Condo Adviser: Condo associations must provide certain documents

Q. I am a unit owner in a mid-size condominium association and there is enough dysfunction with our board of directors to author a novel with. For example, the board fails to provide unit owners financial statements annually as required by the Condominium Act. The board has borrowed money from our reserve account to cover operating expenses due to poor financial management three years in a row. And the board refuses to comply with Section 19 of the Condominium Act financial document requests by unit owners. What can unit owners do to see the financial condition of our association if the board refuses to provide access to financial information it is required to provide under the Condominium Act?

A. Section 19 of the Condominium Act requires Illinois condominium associations to provide certain documents to unit owners upon written request including access to books and records of the association for the current and 10 immediately preceding fiscal years, including but not limited to itemized and detailed records of all receipts, expenditures, and accounts. Section 18(a)(7) requires the board to supply unit owners annually an itemized accounting of the common expenses for the preceding year.

Condominium associations must comply with the Condominium Act, including a proper Section 19 request or risk unit owners filing a Section 19 lawsuit to obtain such access. Unit owners should be aware that pursuant to Sections 19(b) and 19(e), a unit owner that prevails in a lawsuit to compel the examination of records is entitled to recover their reasonable attorneys’ fees and costs from the association, which is a powerful right to enforce their right to inspect.

Q. I am a unit owner in a large condominium association and approximately 25% of the units in the association are leased. Our board of directors feels it would be a good idea to restrict the percentage of units allowed to be leased, but I am not sure. Are there any compelling reasons to limit the leasing percentage of units?

A. Restrictions on the percentage of units that may be leased are commonplace in condominium associations. The most compelling reason to restrict the percentage of units that may be leased is that lenders do not favor making loans for units in condominium associations when the lender feels the leasing percentage is too high for its risk tolerance (commonly 35% to 50%). When that occurs, lenders are less (or not) interested in providing financing to prospective buyers for purchase of units, which ultimately affects unit values because when selling unit owners have difficulty finding buyers for their units, the sales prices is commonly decreased to sell the unit.

Legally speaking, if the percentage of units leased is an excess of 50%, units in the condominium association will not qualify Fair Housing Authority-backed loans, which would eliminate the secondary mortgage market for mortgages on such unit, which has the practical effect that most lenders would not be interested in providing loans to perspective purchasers for the purchase of the unit in the first place.

Q. I live in a 55 and older retirement community association. I heard there is a proposal in the Illinois legislature imposing new temperature requirements for 55 and older communities. What is the status of that legislation?

A. The Illinois legislature recently approved amendments to the Condominium Act and Common Interest Community Association Act to impose certain temperature control requirements for condominium and community associations “in which the initial declaration limits ownership, rental, or occupancy of a unit to a person 55 years of age or older.”

For cooling (June 1 through September 30), the requirement is “cooling systems must operate when the heat index exceeds 80 degrees Fahrenheit”. For heating (October 1 through May 31), the requirement is “(i) between 6 a.m. and 10 p.m., heat must register at least 68 degrees Fahrenheit when the outside temperature falls below 55 degrees Fahrenheit; and (ii) between 10 p.m. and 6 a.m., heat must register at least 62 degrees Fahrenheit”.

These proposed legislative amendments have been approved by the legislature. If the proposed legislation is either signed by the Governor or not vetoed by the Governor by August 7, 2023, it will become law and be effective as of June 1, 2024.

Got a question for the Condo Adviser? Email ctc-realestate@chicagotribune.com.

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