This summary highlights legislative updates in the Illinois Condominium Property Act, the Common Interest Community Association Act, the Condominium and Common Interest Community Ombudsperson Act, and other statutes.

If you have questions or concerns regarding these legislatives updates and their effect on your association, please do not hesitate to contact Kovitz Shifrin Nesbit at 855-537-0550 or visit our website at www.ksnlaw.com.

Note: Updated 10/14/2016

SB2354: Changes to CICAA and ICPA Regarding Executive Sessions

Effective January 1, 2017, Public Act 99-0567 amends Section 1-40(b)(5) of the Common Interest Community Association Act and Section 18(a)(9)(A) of the Condominium Property Act by providing that the board may close any portion of a noticed meeting or meet separately from a noticed meeting: (i) to discuss probable or pending litigation; (ii) to discuss third party contracts or information regarding appointment, employment, engagement, or dismissal of an employee, independent contractor, agent, or other provider of goods and services; (iii) to interview a potential employee, independent contractor, agent, or other provider of goods and services; (iv) to discuss violations of the rules and regulations of the association; (v) to discuss member’s or unit owner’s unpaid share of common expenses; or (vi) to consult with the association’s legal counsel.  This permits limited use of workshops, held without notice and without owners in attendance, to discuss issues that can be discussed in “executive session”. This is a limited legislative response to the Palm decision.

The legislation also provides that in addition to discussion of employment matters in the closed portion of a meeting (also known as executive session), boards may also discuss the engagement of any independent contractor, agent, or other provider of goods and services and interview a potential employee, independent contractor, agent, or other provider of goods and services.

Finally, the legislation provides that the board may consult with the association’s legal counsel during the closed portion of a noticed meeting, or a meeting separate from a noticed meeting. This is really nothing more than codification of existing law.

 

SB2358: Change to CICAA and ICPA Regarding Developer’s Rights

Effective January 1, 2017, Public Act 99-0569 amends the Common Interest Community Association Act, adding Section 1-47, and the Condominium Property Act, adding Section 9.5. It provides that any assignment of a developer’s interest in the property is not effective until the successor has obtained the assignment in writing and recorded it.

This effectively prevents successor developers, and others purporting to hold the rights of the developer relative to the property, from claiming certain rights without documented, recorded proof. It may also protect successor owners from being characterized as a successor developer.

 

SB2359: Change to ICPA Regarding Ability of the Board to Pledge Association Assets

Effective January 1, 2017, Public Act 99-0849 amends Section 18.4(m) of the Condominium Property Act by removing language that made the board of managers power to assign the right of the association to future income from common expenses or other sources and to mortgage or pledge substantially all of the remaining assets of the association subject to owner approval if required by the declaration. Thus, the assignment of the right of the association to future income from common expenses and to pledge all or substantially all of the remaining assets of the association can be approved by the Board alone, even if the declaration requires owner approval.

This makes this section of the Condominium property Act consistent with section 18(b)(13)(ii) regardless if the declaration requires owner approval.

 

SB2741: Change to CICAA Regarding Amendments In Case of Error, Omission, or Inconsistency

Effective January 1, 2017, Public Act 99-0627 amends Section 1-60 of the Common Interest Community Association Act by providing that if a provision of the community instruments does not conform to the Act or to another applicable law because of an error, omission, or inconsistency in the community instruments of the association, the association may correct the error, omission, or inconsistency to conform the community instruments to the Act or to another applicable law by an amendment adopted by vote of two-thirds of the board of directors, without a membership vote.

The legislation also provides that a provision in the community instruments requiring members of record to vote to approve an amendment to the community instruments, or for the members of record to be given notice of an amendment to the community instruments, does not apply to an amendment that corrects an omission, error, or inconsistency to conform the community instruments to the Act or to another applicable law.

Finally, the legislation deletes language providing that corrections of errors or omissions in the community instruments may be adopted by a majority vote of the members at a meeting called for that purpose unless other procedural requirements apply. Essentially, this places the ability to amend the governing documents in the event of an error, omission, or inconsistency solely with the board.

 

HB4658: Changes to the Condominium and Common Interest Community Ombudsperson Act

Effective January 1, 2017, Public Act 99-0776 amends various sections of the Condominium and Common Interest Community Ombudsperson Act. With regard to the adoption of the complaint resolution policy – a requirement previously established by the legislation enacting the Ombudsperson Act itself – adoption of the unit owner complaint resolution policy must now be accomplished no later than January 1, 2019, or if the Association is first created after January 1, 2019, the policy must be adopted within 180 days.  Additionally, the Bill removes the Section of the Act that requires Associations to register with the Department of Financial and Professional Regulation.

