Whether you are an experienced homeowner or a first time buyer in a community administered by an association, it is important that you understand the laws that effect how your association is maintained. Specifically, while you may have heard of the Illinois Condominium Property Act, the Common Interest Community Act, and the Illinois General Not For Profit Act, most homeowners do not understand how these three different statutes work together. In large part, the relationship between these laws depends on whether your association is a condominium association, master association, cooperative, or common interest community association.
The following addresses some key distinctions between these entities and identifies the laws that may be applicable to your association.
Typically, when one thinks of a condominium association, the image of a high-rise residential building comes to mind. However, neither the physical style of building nor the name provided to an association by the developer transform a particular piece of real-estate into a condominium association. Per the Illinois Condominium Property Act, a condominium is distinguishable from all other types of associations by the language used in its declaration. Specifically, every condominium association contains language in its declaration expressly subjecting the property to the terms of the Illinois Condominium Property Act.
The Illinois Condominium Property Act serves as the ultimate legal authority throughout the life of a condominium association and any act by the developer, board of directors and unit owners must be consistent with its terms. It should be noted that if your condominium association has been incorporated as a not-for-profit corporation, you may also consult the Illinois General Not-For-Profit Act, which governs all not-for-profit corporations in Illinois, for legal guidance. However, keep in mind that where there is any conflict between the Illinois Condominium Property Act and the Illinois General Not-For-Profit Act, the provisions of the Illinois Condominium Property Act take precedence.
Under the Illinois Condominium Property Act, each and every condominium association is also governed by and subject to its declaration and by-laws, which collectively outline the ground rules and procedures for operating the association. As a condominium owner, it is important to understand that the covenants and restrictions in the association’s declaration and bylaws run with the land of each owner, and by acceptance of your deed, you become obligated to abide by their terms. You should be aware that the Act also authorizes your board to adopt rules and regulations, which generally provide specific instructions regarding the day-to-day use of the property.
In sum, as a property owner in a condominium association, look to the Illinois Condominium Property Act for legal guidance concerning your rights as a homeowner. Moreover, if you have not already done so, obtain a copy of the association’s declaration, by-laws and any rules and regulations adopted by the board to ensure that you are fully informed of all of the restrictions applicable to your association.
In a master association, one or more condominium associations delegate, by the terms of their declaration or other recorded covenants, certain powers that would otherwise be exercisable by the condominium association, such as the responsibility to maintain certain common elements, to a nonprofit corporation or unincorporated association that exercises those powers on their behalf. Therefore, to determine whether your condominium association is a part of a master association, you can look to the terms of your association’s declaration or other recorded covenant.
Critically, if your association is governed by a master association, you should look to Section 18.5 of the Illinois Condominium Property Act, which applies solely to master associations, to understand both the master and condominium associations’ respective legal obligations. Moreover, similar to condominium associations described above, you may also look to both the master and subservient associations’ declaration and by-laws for further guidance. Finally, because either the underlying condominium associations as well as the master association may be incorporated as a not-for-profit corporation under the Illinois General Not-For-Profit Act, the requirements of the Illinois General Not-For-Profit Act may also be applicable.
Common Interest Community Associations
A common interest community consists of real estate that is subject to a declaration of covenants other than a condominium association, master association, or cooperative. Practically speaking, common interest community associations can best be thought of as a catch-all for those communities that cannot be properly categorized as any of the abovementioned associations.
Unlike a condominium association and master association, a common interest community association is not subject to the provisions of the Illinois Condominium Property Act. Rather, any common interest community association that has over 10 units or annual budgeted assessments of over $100,000 would be required to abide by the Common Interest Community Association Act. However, even if your common interest community association does not meet these requirements, it may elect in its governing documents to subject itself to the Common Interest Community Association Act. In the event that it does not make such an election, then the provisions of the association’s declaration and by-laws would govern.
Additionally, consider whether or not your common interest community association is incorporated as a not-for-profit corporation. If so, your association must be administered consistent with the terms of the Illinois General-Not-For-Profit Act. Like the Illinois Condominium Property Act though, where there is any conflict between the Common Interest Community Association Act and the Illinois General-Not-For-Profit Act, refer to the Common Interest Community Act.
Unlike either of the above associations, in cooperative housing, a corporation or a trust rather than individual owners or an association holds title to the entire property. The corporation or trust, as the legal owner of the property, provides each occupant with a long-term lease permitting him or her to occupy the unit. In addition, each resident receives shares of the corporation and controls it through an elected board of directors. Cooperative housing can be beneficial as it allows for the sharing of certain expenses.
In order to understand the respective rights and obligations of a tenant shareholder and the cooperative, one can look to the certificate of incorporation, articles of incorporation, by-laws and the lease agreement. Moreover, historically many cooperatives have been incorporated as for-profit corporations and the Business Corporation Act of 1983 would be applicable to your cooperative. Alternatively, where the cooperative has been incorporated as a not-for-profit corporation, the Illinois General Not-For-Profit Act applies as well.
This article is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand that there is no attorney client relationship between you and the article author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. © 2018 Kovitz Shifrin Nesbit, A Professional Corporation.