or judgments in which the association is a party. Section 22.1 is not limited specifically to lawsuits, but to any suits, which would include claims in judicial or quasi-judicial forums in which the association is a party.
In your case, the association is required to disclose a suit by a former employee. The date of filing of the handyman's claim, and the type of claim filed, are germane as to whether such disclosure should have been included in your 22.1 disclosure form and to determine whether you have any recourse against the association.