Q. I have been trying to keep up with the different court rulings and government issuances relating to the Corporate Transparency Act (CTA) and whether it is currently in effect or not for community associations. The courts and government have given me whiplash on this issue the last few months. Is CTA compliance required for community associations or not?
A. The CTA is on hold again, but this time it might be permanent for U.S. citizens and domestic reporting companies. A very recent Treasury Department announcement has suspended enforcement of the CTA and most importantly, signals the end of the CTA and its mandatory reporting requirements for condominium and community associations and co-ops. On March 2, the Treasury Department announced that it will (i) “not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners”; and (ii) issue a “proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”
The proposed rule narrowing the scope of the CTA to foreign reporting companies only has not yet been proposed or adopted but is expected to be released in late March. As such, the CTA is currently on hold for community associations (again), but with an expectation that U.S. citizens and domestic reporting companies—including condominium and community associations and co-ops—will be exempted from the CTA in the near future.
Q. I am an investor unit owner in a condominium association. The association’s management company has requested a copy of my tenant’s lease, but I do not want them knowing my business. Am I legally required to give a copy of the unit lease to the association?
A. Section 18(n) of the Condominium Act requires a unit owner leasing their unit to deliver a copy of an executed written lease to the association, or if the lease is oral, a memorandum of the oral lease, not later than the date of occupancy or 10 days after the lease is signed, whichever occurs first. Failure to do so is a breach of the Condominium Act and therefore, subjects to the unit owner to fines for the breach and/or the tenant to an eviction proceeding.
Related to the leasing of condominium units, if a tenant is ever found by the condominium board to have violated the association’s governing documents, pursuant to sections 9.2 and 18(n) of the Condominium Act, the unit owner may be levied a fine due to the tenant’s conduct and/or the association may proceed directly against a tenant for eviction due to the breach by the tenant of the association’s governing documents.
Q. I live in a small, self-managed three-unit condominium association. Under Illinois law, is there a maximum amount a condominium board is allowed to increase condominium assessments per year, and unrelated, if I believe unit percentages allocated to each unit are not fair, can the board simply revise them?
A. Under the Condominium Act, there is no maximum amount that a condominium board is restricted from increasing its annual budget, and thus assessments allocated to each unit. However, pursuant to section 18(a)(8) of the Condominium Act, if the sum of all regular assessments and special assessments payable in the current fiscal year exceeds 115% of the regular assessments and special assessments from the previous year, the unit owners may initiate a series of steps to reject the budget increase, which ultimately requires a majority approval of the total votes of the unit owners to reject the proposed budget at a properly called unit owner meeting.
It must be noted there is an exception to the rejection rights. If the increase relates to an emergency which is defined in section 18(a)(8) as the immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners, the unit owners do not have the right to reject the proposed increase even if the assessments increase significantly more than 115% of the previous year’s assessments.
As far as revising unit percentages already set forth in the declaration, section 4(e) of the Condominium Act requires 100% unit owner approval to amend unit percentages.
Got a question for the Condo Adviser? Email ctc-realestate@chicagotribune.com.
