Recently, two of our clients attempted to move their waste removal services to different providers.  In the process, they discovered that they were bound to a service contract with the current provider that could not be terminated.  The original contract was many years old, but according to the terms, it was set to automatically renew for a specified length of time unless written notice was delivered to the provider.

We've encountered this issue with other vendors as well.  Be sure to read the fine print on any service contract and make a note of any automatic renewals.  You could be legally bound to a contract with a vendor you want to part ways with unless the proper notice is given in a timely manner.

A new modification program by Ocwen Financial Corp. is being rolled out in Illinois and 32 others states.  The program aims to reduce the principal owed on mortgages for underwater homeowners.  Read the full article here...

When completing questionnaires for condo resales for clients, I often come across questions that refer to the association's "fidelity insurance" or "fidelity bond."  This is coverage that insures the association's funds against theft by owners, board members, and their managers or agents. It may be referred to in your insurance policy as "Employee Dishonesty" coverage.

The IL Condo Act requires buildings of six or more units to obtain fidelity insurance covering all of the funds that are under the control of the association.  Many smaller associations do not have any coverage, though they may have large sums sitting in their bank accounts. 

Fidelity insurance should cover all individuals who handle association funds.  Property managers and others who handle association funds should be named as additional insureds on the policy.  Review your insurance and speak to your insurance agent for more information about this coverage.

The Chicagoland Cooperator's July 2011 issue focused on Budget & Finance.  Lauren Peddinghaus, owner of Haus Financial Services and creator of the Chicago Condo Resource Website, was interviewed for an article about new reserves budgeting requirements for FHA Certification.  Read the article online here!

In reviewing several clients' Declarations recently, I'm finding that some governing documents allow the association to apply both late fees to late payments and interest charges to unpaid balances.

HausFS was previously of the opinion that any interest charges indicated in the governing documents (usually shown as a percentage that could be applied to an outstanding balance) were the stipulated "late fees" allowed.  Closer reading makes me believe that if the appropriate language is present in the governing documents, a board can apply a late fee if an assessment is not paid by the established due date and can ALSO apply finance charges if a balance is carried. This is similar to how credit card accounts work.

Many owners accumulate significant balances and boards become frustrated when they can only apply a monthly late fee.  If interest charges are allowed, owners pay a penalty for carrying a balance for prior unpaid assessments even if they have been paying current assessments on time.  

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