By: Scott A. Rosenlund, Attorney
Fullett Rosenlund Anderson PC
Lake Zurich and Chicago

Community associations seeking to make additions to their governing documents often ask whether the changes may be implemented through revised rules and regulations or whether they must be adopted via an amendment to the declaration or bylaws. Depending on the nature of the contemplated revisions, analysis by association legal counsel may be warranted. But an association in any event should ask itself the following questions before adopting a new rule.

Does the proposed rule directly contradict the declaration and bylaws? 

If the answer to this question is “yes,” a declaration or bylaw amendment is most likely required. Limited exceptions to this general principle exist when applicable laws clearly override the declaration or bylaw provision at issue and authorize the rule. For example, Subsection 12(h) of the Illinois Condominium Property Act expressly provides that a condominium board, by rule, may require unit owners to obtain individual liability insurance coverage.

Does the proposed rule indirectly conflict with the declaration and bylaws?

By way of example, until recently, there were differing viewpoints amongst community association professionals regarding an association’s authority to adopt leasing restrictions by rule. Many professionals took the position that leasing restrictions can be adopted via rule only on the very rare occasions when the declaration and bylaws are completely silent as to leasing or when the declaration and bylaws expressly allow such rules. Others employed a more aggressive approach and supported adoption of rules restricting leasing so long as there was not a direct, obvious conflict between the declaration and bylaws versus the rules. The latter, more aggressive approach was rejected in the 2016 court decision Stobe v. 842-848 West Bradley Place Condominium Association. In the Stobe case, the Illinois Appellate Court (First District) held that a condominium association rule imposing a 30-percent cap on leasing was invalid because the declaration mentioned the leasing of units and did not expressly allow the association to impose further restrictions on leasing by rule.

Do the declaration and bylaws expressly mention the board’s authority to adopt rules relating to a particular subject? 

If the answer is “yes,” then a rule probably will be valid. For example, condominium declarations for multi-story buildings often clearly state that boards may by rule implement guidelines requiring sufficiently sound-absorbent floor coverings. If this type of express language appears in the declaration, a properly-adopted, reasonable rule relating to floor coverings would be enforceable.

What is the scope of the association’s rulemaking authority in general?

Subsection 18.4(h) of the Illinois Condominium Property Act provides that the purpose of condominium rules and regulations is to cover the details of the operation and use of the property. Meanwhile, non-condominium common interest community associations and master associations must consider the scope of rulemaking authority conferred by their governing documents. Some governing documents for non-condominium associations expressly empower boards to adopt rules regulating the use and operation of individually-owned lots, while other governing documents only discuss the adoption of rules relating to the common areas. In the 2013 court decision Ripsch v. Goose Lake Association, the Illinois Appellate Court (Third District) held that a common interest community association had the implied, inherent authority to adopt rules regulating the use of common areas, even though the covenants did not expressly grant such rulemaking authority.

Does the proposed rule restrict basic use and occupancy rights? 

As a general matter, restrictions upon the use and occupancy of, or behavior within, individually-owned units or lots are best implemented by amending an association’s declaration and bylaws, rather than through the rulemaking process. Under a well-established body of case law in Illinois and other states, such restrictions contained in recorded covenants will be granted greater deference by a court and generally should not to be subject to a judicial inquiry as to their reasonableness, but a restriction established by rule can be invalidated if a court deems the restriction to be unreasonable.

By: Michael DeSantis, Attorney
Gardi & Haught, Ltd.
Schaumburg, IL

Question: "Is a crack in a garage floor the responsibility of the Association or unit owner?  We are assuming, as based on reading our Declarations, that the unit owner is.  Garage floors are not specifically mentioned, just "...foundations, structural parts of the Building....", (unless the floor is considered part of the foundation)."

Answer: In this response, I am assuming you are referring to a crack in your garage foundation. You are correct to assume that your answer lies in your community’s covenants, conditions and restrictions (“CC&Rs”). CC&Rs detail what responsibilities belong to the Association and what responsibilities belong to you, the individual homeowner. In your case, you must discover whether your CC&R’s define garage foundations as a limited common element or designate it as something else, specifically whether your garage is defined as being part of your individual unit. If your garage is defined as being part of your unit, then it is your responsibility to maintain. If your garage is defined as a limited common element, the Association is likely responsible for its maintenance.

