CAI Illinois Chapter opposes bill that would allow renting of units despite board prohibition
House Bill 821 -- This Bill seeks to limit the ability of an association to impose leasing restrictions. As amended, the Bill states that if a condominium document is changed to prohibit leasing, a unit owner incorporated as a 501(c)(3) charitable organization and is leasing the unit at the time of the amendment, that organization may continue to rent the unit. ILAC questions the validity of this Bill as authorizing activity which is normally prohibited in a declaration and creates two separate classes of owners who may have different leasing restrictions. ILAC opposes this Bill.
Contact your legislators immediately. If passed, this bill will enable organizations to set up group home leasing operations in your associations.
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In Illinois, condo association boards can make rules on their own authority that prohibit renting of units, with no grandfather clause. Here is a bill that would allow exceptions for units owned by 501 (c) (3) corporations. This text was in an email alert to members. The link goes to CAI Illinois' page on current legislation, where this bill is mentioned along with others.
The scariest part of the year is any day the Illinois legislature is in session.
4 comments:
Condos by their nature and market forces will always be a hybrid of owner and non-owner occupied units. This reality cannot be outlawed by condo HOA regulations.
The law should prohibit HOAs from attempting to impose lease restrictions on owners.
What will happen instead is that the condo HOA will adopt regulations, then fine and foreclose on an owner for leasing HIS condo, and then there will be vacant foreclosed condo.
The law should prohibit HOAs from attempting to impose lease restrictions on owners.
What will happen instead is that the condo HOA will adopt regulations, then fine and foreclose on an owner for leasing HIS condo, and then there will be vacant foreclosed condo.
The Illinois case that says condo boards can ban renting of units is Apple II Condominium Association v Worth Bank and Trust Co. 277 Ill App 3d 345, 659 NE2d 93 (1st D 1995).
Here is the problem with renting, and it is the reason that the most common document amendment is a ban on renting units. If more than 20% or at most 25% of units are rented, this is what happens:
1. It becomes impossible for anybody to get Fannie Mae approval on a loan to buy a unit in the building;
2. It becomes nearly impossible for the association to borrow money in order to finance major repairs, which means there will be a much larger special assessment; and,
3. Something new: these days, it is getting hard for an association with a high percentage of absentee owners even to obtain insurance on its own building, officers and directors, or managers (fidelity bond or "crime coverage").
So, there is another side to the situation.
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