Coming Soon to a State Near You

By Patrick Costello, Keay & Costello, P.C., & Co-Chair of the Illinois Legislative Action Committee Charles Perry, Lieberman Management Services, Inc., & Co-Chair of the Illinois Legislative Action Committee

On December 29, 2014, outgoing Governor Pat Quinn signed into law the Condominium and Common Interest Community Ombudsperson Act, following its passage during veto session. With Governor Quinn’s signature, Illinois became the fifth state to enact some form of Ombudsman/Ombudsperson legislation. The bill is the final version of a piece of legislation that Representative Elaine Nekritz has introduced in various forms over the previous five legislative sessions. Through several substantial changes, the Illinois Legislature crafted a bill that is part mandate and part aspirational. In any event, the legislation that has been extensively discussed, debated and reviewed is almost here. While passed in 2014, the Act does not take effect until July 1, 2016.

The true purpose of the Act and the argument supporting the need for an Ombudsperson can be found in the Act’s “Findings”, which preface the legislative requirements. As part of the law, the

“General Assembly finds . . .Unit Owners and persons charged with managing condominium property or common interest community property may have little or no prior experience in managing real property, operating a not-for-profit association or corporation, complying with laws governing condominium property or common interest community property, and interpreting and enforcing restrictions and rules imposed by applicable instruments or covenants. “

Additionally, the Act notes:

“Unit owners may not fully understand their rights and obligations under the law or applicable instruments or covenants. Mistakes and misunderstandings are inevitable and may lead to serious, costly, and divisive problems.”

The Act is an attempt at a legislative solution to these issues.

On its face the Ombudsperson Act has several different components. Initially, the Act creates the “Office of the Condominium and Common Interest Ombudsperson.” The office will exist under the umbrella of the Illinois Department of Financial and Professional Regulation. The Ombudsperson, and other staff, will be employed by the Department. Further, the Ombudsperson will “have the powers delegated to him or her by the Department, in addition to the power set forth in [the] Act.” Currently, there is no mechanism

56 | COMMON INTEREST®

in the Act describing the selection or appointment of the Ombudsperson, however the Act does empower the Department to adopt rules for administration and enforcement.

The powers and obligations granted to the Ombudsperson, and the compliance requirements for Associations can be found within the Act. The first impact comes from the requirement that every association is required to adopt a formal, written policy for resolution of complaints made by homeowners. This policy must include a form on which to make the complaint, a description of the process by which the complaint must be submitted, the timeline in which the Association will resolve the complaint, and the requirement that the Association make its “final” decision within a reasonable time. This provision has an effective date “no later than 180 days after the effective date of this Act.” Accordingly, every association in the state bound to the requirements of the Condominium Property Act or Common Interest Community Association Act, must have adopted their complaint resolution policy no later than January 1, 2017.

Additionally, the Act requires registration from every association in the state subject to either Act. No later than July 1, 2017 (provided the appropriate rules for registering and forms have been created) every association must be registered with the Department of Financial and Professional Regulation. This registration will be valid for a period of two years, and has specific items which must be reported to the Department. As of now, there is no registration fee required. However, non-compliance with the registration requirement could result in an Association being assessed a late fee or penalty. Further, continued non-compliance could eventually suspend an association’s ability ”to impose or enforce its lien for common expenses or to pursue an action or employ any enforcement mechanism otherwise available to it in enforcement of a lien for common expenses until it is validly registered.” Be aware that this provision will not invalidate an association’s lien for common expense or its ability to collect such a debt, it will simply suspend, during the period of time the association is unregistered, its ability to pursue the claim.

Starting July 1, 2018 the Ombudsperson is charged with offering education and training to owners, boards and associations relative to the statutory laws affecting associations and the “operation and management” of

A Publication of CAI-Illinois Chapter