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Sorry, your townhouse is not a condo
Riddle – when is a door, not a door?
Answer – When it is ajar.
Over the years I cannot tell you how many times I have debated with someone that they did not live in a condominium. "Well, it has an association," they would say. "It’s still not a condominium," I would reply. It has a declaration; not a condominium! The association charges assessments; not a condominium! The association does maintenance; IT’S STILL NOT A CONDO!!!
How about based upon what it looks like . . . a row of townhouses may or may not be a condominium. Just as an estate home on a large piece of land may be a condominium.
It is important to know the nature of the legal entity that administers and maintains your property for multiple reasons; statutory authority, rights of ownership, insurance coverage, owner maintenance requirements, etc.
Some of the major distinctions are outlined below in an easy comparison chart. These are the differences in general (for ease of comparison, townhome associations, homeowners and property owners associations are all dealt with under the heading "homeowner associations"):
| Condominium Association | Homeowners Association | |
|---|---|---|
| Ownership interest: | Unit and percentage of ownership in common elements |
Fee simple ownership of lot; right to use common areas |
| Maintenance: | Owner maintains interior of unit and limited common elements; association maintains common elements |
Owner maintains home and lot; association maintains common areas (roads, green belts, ponds, recreational facilities, etc.) |
| Insurance: | Association insures everything except unit interior and contents |
Owner insures dwelling and lot; association insures common areas |
| Assessments: | Assessments are collected on the basis of percentage of ownership |
Assessments are equal among lot owners |
| Voting: | Voting is weighted by percentage of ownership |
One vote per lot |
| Ultimate Authority: | Illinois Condominium Property Act; declaration and by-laws |
Declaration and by-laws (there is no statute governing homeowner associations other than sections of the Illinois Condominium Property Act) |
| Special Assessment: | If it exceeds 15% of previous year’s budget, homeowners can vote to overturn |
Strictly governed by declaration and by-laws |
| Plat of Survey: | Utilize plat and survey of building |
Individual lots are surveyed and must be updated upon re-sale |
| Adopting Budgets: | Strict statutory requirements |
Subject to declaration and by-laws |
| Amendments: | A declaration can be amended and brought current or correct a material error by a 2/3rds vote of the board |
Subject to declaration and by-laws |
Obviously, there are exceptions based upon the specific wording of the declaration and by-laws.
The list is almost endless. Obviously, some of the differences are minuscule, while often a developer’s attorney will adopt a great deal of the typical condominium language for the townhome association’s declaration.
Here are some of the biggest problems that occur when there is a misunderstanding:
- When a townhome association collects assessments and fixes roofs when the declaration only provides for common area maintenance and as a result, the board’s ability to increase assessments or levy a special assessment "legally" is severely impaired.
- When a condominium uses a standard corporate proxy for an election, while the statute requires that known candidates be identified on the form.
- When a townhome board levies a special assessment which is less than 15% of the operating budget but the declaration requires the approval of 2/3rds of the owners.
- When two-thirds of a townhome board appoints an owner to fill a vacancy on the board and the by-laws require owner approval of an appointee at a special meeting.
These are just some of the basic differences that create misunderstandings or even improper action by a board. If in doubt about whether your association is animal, vegetable or mineral; by just looking at the name of the association on the declaration cover and some of the specific jargon, it should give you a clue. However, if there is any doubt, you should always consult with the association’s attorney. Otherwise, the poem, "A rose, is a rose, is a rose" may be incorrect, it may actually be a banana.