However, even if your Association is responsible for its maintenance, there is a possibility that your Association will make you pay for the repair depending on what your CC&R’s read. If your unit is governed by the Illinois Condominium Property Act (the “Act”), the Act provides that an Association may assess the cost of maintenance,  repair and replacement of limited common elements back to the homeowners who have use of those amenities, if the CC&R’s provide for such a charge back. Carefully reading your CC&Rs will help you clarify who is responsible for your garage foundation maintenance and whether such costs can ultimately be charged back to you.

Did you know Community Association Managers must be licensed through the State of Illinois? Make sure your manager has the proper license to manage your community association.  Below is an explanation of the difference between Community Association Managers and Property Managers.

Who:	Community Association Manager	Property Manager
Reports to:	Association Board	Owner or General Manager
License Type:	Community Association Manager	Real Estate
Scope of Work:	Manages community associations	Manages Properties

                                                 

Community Association Managers:  Managers may work for a management company or directly for one or more community associations.  They may work for condominium, townhome, homeowner, recreational, marina, equestrian or other community associations.  They may maintain financial records including receiving funds and making deposits, paying bills, obtaining proposals for projects, issuing work orders for routine items, responding to owner questions and complaints, maintaining records, communicating with board members, assisting with budget preparation, etc.   They may not manage properties unless they have a Real Estate Broker or Managing Broker license.

Property Managers:  Brokers and/or Managing Brokers list properties for sale or rent in order to procure buyers or tenants for clients.  They also assist buyers and tenants in finding properties.  Types of properties include, but are not limited to, residential, vacant land, multi-unit/apartment residential, industrial, office, retail, institutional, mobile homes, deeded parking, mixed use, businesses with real estate, etc. and they may manage properties, but not community associations unless they also have a CAM - Community Association Manager License.  A Broker will work for a company under the direction of the Managing Broker.

All Community Association Managers must be licensed under the Community Association Manager Licensing and Disciplinary Act.  It would be wise to ask for a copy of the manager’s license or you may go online to check:  http://www.idfpr.com/profs/cam.asp.

Kreg Allison, the Director of the Division of Real Estate (the "DRE") for the Illinois Department of Financial and Professional Regulation ("IDFPR") named Adrienne Levatino to be the Illinois Condominium and Common Interest Community Ombudsperson (the "CCIC Ombudsperson"), effective January 1, 2017. As the CCIC Ombudsperson, Ms. Levatino will serve as the lead community liaison and educator for condominium and common interest community property issues in the State of Illinois.

Unit owners, condominium and common interest community associations and their respective boards desire clear and easily accessible information that can help them better understand their respective rights and responsibilities. The CCIC Ombudsperson was created with this in mind.

"The goal is that everyone involved in these communities can better know what laws and rules apply so that they can have realistic expectations about processes and outcomes, and peace of mind that they are being treated fairly under the law. Adrienne Levatino is uniquely qualified in both her professional and life experiences to serve as the first CCIC Ombudsperson in Illinois," said Kreg Allison, Director of the DRE.

While the CCIC Ombudsperson cannot provide legal advice or advocacy services, enforce regulations, or resolve disputes, the CCIC Ombudsperson can publish useful information and direct citizens to resources to better inform their understanding of the laws and rules governing condominium and common interest communities and the resulting rights and responsibilities.

"I look forward to educating associations, boards, and unit owners on their rights and responsibilities here in Illinois and will ensure that the resources published or provided help them make well informed decisions," said Ombudsperson Adrienne Levatino.

No additional or new fees, taxes, or personnel are required for the CCIC Ombudsperson which solely utilizes existing state resources in its current education and outreach only mission.

For more information on the CCIC Ombudsperson, please visit http://www.idfpr.com/CCICO.

By: Joshua Mailey
Signal 88 Security
Arlington Heights, IL

The Holiday Season is upon us! Thoughts of spending time with family and friends, the smells of the season filling the air and the overwhelming sense of joy that returns to our hearts as we remember our childhood holiday experiences. Our schedules begin to get packed with list making and shopping, on top of our regular daily responsibilities, and we start to forget about simple things to keep the holiday season safe.

The 2014 Bureau of Justice Statistics study, “Seasonal Patterns in Criminal Victimization Trends” reports that overall crime has been reduced between 1993-2010, but indicates some crimes show no significant fluctuation from traditionally higher crime summer months. The study identifies robbery as occurring frequently in winter as in summer, and identified crimes against persons and motor vehicle thefts seeing an insignificant reduction in winter as it does in summer, while personal assaults occur more frequently in the fall months.

