Illinois condo HOA legislation update (March 2019)

By Deborah Goonan, Independent American Communities

The Illinois Legislature is considering several bills that would limit Home Rule power of local governments; mandate that a condo board must provide nominal due process before levying a fine; change the process for payment of property taxes; and increase transparency and disclosure requirements.

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HB 29 would stop local government from enacting Ordinances that contradict state law

The bill states that a local government, including a Home Rule unit, cannot regulate association-governed communities in any way that is inconsistent with state laws/

Applies to Common Interest Community Association Act (Sections 1-20 and 1-45 of Public Act  100-292) and  the Condominium Property Act (Sections 9, 15, 18, 18.4, 18.10, 19, 27, and 31 of Public Act 100-292).

The proposed amendment is in response to the City of Chicago’s attempts to undermine state law governing transparency and unit owner access to Association membership lists, as explained in a previous post here on IAC.

The bill passed in the House with near unanimous support, and is currently under consideration by the Senate.

Engrossed text of House Bill 29 

(Rep. Andrew Thapedi – D; Jacqueline Collins – D; Sam Yingling – D; Mark Batinick – R)

Track progress of HB 29

 

SB 220 would add Condo Association due process requirement prior to imposing a fine on a unit owner

Interestingly, this bill only applies to Condominium Associations, not HOAs under the Common Interest Community Association Act.

The bill would obligate the Association to provide a unit owner with a minimum of 20 days written notice and “opportunity to be heard,” prior to its levy of a fine, initiating collections, or filing  a negative report to a credit bureau.

Important note: these conditions would only apply to imposition of fines, and not other rights of the board, such as revoking voting rights or access to common amenities.

The bill has bipartisan support, and passed the Senate with near unanimous approval. Currently under consideration in the House.

Engrossed text of SB 220  Sponsors Sen. Laura Murphy (D), Rep. Kelly Burke(D)

Track progress of SB 220

 

HB 1466 proposes changing allocation and collection of property taxes for condominium associations

Amends Condominium Property Act with two significant changes:

  1. Allows the board of managers or the unit owners to vote on reallocation of property tax on common elements, based upon the square footage of each unit.
    • Amendment would require a two-thirds vote of the board OR a majority of unit owners OR any greater percentage required by condo governing documents.
  2. This amendment would only apply to associations with 20 units or less.

The allocation of percentage ownership in the condo association for the purposes of calculating property tax would be separate from the allocation for the purposes of determining condo assessments and voting interest in the Association.

Engrossed Text of HB1466 (Rep. Gregory Harris – D, Rep. Mark Walker – D)

Track progress of HB1466

A related tax bill, HB 3601, sponsored by Sam Yingling (D), applies to Common Interest Communities (HOA planned development) for persons in a “retirement community” where at least 80% of residents are age 55 and up.

It would shift property taxes on each home to be billed and collected by the local governing entity, not the HOA.

The HOA could only collect property taxes on common property in the community, and would have to provide each member with a list of expenses covered by an HOA assessment, including tax on common property.

 

Several bills in House committees would increase transparency, accountability, and disclosure requirements

At the time of this post, all bills are assigned to House Committees.

HB 2721 would require a homeowners or condo association board or manager to disclose a copy of the most recent Reserve Study to a prospective buyer. If no Reserve Study has been done in the past seven years, the association would issue a written statement to that effect.

HB 3416 would mandate a management agent to disclose to the Condominium Association any agreements with a vendor or contractor that include payment of a commission.

HB 2844 would require that a Condominium Association supply a buyer with a resale disclosure packet within 5 business days (and not 30 days). The bill also limits the fee for resale documents to $100.

HB 2598 would obligate a managing agent, if providing insurance coverage for Condo Association property in the name of the management company, to notify the board at least 90 days prior to cancellation of the policy. If the manager cancels an insurance policy without required notice, the agent would bear financial responsibility for covering any losses to the Association, and could be charged with a Class B misdemeanor.

HB 50 would significantly change minimum maintenance contract requirements for Condominium Associations.

  • A contract would have to specify all services to be provided, and at what frequency and cost to the Association;
  • A developer would have to disclose any financial interest in the contract;
  • A board member would also have to disclose personal financial interest in a contract. Furthermore, if the contractor did not provide services according to the contract, the Association could pay a different contractor to do the work, and bill the negligent contractor;
  • Maintenance contractors and managers would be prohibited from purchasing a condo unit at foreclosure;
  • If a manager or maintenance contractor owns 50% or more of the units, the remaining unit owners could cancel the contract with a majority vote.