By Howard Dakoff
Q. I am a new unit owner in a condominium association. I would like to know whether the Illinois Residential Real Property Disclosure Form requires a seller of a condominium unit to disclose smoke transmission into a unit that is for sale. The condominium declaration does not prohibit smoking in units, but smoking is prohibited in the common elements.
A. The Illinois Residential Real Property Disclosure Form contains a series of required disclosures that a seller of real estate must disclose relating, in sum, to material defects in various components of the property, disclosures relating to flooding and unsafe conditions, and infestation of termites and wood boring insects. The form does not require disclosures relating to smoke transmission or alleged violations of condominium instruments by adjacent condominium unit owners.
Q. I live in a town home association that is subject to the Common Interest Community Association Act. I submitted a written request to the managing agent for bank statements of the association’s reserve fund to get a clear financial picture of the reserve fund. The year-end financial report did not include any information on the balance of the reserve account. Is a homeowner entitled to year-end financials relating to the reserve account?
A. Section 1-45(b) of the Common Interest Community Association Act requires a community association board provide members with a reasonably detailed summary of the receipts, common expenses and reserves for the preceding budget year.
The board must also make available for review to all homeowners an itemized accounting of the common expenses for the previous year actually incurred or paid, together with an indication of which portions were for reserves, capital expenditures, repairs or payment of real estate taxes, as well as state the net excess or deficit of income over expenditures, plus reserves. Additionally, the board must provide a consolidated annual independent audit report of the financial status of all funds within the association, which would include the reserve funds.
A board that fails or refuses to provide information required to be provided homeowners may be subject to a lawsuit to force such disclosures and the homeowner may be entitled to an award of reasonable attorneys’ fees and costs for having to file a lawsuit for such disclosures.
In response to the trend of bulk sales in condominium buildings in Chicago — with the end goal being a deconversion of the condominium association — the City Council on Sept. 18 approved an ordinance to increase the unit owner approval standard for a bulk sale of condominium property to 85%. Section 15 of the Illinois Condominium Property Act currently allows 75% of the unit owners to approve a bulk sale of a condominium property. If the unit owner approval threshold is met, it forces all owners to sell their unit.
The ordinance — introduced by Ald. Brendan Reilly, 42nd, and Ald. Harry Osterman, 48th — becomes effective Oct. 16. The ordinance does not apply to a bulk sale of a condominium property where the unit owners completed the vote to sell the property before the effective date of the ordinance.
The purpose of the ordinance is to require more unit owners to support such a bulk sale since many of the recent contested bulk sales of high-rise condominium buildings in Chicago were accomplished with unit owner approvals between 75% and 80%, but with a significant block of unit owner opposition. A likely effect of the ordinance on the deconversion marketplace will be to slow down bulk sales of condominium properties — but not stop bulk sales altogether — because a higher percentage of unit owner approval is now required.
This article first appeared in the Chicago Tribune on October 2, 2019. Access the article here.