Many condominium associations are currently suffering from high rental rates. This is the result of underwater owners who cannot sell but have moved out of their units and foreclosures that have been bought up very cheaply by investors. It's not unusual to hear about small buildings with only a handful of owner occupants remaining. This can make condo living especially challenging for those owners. 

Imposing caps on leasing in your association is one way to preserve owner occupancy rates. Condo attorneys have generally advised that an amendment to the association's Declaration is the best way to ensure the enforceability of rental caps. However, an amendment requires a positive vote of a super majority of owners (often 2/3), and if that majority is already renting, they are unlikely to vote for a cap. 

A board may be able to work around an amendment and impose rental caps through Rules & Regulations, which are only voted in by the board, if their Declaration  specifically includes language allowing for the creation of rules and regulations related to leasing. 

A court opinion last February addressed the issue of rental restrictions via Rules & Regs. An owner sued the association for attempting to evict his tenant, as the association had Rules & Regs in place restricting rentals to 30% of units. However, because the association's Declaration did not include language allowing the board to establish restrictions on leasing, the owner prevailed. The court held that in order to impose any further restrictions on leasing, the association would have to amend the Declaration. Creating Rules & Regs was not a legally viable way to impose leasing restrictions because it was not expressly allowed by the Declaration.

Key takeaway.... Before giving up on restricting leasing because too many owners are already renting, check your Declaration! It may grant the right of the board to impose leasing restrictions via Rules & Regs, thereby circumventing an owner vote on an amendment.

You can read more about this case here. Understanding the hierarchy of authority of an association's governing documents can also help you to navigate many legal questions. 

Unfortunately, what happens in a condo unit doesn't always stay in a condo unit. Smoke (among other nuisances) can travel easily between walls and through the common elements to other units.

Owners cannot be stopped from smoking in their units unless the association adopts an amendment to the declaration or bylaws to prohibit smoking. This requires owner approval and can take time and money to pass but it is a viable solution for buildings who can muster the necessary number of votes. When an amendment is not possible, the board can adopt rules to help prevent smoke from travelling between units.

Read more about this topic in a recent Chicago Tribune article

In Chicago, condominium associations are governed by the Illinois Condominium Property Act. Section 22.1 of the ICPA contains provisions regarding the information that must be disclosed to prospective purchasers of units within the association.  

Click here for an article providing an overview of the disclosures provided in Illinois by a condominium association to a prospective buyer of a unit and (1) what is mandated by law; (2) what current practice is; (3) associations’ and board members’ exposures to claims for failure to comply; and (4) action needed to remedy the ills that exist in the market today.

A key challenge of condo living is understanding that while you own your property, you do not have the absolute right to do whatever you like. The condominium association has the right and the responsibility to establish rules and regulations that govern how owners are to behave on the property and to impose fines for violations. The goal is to preserve harmonious living for all of the owners.

In order to apply a fine and ensure that it is enforceable, however, the association must take the following 5 steps of due process:

  1. Cease and Desist Letter
  2. Hearing Notice
  3. Hearing
  4. Decision
  5. Appeal

Detail on these steps can be found in our Templates & Guides. For more information on creating and enforcing Rules & Regulations, see our Educational Videos.

Lauren Peddinghaus of Haus Financial Services, LLC was recently interviewed for Alison Bowen's story in the Chicago Tribune about living with babies in apartments and condos in Chicago. The full article appears online and on the front page of the Sunday, April 23rd Real Estate section.

If you are a parent in a condo or the neighbor of a family with a baby, this story will resonate with you! How does your condo association handle issues like noise and strollers?

Read the full article here.

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