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Subject: Looking for Interpretation & Answers
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ReneeD
(Illinois)

Posts:201


11/01/2005 10:21 PM  
We are an Illinois HOA. I apologize for this lengthy post but I welcome anyone's best interpretation on any or all of the following:

1) Our BOD plans to adopt '06 Proposed Budget at our 11/09 meeting; however, not one of the 250+ homeowners has received a Budget for review (as of this writing)let alone an [estimation] of income, expenditures and "health" of our reserves for this year. According to Condo Act notice must be given not less than 10 days nor more than 30 days. QUESTION: What recourse do we homeowners have at this point? Does the Board have the right to adopt a budget without homeowner input?

2) What is “pecking order” of all these contracts? Declarations and Bylaws, Illinois Condominium Act, Illinois Not For Profit Act?

3) According to our management agreement entered into by the Association it shall have a term of not more than one (1) year and shall be terminable by the Association for cause on thirty (30) days written notice, or without cause or payment of a termination fee by either party on ninety (90) days written notice. The preceding statement is verbatim from a copy of Management Contract; however, in all the years I have lived here it was communicated to homeowners that the BOD always signed a 2 year contract. What is wrong with this picture? Do the homeowners have any recourse on this?

4) This year’s budget the association incurred an increase in assessment fees. According to our CCCR’s, there is a formula that ties in with calculating just how much of an increase can be imposed. Can anyone tell me, in plain English, how this is figured? Following is description of formula….

Cost of Living Increase. If, as of the first day of any month after this Declaration is Recorded, the level of the most recently published Cost of Living Index - All items (1967=100) as published from time to time by the Bureau of Labor Statistics (the “Index”), is greater than the level of the most recently published Index as of the date of the Recording of this Declaration which is 276.4 (the “Index Base Level”), then, at the option of the Board, the Community Assessment payable by each Owner (other than Developer) for such month and months thereafter until next adjusted, shall be equal to the Basic Assessment then in effect multiplied by a fraction, the numerator of which shall be the level of the most recently published Index and the denominator of which shall be the Index Base Level. If the Index shall cease being published, such other standard or index selected by the Developer, in its discretion, as shall most nearly approximate the measurements theretofore made by the Index shall be used as the Index hereunder, and the Index Base Level shall be adjusted accordingly.

5) Late fees and attorney charges seem to be ad finitum…each year the attorney keeps piling “new” charges e.g., title search fees, etc. I don’t believe any delinquent homeowner in our complex will ever be able to get caught up. Years go by and I get this sinking feeling that this Association has never collected on back assessments, aka lien, when a unit is sold. Pretty much every year, the auditor recommends we "write off" these amounts. Following excerpt can be found in our Decs:

Each charge, together with interest and reasonable costs of collection, if any, as hereinafter provided, shall be a continuing lien upon the Dwelling Unit against which such Charge is made and also shall be the personal obligation of the Owner of the Dwelling Unit at the time when the Charge becomes due. The lien or personal obligation created under this Section shall be in favor of and shall be enforceable by the Association.

THANKS, IN ADVANCE, TO ANYONE WILLING TO OFFER ANY INSIGHT ON ABOVE--EITHER ALL OR PARTS OF--. -ReneeD

LisaS
(Illinois)

Posts:341


11/02/2005 1:11 PM  
I am in Illinois as well. First- Condo, Townhouse or single family subdivision? It matters in whether or not your association is governed by the Illinois Condo Laws. Also, are you a not-for-profit? (in good standing?) The 10 day/30 day rule may not be applicable.

Thanks to recent changes in the State of Illinois Condo Laws, 'late fees' can no longer be charged. That is, unless there is a tangible added expense to the association caused by a member paying late. Then the fee can be charged, but not to exceed that charge. Interest can be charged, but generally not to exceed the maximum usury rate. The updates can be found at the state web site

Liens should always be collected on for non-payers at closing of the sale of a property. Clear title cannot be given for a property with a lien on it, and obviously a buyer and their attorney (as well as mortgage company) don't allow an unclear title. Your Association should be issuing some sort of Indemnity Letter stating that fees/liens/dues are outstanding.