It provides that an association’s final determination in response to a unit owner’s complaint must be made within 180 days after the Association received the owner’s original complaint. It previously required the final determination to be issued with a “reasonable time”. Disputes cannot be submitted to the Ombudsperson until July 1, 2020 and if the legislature appropriates funds.

The law provides that neither the Ombudsperson nor the Department shall have any authority to consider matters before a comparable department or body established by a county, municipality, or township (such as the Illinois Human Rights Commission) pursuant to an ordinance prohibiting discrimination and established for the purpose of investigating and adjudicating charges or complaints of discrimination under the ordinance, or before a federal agency or commission that administers and enforces federal anti-discrimination laws and investigates and adjudicates charges or complaints of discrimination under such laws. The law also provides that certain confidentiality provisions do not extend to educational, training, and outreach material, statistical data, or operational information maintained by the Department in administering the Act.

Finally, the law provides that the Act is repealed on July 1, 2022 (instead of July 1, 2021).

 

HB5696: Changes to CICAA and ICPA Regarding “Acceptable Technological Means”

Effective January 1, 2017, Public Act 99-0612 amends Sections 1-5 and 1-85 of the Common Interest Community Association Act and Sections 2(z) and 18.8 of the Condominium Property Act by providing that the term “acceptable technological means” includes, among other things, any generally available technology that, by rule of the association, is deemed to provide reasonable security, reliability, identification, and verifiability.

The law also provides that any notice required to be sent or received or signature, vote, consent, or approval required to be obtained under any condominium instrument or any provision of the Illinois Condominium Property Act, as well as the performance of obligations or exercise of rights, may be accomplished by acceptable technological means.

The legislation also states that Sections concerning the use of acceptable technological means do not apply to any notices required: (i) under the Forcible Entry and Detainer Article of the Code of Civil Procedure; or (ii) in connection with foreclosure proceedings in enforcement of any lien rights” under the Act (instead of “notices required under [the Forcible Entry and Detainer Article] of the Code of Civil Procedure related to: (i) an action by the common interest community association to collect a common expense; or (ii) foreclosure proceedings in enforcement of any lien rights” under the Act).

 

SB3166: Change to Forcible Entry and Detainer Article

Effective January 1, 2017, Public Act 99-0753 amends Section 9-117 of the Forcible Entry and Detainer Article of the Code of Civil Procedure, changing a statutory notice of motion for the extension of an order of possession by replacing the term “landlord” with the term “plaintiff”.

 

H.R.3700: Modernization of FHA Condominium Approvals

On July 29, 2016, House Bill H.R. 3700 became Public Law No. 114-201. While the Law amends the United States Housing Act of 1937 and other housing laws to modify the Department of Housing and Urban Development’s (HUD’s) rental assistance (including section 8 low-income [voucher]) and public housing programs, and the Department of Agriculture’s (USDA’s) single family housing guaranteed loan program, this summary will focus on the changes to the Federal Housing Administration’s (FHA’s) requirements for condominium mortgage insurance.

Effective July 29, 2016, the Law made various changes to Title III, Section 3.01 of the United States Housing Act of 1937. Primarily, the Law amends the National Housing Act to require the FHA to modify its certification requirements for condominium mortgage insurance to make recertifications substantially less burdensome than original certifications. The FHA must consider lengthening the time between certifications for approved properties and allowing information to be updated rather than resubmitted.

A HUD field office must make decisions regarding exemptions to current FHA commercial space requirements and must consider factors relating to the economy of the locality in which the project is located.

Additionally, the FHA must apply to FHA condominium mortgage insurance the existing standards of the Federal Housing Finance Agency (FHFA) relating to encumbrances under private transfer fee covenants to the same extent and in the same manner as those standards apply to mortgage investments by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). If the FHFA changes its standards after enactment of the Law, the FHA must adopt the changes or disregard them with an explanatory notice within 90 days.

Finally, the FHA must issue guidance regarding the percentage of units that must be occupied by the owners (or sold to owners intending to meet such occupancy requirements) in order for a condominium to be eligible for FHA mortgage insurance. If the guidance is not issued within 90 days of enactment of the Law: (1) at least 35% of all family units must be occupied by the owners or sold to owners who intend to meet the occupancy requirement, and (2) the FHA may increase the requirement for a project on a project-by-project or regional basis after considering factors relating to the economy of the locality in which the project is located. This would permit FHA certification by many associations that do not currently qualify because of the high number of units that are investor owned.

 

If you have questions or concerns regarding these legislatives updates and their effect on your association, please do not hesitate to contact Kovitz Shifrin Nesbit at 855-537-0550 or visit our website at www.ksnlaw.com.