News & Announcements

News & Announcements

ILLINOIS APPELLATE COURT RULES IN FAVOR OF FRA ASSOCIATION CLIENT

In a case concerning payment of assessments by a foreclosing mortgage lender, the Illinois Appellate Court has made an important ruling favorable to Illinois condominium associations. On August 8, 2017, the Illinois Appellate Court issued its opinion in Country Club Estates Condominium Association v. Bayview Loan Servicing LLC, 2017 IL App (1st) 162459. The Country Club Estates case clarifies the 2015 Illinois Supreme Court decision in 1010 Lake Shore Association v. Deutsche Bank National Trust Co., and the Country Club Estates decision can be cited as binding precedent applicable in other condominium association assessment collection cases. A brief summary of the facts in the Country Club Estates case and the Appellate Court’s decision follows.

Mortgage lender Bayview Loan Servicing LLC foreclosed on a condominium unit located within Country Club Estates Condominium. The mortgage foreclosure sale was confirmed in November 2014. In March 2015, Country Club Estates Condominium Association sent the mortgage lender a Notice and Demand for Possession. In April 2015, the association filed a forcible entry and detainer lawsuit against the mortgage lender. The previous owner of the unit had not paid assessments dating back to January 2011, and, as of the filing of the forcible lawsuit, the mortgage lender had failed to make any payments whatsoever. In light of these facts, and based on the precedent of the 1010 decision, the association sought both the pre-foreclosure sale and post-foreclosure sale assessments from the mortgage lender. These pre- and post-foreclosure sale assessments totaled $18,659.26 as of the filing of the forcible lawsuit.

In June 2015, while the forcible lawsuit was pending in the trial court, the mortgage lender tendered to the association a partial payment in the amount of $4,771.85. This partial payment represented only the post-foreclosure sale assessments. The association rejected the partial payment. In the trial court, the mortgage lender argued that the partial payment extinguished the association’s lien for pre-foreclosure sale assessments. The association argued that, under Illinois Condominium Property Act Section 9(g) and the 1010 decision, a foreclosure purchaser is required to make prompt payment of post-foreclosure sale assessments in order to extinguish a condominium association’s lien for pre-foreclosure sale assessments. Granting partial summary judgment to the mortgage lender, the trial court ruled in favor of the mortgage lender on this point. The association appealed the trial court’s ruling.

Reversing the trial court, the Appellate Court agreed with the association’s interpretation of Section 9(g) and the 1010 decision. Noting that the mortgage lender refused to pay any assessments – past or present – for seven months after the foreclosure sale, the Appellate Court held that a foreclosure purchaser must make prompt payment of assessments in order to extinguish pre-mortgage foreclosure sale assessments.

While the Appellate Court did not establish a precise definition of what constitutes “prompt” payment in this context, it did state that, in the absence of extenuating circumstances, it would expect commencement of assessment payments during the month following the foreclosure sale as required by Section 9(g). So although the Country Club Estates decision makes it clear that a foreclosure purchaser’s payments must be prompt, we would advise associations to exercise reasonable judgment based on the totality of the particular circumstances in deciding when to pursue pre-foreclosure sale assessments from a foreclosure purchaser. As always, the attorneys at FRA will continue to assist our association clients and their community managers in evaluating how to move forward under these circumstances, taking into consideration the facts of any particular case.

FRA attorneys Stuart Fullett and Jeff Swanson handled the appeal on behalf of the association.

FRA Shareholder Stuart Fullett Quoted in the Chicago Tribune

FRA shareholder Stuart Fullett was quoted in the July 30, 2017 issue of the Chicago Tribune. In the article, Stuart commented upon requests for assistance animals in no-pet buildings. To read the full article, click here.

FRA Shareholder Scott Rosenlund Presents at CBA Condominium Subcommittee Meeting

On May 16, 2017, FRA shareholder Scott Rosenlund acted as a co-presenter before the Condominium Subcommittee of the Chicago Bar Association. The continuing legal education course was entitled “Discrepancies in the Illinois Condominium Property Act and Common Interest Community Association Act: Addressing the Grey Area of HOA and Condo Law.”

FRA Shareholder Scott Rosenlund Quoted in The Chicagoland Cooperator

FRA shareholder Scott Rosenlund was quoted in the May 2017 issue of The Chicagoland Cooperator. In the article, Scott commented upon board member fiduciary obligations. To read the full article, click here.