Hope it helps a little.
Lisa
ReneeD
(Illinois)

Posts:201


11/02/2005 8:09 PM  
I know this is a single-family, attached townhome community with fee-simple rights. Not for profit, yes; but, because I am not being given full access to our financials I have no way knowing if we are in good standing. What is a 10 day/30 day rule?

Would the recent late fee changes apply to us as well? You are raising some interest points I have never been aware--what would qualify as tangible added expense? Interesting I read in our Decs/ByLaws late fees can be imposed; additionally interest charges but not to exceed 18% per annum. I can only assume BOD or mgmt company chooses not too (due to administrative handling/laziness?). If it is written in our Decs should they be doing this?

In regards to liens and not having full access to financial records--even if I did---where would this be posted say as an example an owner sold his unit and was $2700 in arrears. Based on your above comments I can only assume this to be entered somewhere under Income? Secondly, if this were so, I am trying to understand why the auditor would suggest "writing off" those amounts; obviously monies would never be collected because that delinquent owner is long gone. As I write this, I am getting that sinking feeling something about that is terribly wrong---meaning when unit is sold this mgmt company's accounting "arm" is not communicating with the "closing" department to collect those fees aka lien? I am aware of several "old" cases this taking place but because this would be considered proprietary and confidential information (Delinquency Report) only for BOD/Management Company knowledge, no one--like us homeowners--would even know this is happening! There is something terribly fishy here and I'm beginning to wonder if this law firm is milking profits from these delinquencies until they no longer can! If so, how would I even begin proving otherwise?n -ReneeD
LisaS
(Illinois)

Posts:341


11/08/2005 4:57 PM  
Sorry- 10 day/ 30 day rule meaning notification as you stated not less than 10 days but not more than 30. Illinois Condo law gives guideline for adotpion of propsed budgets and notification requirements.

Technically, yes they can approve a budget without input, but....if questions are raised and enough people request review it must be done.

The late fee changes in the law do apply to you. The 'tangible' or 'justifiable' costs they can add included attorney fees. But it can't just be some arbitrary fee they charge to punish you. They actually have to incur an expense.

Also, if fees are not paid, and at some point a lien is placed on a property it is a matter of public record. It is attached to the deed. You can look them up online in most counties. And usually exclusive of bankruptcy it gets collected at/before closing to satisfy debt (paid to your associatin). Then the person who wrote the lien (your association) would sign off on a release which then gets filed with the county. Then the title is clear.

If your association is NOT filing liens for over due assessments (you mentioned $2700) they are not acting as a responsible fiduciary. It costs $28 to file a lien, and $28 to file a Release of Lien. You don't need an attorney, and you can charge it to the debtor. It is simple and I do it for our Association in Will County. Out of 13 liens we filed for Annual dues in May, we now only have 2 unpaid.
Why should your Association write off an easily collectable debt? It is laziness. Even if they hired an attorney to file for them, they could charge the debtor for that as well (per law)

I don't know if I confused you more, but I hope it helped a little!
ReneeD
(Illinois)

Posts:201


11/10/2005 7:43 PM  
Lisa, thanks for great info and now I'm overwhelmed a bit at how little I actually do know. What is making me more nervous is that I think our BOD "trusts" whatever management company is doing. Also, if they were filing liens and are able to collect, where would this show up as revenue? On our Income&Expense statement? Likewise, filing liens would be an expense. Also it appears standard practice for writeoffs to be based on outside auditor's recommendation? Files are turned over to attorney after 90 days but I can tell you for a fact that there are some h/o's that have been on the list over 3 years! What is wrong with that picture? And, each year I think the attorney files another tract search and whatever other charges. In my opinion, BOD chooses to have an auditor file any federal/state forms; seems as if these 'tax' writeoffs occur to lessen any chance of potential income with full knowledge that chances of collecting that amount are slim to none at all.
LisaS
(Illinois)

Posts:341


11/17/2005 7:53 PM  
where these line items show up depend on the statement. they could be called anything. We simply call them 'outstanding accounts'. The costs associated with the lien are included in the lien that we file, so it is money due as well. When we collect it is inclome and the only expense it offsets is the cost we paid to the county recorder to file the lien.

Three years behind for some members! That is too much . But. why would anyone pay dues if they knew they could get away with not paying?

Lisa
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