Wednesday, January 25, 2006

Condominium due diligence

I heard two horrer stories today regarding attorneys who did not represent clients properly when they purchased condominium properties. More on their stories below.

If you don't know your obligation, note Section 22.1 of the Illinois Condominium Property Act:

Sec. 22.1.

(a) In the event of any resale of a condominium unit by a unit owner other than the developer such owner shall obtain from the Board of Managers and shall make available for inspection to the prospective purchaser, upon demand, the following:

(1) A copy of the Declaration, by‑laws, other condominium instruments and any rules and regulations.
(2) A statement of any liens, including a statement of the account of the unit setting forth the amounts of unpaid assessments and other charges due and owing as authorized and limited by the provisions of Section 9 of this Act or the condominium instruments.
(3) A statement of any capital expenditures anticipated by the unit owner's association within the current or succeeding two fiscal years.
(4) A statement of the status and amount of any reserve for replacement fund and any portion of such fund earmarked for any specified project by the Board of Managers.
(5) A copy of the statement of financial condition of the unit owner's association for the last fiscal year for which such statement is available.
(6) A statement of the status of any pending suits or judgments in which the unit owner's association is a party.
(7) A statement setting forth what insurance coverage is provided for all unit owners by the unit owner's association.
(8) A statement that any improvements or alterations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are in good faith believed to be in compliance with the condominium instruments.
(9) The identity and mailing address of the principal officer of the unit owner's association or of the other officer or agent as is specifically designated to receive notices.
(b) The principal officer of the unit owner's association or such other officer as is specifically designated shall furnish the above information when requested to do so in writing and within 30 days of the request. (c) Within 15 days of the recording of a mortgage or trust deed against a unit ownership given by the owner of that unit to secure a debt, the owner shall inform the Board of Managers of the unit owner's association of the identity of the lender together with a mailing address at which the lender can receive notices from the association. If a unit owner fails or refuses to inform the Board as required under subsection (c) then that unit owner shall be liable to the association for all costs, expenses and reasonable attorneys fees and such other damages, if any, incurred by the association as a result of such failure or refusal. A reasonable fee covering the direct out‑of‑pocket cost of providing such information and copying may be charged by the association or its Board of Managers to the unit seller for providing such information.


Now the two horrer stories. First, an attorney settled a malpractice action for $20,000 because he had not made his 22.1 request and after the Buyer moved into the condominium the condominium passed a special assessment. If the attorney had done his job, capital expenditures must be disclosed (note (3) above).

Second, another attorney did not make his 22.1 request and later it was found that the condominium did not allow renters. The Buyer only was purchasing as an investment. This one is still pending but I'd call my legal malpractice carrier if I were the attorney.

Bottom line, as an attorney who represents condo boards and people buying condos and as a person who currently lives in a condo, the financial condition of your association is a HUGE part of your investment. Know the law and know your responsibility!

2 Comments:

At 6:13 AM, Blogger blogme said...

I see in your blog you are talking about something related to real estate. Are you interested in real estate? Here's a good site to find those deals. All deals are available at auction prices. Residential real estate, commercial real estate, lots, real estate courses, analysis, timeshares, condo hotels, mortgages, plus many kinds of investments. You have nothing to lose by looking. Just a secret little tip I wanted to pass along.

 
At 10:48 PM, Blogger angelo h said...

What a wonderful information... I found you via on google! This is great! Thanks for the post.


manila condominiums

 

Post a Comment

Links to this post:

Create a Link

<< Home

Google