FRA Shareholder Scott Rosenlund Authors Article for ACTHA

FRA shareholder Scott Rosenlund recently authored an article for the Association of Condominium, Townhouse and Homeowners Associations. In the article, Scott addresses the scope of community association rulemaking authority. To read the full article, click here.

FRA Shareholder Scott Rosenlund Authors Legal Update

On January 23, 2017, the Illinois Chapter of the Community Associations Institute published an article authored by FRA shareholder Scott Rosenlund. To read the article, entitled “Illinois Condominium Property Act Amended to Streamline Association Loan Procedures,” click here.

FRA Attorneys Attend 2017 National CAI Law Seminar

FRA shareholders Stuart Fullett, Scott Rosenlund and Jeff Swanson recently returned from the annual Community Associations Institute Law Seminar in Las Vegas. The Law Seminar provides an opportunity for community association attorneys from across North America to discuss emerging trends and issues important to the practice of community association law. Highlights of the Law Seminar included sessions discussing national developments in fair housing enforcement, case law relating to rogue board members and how community associations can avoid exposure to intellectual property claims.

FRA Shareholder Scott Rosenlund Quoted in The Chicagoland Cooperator

FRA shareholder Scott Rosenlund was quoted in the January 2017 issue of The Chicagoland Cooperator. In the article, Scott commented upon some of the legal issues which will affect community associations in 2017. To read the full article, click here.

LEGISLATIVE UPDATE

The Illinois Condominium Property Act (“Condominium Act”), the Illinois Common Interest Community Association Act (“CICAA”) and the Illinois General Not For Profit Corporation Act of 1986 (“NFP Act”) were recently amended. A summary of the changes is provided below.

Condominium and CICAA Association Board Meeting Requirements

In response to widespread concern regarding the strict open board meeting requirements established by Palm v. 2800 Lake Shore Drive Condominium Association, the circumstances under which a condominium board or a CICAA association board may meet in closed session have been expanded. Two important aspects to these changes are discussed below.

First, condominium and CICAA association boards will be authorized to discuss certain sensitive subject matter either at a closed portion of a noticed board meeting or outside of a noticed meeting. In other words, boards will be able to meet in closed (“executive”) session to discuss specified topics without calling an open board meeting. With very limited exceptions, boards still must vote on matters discussed in closed session at noticed, open board meetings.

Second, the categories of topics which may be discussed in closed session have been broadened. Condominium and CICAA association boards will have the authority to engage in the following conduct in closed session: discuss pending or probable litigation; discuss the appointment, employment, engagement or dismissal of an employee, independent contractor, agent, or other provider of goods and services; interview a potential employee, independent contractor, agent, or other provider of goods and services; discuss rule violations; discuss assessment collection matters; and consult with association legal counsel. CICAA association boards also may meet in closed session to “discuss third party contracts.”

In our opinion, these changes will be of significant practical benefit to associations. While we continue to advise our association clients to limit use of closed sessions to appropriate circumstances, the changes make it clear that boards may, for example, conduct violation hearings and meet with their attorneys without having to call open board meetings, so long as voting occurs at open board meetings.

These changes will take effect on January 1, 2017.

Ombudsperson

The Condominium Act and CICAA have been amended with respect to state ombudsperson’s office requirements. All associations subject to the Condominium Act (including master associations) or CICAA now have until January 1, 2019 to adopt a written policy for resolving complaints made by homeowners. The previous requirement that associations register with the Illinois Department of Financial and Professional Regulation has been repealed. These changes took effect on August 12, 2016.

Condominium Association Loan Authority

Subsection 18.4(m) of the Condominium Act has been changed to provide that condominium associations will have the right to pledge substantially all of the assets of the association by a majority vote of the board, regardless of restrictions requiring unit owner consent which may appear in the condominium instruments. This important change will eliminate a common impediment to condominium association common element repair loan transactions. This change will take effect on January 1, 2017.

Board Size

The NFP Act has been amended to expressly provide that the Illinois Secretary of State may cause a not-for-profit corporation to be dissolved if the corporation fails to maintain at least three directors. This change took effect on July 1, 2016.

Successor Developers

The Condominium Act and CICAA have been amended to provide that assignments of developer rights to a successor developer must be in writing and recorded with the office of the county recorder. These changes will take effect on January 1, 2017.

CICAA Association Community Instrument Amendments

CICAA has been amended to clarify technical requirements for amendments to community instruments. This change will take effect on January 1, 2017.

Technology Clarification

Minor language clarifications relating to the use of technology have been made to the Condominium Act and CICAA. These changes will take effect on January 1, 2017.