When purchasing a condominium, buyers must be extra-careful. Condominiums are a form of common ownership, and come with their own set of challenges. Condominium Declarations/Bylaws and Rules and Regulations govern condo living, and must be followed to avoid fines, liens, and friction with the neighbors. Before purchasing a condominium, buyers should be diligent to make sure that they are comfortable with their purchase.
Pursuant to Section 22.1 of the Illinois Condominium Property Act, the seller of a condominium is required to provide certain documents to a prospective purchaser. By reviewing these documents thoroughly, buyers can avoid surprises at or after closing. For example, the Condominium Declaration/Bylaws and Rules and Regulations typically explain condominium governance, management, and items that will affect the condominium owner daily, such as rules concerning pets, noise, renting units, parking, etc. The condominium budget will lay out how much money the association collects and spends every year, and how much debt the association has. Buyers may not be interested in purchasing property that carries substantial debt for which they will have to pay special (translate: extra) assessments on a monthly or annual basis. Sellers also must provide past meeting minutes for the buyer’s review. Meeting minutes may reveal financial or maintenance issues that the association currently has or may have in the near future.
Additionally, a Section 22.1 Disclosure form is typically completed by the condominium board or the management company of a resale condominium. The form confirms the assessment, notifies prospective purchasers of any pending special assessments, states whether or not the association has any liens or lawsuits against it, and provides insurance information for the association. In most circumstances, immediately after a contract is signed, the buyer’s attorney will request a copy of the Section 22.1 Disclosure and related documents. Buyers will usually have a few days after receipt of these documents to determine whether or not they want to proceed.
If a condominium is being sold for the first time, i.e. it is either new construction or a condo conversion, the rules are slightly different. In addition to the Condominium Declaration/Bylaws, Rules and Regulations, and budget, developers must provide a drawing of the unit being purchased. If the building is large enough, the seller may also need to provide a Property Report highlighting the pros and cons of the building’s construction.
A thorough review of the documents required under Illinois law is necessary to assist buyers in making informed decisions regarding their purchase and to determine whether a particular condominium community is right for them.
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2 comments:
I just had a bad encounter with this. When I bought my townhome, the fence was clearly in need of repair, which I wanted to get a credit for from the seller. My attorney reported that it was the homeowner's association's responsibility and that I couldn't get money from the sellers. I think she just looked at the Rule 22.1 disclosure and said, "the fence isn't listed as an upcoming assessment." End of story. Turns out the homeowner's association is just poorly managed and it took them 2 years to figure out how to do the assessment - which is $1300. I'm pretty irked that I called this out 2 years ago and I'm the one paying.
Section 22.1 Disclosures are certainly not fool-proof, but they do typically help protect you from short-term special assessments. Your assessment, unfortunately, came two years later. It is very difficult to get money from sellers when the possible assessment is not at least discussed (i.e. in the minutes) prior to closing, and the assessment is likely to be in the remote future if discussed. Sellers don't want to be attached to the property for that long by putting money in escrow, especially when they won't be reaping any benefit from the repair since they're long gone.
Also, while technically the fence repair may be the associations's responsibility as your attorney said, the bottom line is this -- when the association needs to fix something, they have to get the money from the homeowners if they don't have enough in reserves or choose not to use their reserves for some other reason. It's tough for the homeowners to be stuck with a large bill like that!
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