What is a condominium; what are the rights, duties, and protections of the condo owner and the Cono Association? Knowing the elements of one's relationship with the Condo Association can assist the owner when there is a conflict, especially when there is a monetary default.
What is a Condo and a Condo Association?A condominium (condo) is a type of real estate divided into several units. Each unit is separately owned. The common areas are jointly owned by condominium owners.
Condominiums Associations (Condos) include multi-unit apartments and townhouse and some single family houses. There are also office and store condos. While co-ops are a bit different the following generally apply.
Condominium Associations have liens on the individual properties. Generally, the liens are subordinate to mortgages and any other recorded liens.
Condos are generally governed by Homeowners Association (HOA). Larger condo frequently employs a management company.
Condominiums in Illinois are governed by the CONDOMIUM PROPERTY ACT (765 ILCS 605/). The contents of the law can be found at the following site:http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2200&ChapterID=62
DUESOwners of Condo units are responsible for monthly dues or assessments. In addition, the Condo Association can levy special assessments; assess fines, and sometimes charges for work done on an individual condo. The special assessments can be required to be paid in a lump sum or over a period of time.
FALLING BEHIND ON CONDO DUESGenerally, monthly condo payments are due on the first of the month. If received after the 15th of the month a late charge is levied.
When the condo is behind 31 days or more the Association will send a collection letter for the full amount due and the day it expects the payment to be made. Since many Associations hire Management Companies it will send the letter which will likely include another fee. The collection letter must comply with the Fair Debt Collection Practices Act allowing the condo owner time to dispute the delinquency and/or the amount demanded.
At some point, the Association will refer the matter to a law firm who concentrates in collecting defaulted condo dues.
Generally, they too will send a demand letter which will include so-called reasonable attorney's fees. It has been our experience that the so-called reasonable fees are steep.
LIENSAs the matter progresses there will be a title search and thereafter a recorded Lien placed on the unit. Again more costs and fees.
FORCIBLE ENTRY AND DETAINER (EVICTION)The Condo Association can proceed with a law suit to gain possession of the unit. If a judgment is entered the possession can be enforced by the sheriff. If successful in the eviction the condo association can rent the unit and apply the rents to offset the delinquency
FORECLOSUREWhile rare the Association can actually file a foreclosure. It is rare because most condos have mortgages and other liens making it impractical. But if there is a lot of equity there is nothing to stop them.
MONEY JUDGMENTSWhen the condo unit is subject a foreclosure or if the condo owner abandons the unit a Money Judgment can be entered against the owner.
After the Associaton obtains a judgment it can pursue collection the same as other creditors including wage garnishments and bank garnishments.
CHAPTER 13 SOLUTIONA condo owner can file a Chapter 13 assuming the ability to pay the current monthly condo dues and repay the back amounts over a period up to 5 years
CHAPTER 7 SOLUTIONSAt any time the condo unit owner can file a Chapter 7 to obtain a discharge of back condo dues (although a lien on the property will remain.) However, the unit owner is legally responsible for future condo dues.
Frequently there is a pending foreclosure which will end with a sheriff's sale. The unit owner can file a Chapter 7 and receive a discharge of the mortgage debt and condo arrearages but will have to pay future dues. Pending an eventually move this might be cheap rent.
On the other hand if the unit owner has moved out of the unit it might well be best to wait to file a Chapter 7 until after the mortgage company completes its sheriff's sale.