Conversely, the United States Fire Administration reports that cooking, heating and electrical fires were some of the top causes of structure fires during the winter, especially during the holidays. The American Red Cross reports that nearly 47,000 fires occur during the winter months, claiming over 500 lives per year! Structure fires leaves families devastated, and in multi-family structures, a single fire event can lead to direct damage and smoke damage to the extent of leaving all the units in a building to be evacuated for extended periods of time.

When considering the safety of ourselves, property, and our homes, there are some simple things we can do to keep ourselves and loved ones safe.

Making yourself less of a target

•          When leaving home, keep strategic lights on to make the appearance that someone is home.
•          Keep package deliveries indoors or dropped off in places out of public view.
•         Don’t keep a lot of packages in cars in busy parking lots.
•          Ask close neighbors that you trust to watch out for your house and do the same for them.
•          Keep doors and windows locked. Leave TV or radio on.
•          Never leave house keys, purses, or valuable items in cars. Leave garage door transponders locked up and out of view.
•          Keep all firearms secure on your person or in a heavy duty safe. (if you have a license to do so legally. Always follow local and state laws regarding firearm use and carry)
•          Keep an eye out for strange cars and persons in the area. If you believe someone entered your house, DO NOT GO INSIDE! Go somewhere safe and call 911.

Winter Season Home Safety

•          Power outages can occur during nasty winter storms.
•          Keep flashlights and extra batteries available.
•          Only use space heaters that are appropriate for indoor use.
•          Keep your cell phones fully charged and have portable charging devices for them.
•          Electrical fires caused by circuit overloads and space heaters kill many people during the winter months. Keep a fire extinguisher available on every level of your home and have an evacuation plan.
•          Change batteries for smoke and carbon monoxide detectors every year.
•          Never leave open flames or burning candles unattended.

If you have a security system or security service, notify them that you will be out of town and inquire about premise checks if available. Update you contact information so you can be notified if there was an emergency. Being situationally aware of your surrounding is critical to staying safe and preventing accidents from happening. Shopping during the Holiday Season keeps us out of the house more and into areas that are crowded with fellow shoppers. Keep these tips in mind when travelling about.

By: David Hartwell, Esq.
Penland & Hartwell, LLC
Chicago, IL

The Condominium and Common Interest Community Ombudsperson Act (765 ILCS 615/1) – The Ombudsperson Act has been amended again, requiring the Department of Professional Regulation to post a new website to provide owners with information resources.  The amendment has extended the deadline for an association to adopt a written policy for resolving unit owner complaints to January 2019.  Effective July 1, 2020, owners may make written requests to the Ombudsperson for assistance.  At this time, no Ombudsperson has been appointed.

Changes to Open Meetings (765 ILCS 605/18(a)(8) and 765 ILCS 160/1-40(b)(5) – In response to the Palm v. 2800 Lake Shore Drive ruling addressing meetings of board members, effective January 1, 2017, board members may now meet in closed session (sometimes referred to as “Executive Session”) to discuss: (1) pending, probable or imminent litigation; (2) third party contracts or information regarding the appointment, employment, engagement, or dismissal of an employee, independent contractor, agent, or other provider of services; (3) interview a potential  employee, independent contractor, agent, or other provider of services; (4) violations of rules and regulations; (5) unit owner’s unpaid share of common expenses; and (6)  consult with legal counsel on any matter.  Any action taken by the board in a closed meeting must be ratified by a majority of the board at a properly noticed meeting.

Pledge of Assessments for Condominiums (765 ILCS 605/18.4(m)) – Effective January 1, 2017, this amendment deletes the first clause of Section 18.4(m) which states “Unless the condominium instruments expressly provide to the contrary…”, thus giving all boards of directors the authority to pledge and assign the right of future income from common expenses and to mortgage or pledge substantially all assets of the association.  This will help associations obtain financing for special assessments and capital improvement projects.

More Technological Means for Common Interest Communities (765 ILCS 160/1-5) – Effective January 1, 2017, the Common Interest Community Association Act expanded the definition of “Acceptable Technological Means” to include “without limitation, electronic transmission over the Internet or other network whether by direct communication, intranet, telecopier, electronic mail, and any generally available technology that, by rule of the association, is deemed to provide reasonable security, reliability, identification, and verifiability.”

