This grant of possession of the unit to the association is temporary and does not involve a transfer of ownership of the unit. In other words, even though a homeowner has been evicted, the homeowner retains ownership of the unit, as well as the obligation to pay the mortgage and property taxes for the unit.


Most homeowners facing eviction become highly motivated to bring their accounts current and resolve the matter before the sheriff completes the eviction. The eviction process therefore is effective in most cases, and eviction litigation usually is relatively streamlined as compared with other types of litigation. This having been said, certain variables can make an assessment collection matter more complicated, and preparation for such scenarios can help an association maximize the revenue it collects. Some strategies for optimizing assessment collection practices are discussed below.


Adopt (and Follow) a Written Assessment Collection Policy


Adopting and diligently following an assessment collection policy will help an association stay on track in collecting its receivables. A key aspect of a collection policy is having delinquent accounts automatically turned over to association legal counsel for collection action. For example, a collection policy could specify that accounts which are more than 60 days in arrears will be automatically sent to counsel. Other topics for possible inclusion in a collection policy are the due date for assessments, the date upon which late fees are applied, the late fee amount, payment plan procedures, an explanation of the remedies available to the association (e.g., eviction and lien foreclosure), and clarification that all association legal expenses arising in connection with a delinquency will be charged to the homeowner’s assessment account.


Collection policies can be implemented via an amendment to the association’s rules and regulations or by a board resolution. Collection policies must be consistent with the association’s declaration and bylaws and applicable law. Association legal counsel often will handle drafting the collection policy.


Payment Plans are Acceptable – to a Point


Associations are not obligated to accept homeowner payment plan requests. However, within reason, associations certainly can (and in some cases, perhaps should) work with homeowners who demonstrate a sincere intention to pay their delinquent balances but request a payment plan. Homeowner requests for payment plans should be in writing and should state the portion of the delinquent balance the homeowner is requesting to pay each month in addition to the regular monthly assessments, as well as the number of months the payment plan will cover. Ideally,


42 | COMMON INTEREST®


a payment plan will include an initial lump sum payment. Payment plans having an excessively long duration can have a negative effect on association cash flow and should be avoided. For example, some associations will not accept payment plans having repayment terms exceeding six months.


In reviewing a request for a payment plan, a board should take into consideration the facts and circumstances of the particular case, including factors such as the following:


(1) The nature of any hardship of the homeowner; (2) The overall amount owed by the homeowner;


(3) The length of time the assessment account has been delinquent;


(4) Whether the account has previously been delinquent;


(5) Whether the homeowner has previously defaulted under a payment plan;


(6) The status of any mortgage foreclosure case relating to the unit;


(7) Whether the homeowner is otherwise in compliance with the association’s governing documents;


(8) The proposed payment schedule; and


(9) The financial position and cash flow needs of the association.


Don’t Ignore Mortgage Foreclosure Cases


If a lender files a mortgage foreclosure lawsuit against a homeowner, the foreclosure case will complicate and could compromise an association’s full recovery of the homeowner’s delinquent common expenses. Nevertheless, an association can take certain steps in response to a foreclosure to maximize the amounts it can collect.


First, if there is substantial equity in the unit and the unit is ultimately sold at a judicial mortgage foreclosure sale to a third party (i.e., a bidder other than the foreclosing mortgage lender), there may be surplus foreclosure sale proceeds available to the association as a junior lien holder. If an association wishes to have access to a potential surplus, the best practice for the association is to have its legal counsel file an appearance and answer in the foreclosure case, monitor the status of the foreclosure case and have the association’s junior lien included in the judgment of foreclosure and sale.


Second, Sections 9(g) and 18.5(g-1) of the Illinois Condominium Property Act allow associations to recover up to six months’ common expenses and certain legal expenses if a unit is sold at a mortgage foreclosure sale. The application of these statutory provisions is nuanced and subject to evolving case law interpreting the statutory


• Winter 2022 • A Publication of CAI-Illinois Chapter


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