When a homeowner falls behind his or her monthly condominium assessments, the Association’s Board can turnover that account to our offices to begin the collection process. The process entails our offices sending a demand for possession whereby the homeowner is given 30 days in which to pay the debt. In the event the homeowner fails to pay within the 30 days, if directed to do so, we will file a lawsuit under the Forcible Entry and Detainer Act against the homeowner for the unpaid assessments. The ultimate outcome is that the Association is awarded an Order for Possession and Judgment for the past due assessments, attorney’s fees and court costs. The Order for Possession has a “stay” date which is the date by which the homeowner has to pay the judgment amount plus subsequent accruing assessments and the failure to do so, will result in the Association’s right to place the Order for Possession with the Sheriff to begin the physical eviction process after the “stay” date. Unless otherwise agreed to, by statute, the minimum “stay” date is 60 from the entry of the Order for Possession.
For the Association, the ideal outcome is when the homeowner is able to pay off the debt prior to the “stay” date or both parties have entered into a payment plan. However, in those instances when the homeowner has failed to remit full payment prior to the “stay” date and the Association has gained possession of the premises, the Association has the right to rent out the unit and apply the rental income towards the balance due on the homeowner’s account. However, it is important for the Association to be aware of the new change in the law regarding leasing the premises.
The change to the current leasing provision under the Forcible Entry and Detainer Act is highlighted below and became effective January 1, 2015:
Sec. 9-111.1. Lease to bona fide tenant. Upon the entry of a judgment in favor of a board of managers for possession of property under the Condominium Property Act, as provided in Section 9-111 of this Act, and upon delivery of possession of the premises by the sheriff or other authorized official to the board of managers pursuant to execution upon the judgment, the board of managers shall have the right and authority, incidental to the right of possession of a unit under the judgment, but not the obligation, to lease the unit to a bona fide tenant (whether the tenant is in occupancy or not) pursuant to a written lease for a term which may commence at any time within 8 months after the month in which the date of expiration of the stay of judgment occurs. The term may not exceed 13 months from the date of commencement of the lease. The court may, upon motion of the board of managers and with notice to the dispossessed unit owner, permit or extend a lease for one or more additional terms not to exceed 13 months per term. The board of managers shall first apply all rental income to assessments and other charges sued upon in the action for possession plus statutory interest on a monetary judgment, if any, attorneys’ fees, and court costs incurred; and then to other expenses lawfully agreed upon (including late charges), any fines and reasonable expenses necessary to make the unit rentable, and lastly to assessments accrued thereafter until assessments are current. Any surplus shall be remitted to the unit owner. The court shall retain jurisdiction to determine the reasonableness of the expense of making the unit rentable.
Simply stated, this change means that the commencement date of the lease must be within 8 months of the date of the expiration of the “stay” date on the Order for Possession. If the unit is not rented within this timeframe, the Association must obtain approval from the court. The Association is still entitled to lease the unit for 13 months. If the homeowner’s account ledger has not reached a zero dollar balance after 13 months, the lease may need to be extended beyond the 13 months in order to pay off the assessment balance. In such a case, we would file a motion on behalf of the Association to extend the time period to lease the premises for an additional 13 months. This change to the Act will help the Association in leasing units by affording more time to complete any necessary repairs and find potential tenants. Our offices can provide you with the requisite lease once the Association locates a tenant.
Keep in mind that when the Association enters into a lease with the tenant, the practical implication is that in the event that the tenant fails to timely remit rental payments, the Association must restart the eviction process. This means that the Association cannot enforce the prior Order for Possession and Judgment that was obtained in the underlying case against the delinquent homeowner. If the Association wants to evict the tenant that the Association has a lease with, the Association can retain our firm to prepare and serve a 5 day notice for non- payment of rent and file a Forcible Entry and Detainer Act action if necessary.
If we can be of assistance to your Association, please contact KSN at 855-537-0500 or through our website.
By: Neha A. Parikh, Principal at Kovitz Shifrin Nesbit