Assignment by Successor Developer (7765 ILCS 605/9.5 and 65 ILCS 160/1-47) – Effective January 1, 2017, the ICPA and CICAA will be amended to add: “Successor Developers.  Any assignment of a developer’s interest in the property is not effective until the successor: (i) obtains the assignment in writing; and (ii) records the assignment.”

CICAA adds Conformity Clause (765 160/1-60) – Effective January 1, 2017, CICAA is amended to now provide that for any provision of the governing instruments which do not conform with the Act or other applicable law, the association may correct such inconsistency by an amendment, adopted by two-thirds (2/3) of the board of directors, without a membership vote.

Not for Profit Act Requires Three Directors (805 ILCS 105/101.01) - Effective January 1, 2017 the Secretary of State may dissolve any corporation administratively if it fails to maintain at least three directors.

By David Hartwell, Esq.,
Penland & Hartwell, LLC
Chicago, IL

Question: Last fall our condo board approved the association’s annual budget, which included a special assessment to cover expenses for a painting project.  At that time the board was still reviewing bids and, for budget purposes, included the higher-end bid of $120K and special assessment model of $70K in the budget.  (The rest of the project was being funded through reserves). 

Since the time the budget was approved, the board ultimately accepted a lower bid of $70K and special assessment model of $45K.

 Is it appropriate to amend the budget with the new figures?  What are the ramifications of changing the budget once it’s approved?

 Answer: If a budget contains a line item for a capital improvement project to be started in that year, then a special assessment would not be necessary.  However, if the board sought funding for a project that was not previously budgeted for, then a special assessment would be necessary and must be passed consistent with Section 18(a)(8) of the Illinois Condominium Property Act (“Act”). 

If the cost of the painting project was part of the budget, then theoretically under this set of facts, there would exist an operating surplus at the end of the year due to the significant disparity of the lower project cost.  If this occurs, the board should then consult the declaration to determine how operating budget surpluses are to be addressed for that association. 

Depending upon the fiscal year of the association, I would likely recommend that the board consider amending its budget to reflect the actual cost of the painting project.   The board should also consult with its accountant during this process.  Alternatively, if the painting project is being funded from a special assessment, the board should first look to the special assessment resolution to determine if it only specified the painting project or also addressed other maintenance, repair and replacement of common elements.  If the latter is true, the additional sums collected could be used for other contemplated projects and the board would need to vote on the additional expenditures at an open meeting; otherwise, the special assessment should be amended to reflect the actual cost of the project.  A potential ramification in amending the special assessment is that it may reopen the unit owners’ opportunity to attempt to reject it, as set forth in the procedures of Section 18(a)(8)(ii) of the Act, if the proposed new amount exceeds more than 15% of the budget.  If the amount does not exceed the 15% threshold, then no challenge can be made. 

 Lastly, the board could consider levying the original special assessment thereby avoiding the need to draw on reserves.    As a practical matter, every board should act consistent with its governing documents and should act in the best interests of all of its owners.  In my experience, most owners want to see the board acting in a fiscally responsible manner, especially when it pertains to a special assessment.

As set forth in 18(a)(6) of the Illinois Condominium Property Act, the board must send out the new amended budget at least 25 days prior to the date of the meeting at which the board intends on approving it. 

By Mark Swets, CAE, Executive Director
ACTHA
Chicago

The Chicago Cubs are World Series Champions!  (That still sounds great!)

As a lifelong baseball fan, this dramatic postseason provided numerous storylines of curses, long-term futility, perseverance, performing under pressure and the magic of an impassioned rain delay speech. From a business perspective, the 2016 Chicago Cubs are a classic case study in the value of teamwork.  Much of my joy this season has been watching the Cubs successfully perform as a true “team”.  They seemed to contain all of the elements of a winning team: hard work, focus, resiliency and enjoyment.  And they won!    

As quoted by Wikipedia:

  “A team is a group of people or other animals linked in a common purpose. Human teams are especially appropriate for conducting tasks that are high in complexity and have many interdependent subtasks.”

“A team becomes more than just a collection of people when a strong sense of mutual commitment creates synergy, thus generating performance greater than the sum of the performance of its individual members.”

Our focus on successful teams tends to resonate most in the field of sports, but easily could be transferred to the role of an association team.  A successful community association “team” starts with a committed board of directors who establishes the culture, vision and goals for the association.  In the case of the Cubs, the goal was clear:  win the World Series.  It seems everything they did during the season was in support of achieving their goal.  What goals does your association have?  Are they clearly identified (preferably written down) and shared with the community?

