Thursday, July 24, 2014

A deep divide over new condo foreclosure bill -

A deep divide over new condo foreclosure bill -

"The Illinois Condominium Property Act allows associations, in case of a judicial foreclosure sale, to recoup up to six months of unpaid common expenses from the next owner of the unit.

These expenses may include special assessments, late fees, fines and attorney fees. Lenders are exempt from making this payment.

The bill would amend the condo act by capping an association's claim to nine months of regular assessments. Attorney and court costs can be recovered as long as the total doesn't exceed the cap.

The Illinois Association of Realtors, which supports the legislation, said the current law is an affordability barrier for buyers.

The extra costs, which can reach several thousand dollars, typically cannot be financed. Buyers often are stunned to discover at closing that they owe sizable sums."


So under the proposed law, which is sitting on Governor Quinn's desk awaiting signature or veto, the association could receive an amount equal to nine months of back assessments instead of six months, but the tradeoff is that the maximum amount would include the attorney fees and other charges that are always tacked onto the association's claim against the owner.  Realtors are in favor of the bill, saying, "We think the way the current law is written has fostered an atmosphere that has allowed outrageous attorney fees to run up and for associations to throw in anything having to do with the prior owner just because they knew they could stick the buyer with it."  But association attorneys are not happy with having their meal ticket trimmed.

1 comment:

IC_deLight said...

Of course the attorneys can get "their fees" - the fees need to be paid by the HOA corporation that the attorney is engaged by as opposed to the owner or bona-fide foreclosure sale purchaser. They just won't have open license to charge whatever they want to the buyer.

The management companies collect "late fees" as a windfall and work hard to creatively come up with ways to declare homeowners "in arrears" on assessments in order to pyramid up late fees and other junk fees payable to the management companies.

With this kind of windfall, it won't be long before the vendors start cannibalizing each other when there is a cap on how much they can collect in aggregate. I say good for the existing owners as well as the purchasers. It's not like the money was going to the condo corporation to begin with.