SB2664 passes the state General Assembly, but arguing sides has “veto” ringing in the governor’s ears.
In 1963, the Illinois General Assembly passed into action the Condominium Property Act. For more than four decades, the legislation has served as the primary document governing condominium associations in the state.
Since the bill’s inception and subsequent passing, the specific wording contained within has been altered and amended many times so as to remain relevant with the market of the day – a common practice with living documents. The most recent of these changes comes in the form of Illinois Senate Bill 2664 – sponsored by several Republican and Democratic members of the General Assembly.
The bill itself, which might better be described as an amendment, would fundamentally change the way condominium associations and buyers handle the procurement of foreclosed properties.
How Does It Work?
The way it is currently setup by the Condominium Property Act, when a buyer makes a bid on a foreclosed property, the overseeing association is allowed to request that the buyer also pay the equivalent of six regular monthly assessments, which are used to help maintain the property and surrounding space. Additionally, the association may also ask the buyer to cover any fees or court costs accrued during the foreclosure process – no cap.
SB2664 wouldn’t entirely change the process, but it does outline two distinct changes:
- Associations would be able to ask for the equivalent of nine regular monthly assessments, instead of six.
- Fees, court costs and any other miscellaneous expenses an association might require a buyer to pay would have to be included in the nine regular monthly assessments. Costs cannot exceed that amount.
What’s the Controversy?
On May 22 of this year, SB2664 moved pass the Senate with a strong majority, winning the vote 55 to 1. The bill has also garnered strong support from a number of real estate groups, such as the Illinois Association of Realtors, many of which have a pronounced lobbying presence in the state’s General Assembly. Not everyone, however, is as keen on what the bill would mean for condominium associations.
When a buyer takes on a foreclosed condo, the association facilitating the transaction asks that certain back assessments and fees be paid to supplement the money the organization has already lost. While the legislation’s language currently caps back assessments at six months, the association’s allowance to collect fees for special assessments, court costs and fines helps recoup larger losses often times associated with keeping the property.
Of course, the new amendment would extend the amount of back assessments associations could charge up to nine months, but Lauren Peddinghaus, owner of local Haus Financial Services, points out that by defining an overall cost cap, condominium associations are likely going to lose out overall.
“Foreclosure timelines can be unpredictable,” she says. “Nine months of unpaid assessments is not sufficient compensation to associations who have taken steps to address delinquencies that accumulate throughout a foreclosure.”