Another vital component is the actual assembling of the team.  Certainly the 2016 Chicago Cubs “team” was assembled over several years and included a combination of new ownership, general management, player development, homegrown talent and free agent signings.  Who comprises your association “team”?  The board of directors, committees, staff and the property manager are obvious choices, but what about your banker, accountant, attorney and insurance broker?  Whomever you choose, make sure they are qualified and committed to achieving the association’s goals.

Once the team is assembled, it’s important to clearly define roles between team members.  This was a key cog in the Cubs’ success throughout the year, and especially during the World Series.  From the starting pitched to the pinch runner to the flame-throwing closer, each team member understood their role and was able to execute it effectively.  Establishing roles allows each member to perform to the best of their ability and develops a pattern for success.  Take a moment to document your association team and the role each team member plays, and share this amongst everyone on the team.

Lastly, take time to validate and support team members.  The Cubs encountered multiple setbacks during the season, including injuries and slumps in individual player performance.  But the team continued on, keeping faith in their abilities and “picking each other up”.  Throughout the season, team members publicly supported each other in interviews and community events.   In community associations, a little encouragement goes a long way!  Recognize the skill set of your association “team” and support them as you work together to achieve common goals.

 Watching a successful team perform never gets old!  It starts with assembling committed members with clearly-defined roles, working towards a common goal.  It continues with validation and support between team members while overcoming setbacks.  And it culminates with the satisfaction and celebration of a mission accomplished!  May your association establish and embrace its team and achieve the success of the 2016 Chicago Cubs!

Join us in Northbrook for our next ACTHA event! Connect with board members, unit owners and quality vendors who serve community associations as well as leading industry experts addressing topics impacting today’s condo, townhome and homeowners associations.

Exchange ideas with association board members

Find Solutions to the biggest issues impacting community associations

Meet representatives from legal, financial services, construction firms and more

North Expo | Sat., October 15 | 8am-1pm | Renaissance Chicago North Shore Hotel

Schedule of Events:

7:30 a.m.: Registration and Breakfast
8:00 – 9:00 a.m. Concurrent Education Sessions

• Condo Act for Dummies – Get Smart
  This session will dissect the basics of the ACT and reinforce the items of major importance. Since the Palm decision it is more critical than ever to understand the proper procedures for governance, meetings, notices, and more. Also covered will be learning the difference between the ACT, your declarations, bylaws and rules and regulations and their order of authority.
• Are You Ready for Winter?
  It’s time to refer to your checklist and make sure your snow contract is in place, your insurance is renewed and covers all the nasty weather problems like slip and falls, systems are winterized and such. What do you do about those vacant units, gutters clogged with leaves, avoiding ice dams, for starters?

9:00 a.m. - 11:30 a.m.: Trade Show

10:00 a.m. – 10:20 a.m.: Mini Education sessions (on trade show floor)

Reducing Liability for the Multi-Family Property

10:45 a.m. – 11:05 a.m.: Mini Education sessions (on trade show floor)

Benefits of Native Landscaping

11:30 a.m. – 1:00 p.m. Concurrent Education Sessions

• Don’t Be a Fool – Rules & Regs
  Board members need to carefully review and do an assessment of your association’s Rules and Regulations. Board members frequently assume things are in the Rules only find out they are not. How do you amend them? Are they consistently applied and enforceable? Have they been updated to conform to changes in the law?
• How to Fund Your Project – It’s Always About the Money
  Whether planned or unexpected, there comes a time when you are faced with a large project to renovate, improve, or replace. Various methods of funding large projects include items, such as, raising regular assessments over time to build reserves, approving a special assessment, and applying for a bank loan. Each involves different conditions and requirements and should consider the needs of the owners.

Association Members

Riviera Condo Assn, Glen Ellyn

Canterbury at Carillon HOA, Plainfield

Indian Ridge Lakes Condo Assn, Indian Head Park

Townhomes of Russet Oaks HA, University Park

 

Commercial Members

A. Schoeneman & Co.  – is one of the oldest and most respected family-owned public adjusting firms servicing the Chicago area, exclusively representing policyholders in insurance claims.
Contact: Ron Schoeneman, 773-539-7446 (Chicago), 224-251-8446 (Suburbs), ron@aschoeneman.com  

Custom Installations – A family owned business located in Lake Forest, providing full service exterior remodeling in Chicagoland including roofing, gutter, siding and window installations.
Contact: Brad Hironimus, 847-932-4500, brad@custominstallations.com