Bill Text: IL HB0688 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Condominium Property Act. Provides legislative findings concerning the importance of municipalities reclaiming housing stock that was used in fraudulent schemes. Provides procedures for addressing distressed condominium property that is a danger, blight, or nuisance to the surrounding community or the public and that is substantially unoccupied, without utilities, or in a serious negative condition. Provides definitions of "distressed condominium property", "owner", and "other party in interest". Provides that a municipality may file a petition in the circuit court and that if the court finds that a property is a distressed condominium property, the court may appoint a receiver to manage the property. Provides also that if a court finds that the property is not viable as a condominium, the court may deem that the entire property is owned in common by the unit owners and may authorize the receiver to sell the entire property without the consent of the unit owners. Provides that if the receiver sells the property pursuant to court authorization, the sale proceeds shall be paid to unit owners according to their respective shares, after sale expenses, taxes, and liens have been paid. Provides that the receiver has the power and authority to secure and insure the premises, make repairs, and otherwise manage the premises. Provides that other parties in interest shall be provided written notice and a copy of the petition or complaint either by United States certified mail, return receipt requested, within 30 days of the issuance of the summons or by personal service of the complaint. Provides that the court may authorize a receiver to enter into a sales contract for the property upon a motion, with notice to all owners and other parties in interest and those parties having an opportunity to be heard. Makes other changes.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Passed) 2009-08-10 - Public Act . . . . . . . . . 96-0174 [HB0688 Detail]

Download: Illinois-2009-HB0688-Enrolled.html

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AN ACT concerning civil law.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Legislative findings. The General Assembly
finds that it is imperative for municipalities to reclaim
certain housing stock that has been used in various fraudulent
schemes and that now creates a nuisance to the municipality.
Distressed condominiums create a hazard and blight to the
general public and community, diminish the local tax base,
distort the true value of property in the community (thereby
creating illusory market values that harm innocent developers
and buyers), and remove housing from the rental market,
especially for low and moderate income renters. While normal
conservation and building code enforcement methods can
adequately deal with housing code violations found in
legitimately created condominium buildings which are managed
by functioning condominium associations, this Act is necessary
because those normal code enforcement procedures are not
effective in dealing with distressed condominiums, because
there often is no functioning condominium board which can take
responsibility for the necessary code repairs. In that
situation the repairs may take years to complete, and the delay
can result in a property with such serious problems that the
property cannot be restored and instead must be demolished.

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Section 5. The Condominium Property Act is amended by
adding Section 14.5 as follows:
(765 ILCS 605/14.5 new)
Sec. 14.5. Distressed condominium property.
(a) As used in this Section:
(1) "Distressed condominium property" means a parcel
containing condominium units which are operated in a manner
or have conditions which may constitute a danger, blight,
or nuisance to the surrounding community or to the general
public, including but not limited to 2 or more of the
following conditions:
(A) 50% or more of the condominium units are not
occupied by persons with a legal right to reside in the
units;
(B) the building has serious violations of any
applicable local building code or zoning ordinance;
(C) 60% or more of the condominium units are in
foreclosure or are units against which a judgment of
foreclosure was entered within the last 18 months;
(D) there has been a recording of more condominium
units on the parcel than physically exist;
(E) any of the essential utilities to the parcel or
to 40% or more of the condominium units is either
terminated or threatened with termination; or

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(F) there is a delinquency on the property taxes
for at least 60% of the condominium units.
(2) "Owner" means any unit owner or owner of record of
the condominium property.
(3) "Other party in interest" means any mortgagee of
record, lien holder of record, judgment creditor, tax
purchaser, or other party of record, other than the owner,
having legal or equitable title or other interest in the
distressed condominium property or in a unit of the
property.
(4) "Municipality" means a city, village, or
incorporated town in which the distressed condominium
property is located.
(b) A proceeding under this Section shall be commenced by a
municipality filing a verified petition or verified complaint
in the circuit court in the county in which the property is
located. The petition or complaint shall allege conditions
specified in paragraph (1) of subsection (a) of this Section
and shall request the relief available under this Section. All
owners shall be named as defendants in the petition or
complaint and summons shall be issued and service shall be had
as in other civil cases. All known other parties in interest
shall be provided written notice and a copy of the petition or
complaint either by United States certified mail, return
receipt requested, within 30 days of the issuance of the
summons or by personal service of the complaint. The hearing

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upon the suit shall be expedited by the court and shall be
given precedence over other actions.
(c) If a court finds that the property is a distressed
condominium property:
(1) the court may order the appointment of a receiver
for the property with the powers specified in this Section;
or
(2) the court, after a hearing held upon giving notice
to all interested parties as provided in subsection (b),
may appoint a receiver for the property and if the court
further finds that the property is not viable as a
condominium, then the court may declare:
(A) that the property is no longer a condominium;
(B) that the property shall be deemed to be owned
in common by the unit owners;
(C) that the undivided interest in the property
which shall appertain to each unit owner shall be the
percentage of undivided interest previously owned by
the owner in the common elements; and
(D) that any liens affecting any unit shall be
deemed to be attached to the undivided interest of the
unit owner in the property as provided herein.
A copy of the court's declaration under paragraph (2) of
this subsection (c) shall be recorded by the municipality in
the office of the recorder of deeds in the county where the
property is located against both the individual units and

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owners and the general property. The court's declaration shall
be forwarded to the county assessor's office in the county
where the property is located.
(d) If a court finds that property is subject to paragraph
(2) of subsection (c) of this Section, the court may upon a
motion filed, notice given to all owners and other parties in
interest as provided in subsection (b) and those parties having
an opportunity to be heard, authorize the receiver to enter
into a sales contract and transfer the title of the property on
behalf of the owners of the property. In the event of such a
sale, the net proceeds of the sale, after payment of all the
receiver's costs, time, expenses, and fees as approved by the
court, shall be deposited into an escrow account. Proceeds in
the escrow account shall be segregated into the respective
shares of each unit owner as determined under subparagraph (C)
of paragraph (2) of subsection (c) of this Section and shall be
distributed from each respective share as follows: (1) to pay
taxes attributable to the unit owner; then (2) to pay other
liens attributable to the unit owner; and then (3) to pay each
unit owner any remaining sums from his or her respective share.
(e) A receiver appointed under this Section shall have
possession of the property and shall have full power and
authority to operate, manage, and conserve the property. A
receiver appointed pursuant to this Section must manage the
property as would a prudent person. A receiver may, without an
order of the court, delegate managerial functions to a person

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in the business of managing real estate of the kind involved
who is financially responsible and prudently selected.
Without limiting the foregoing, a receiver during such time
shall have the power and authority to:
(1) secure, clean, board and enclose, and keep secure,
clean, boarded and enclosed, the property or any portion of
the property;
(2) secure tenants and execute leases for the property,
the duration and terms of which are reasonable and
customary for the type of use involved, and the leases
shall have the same priority as if made by the owner of the
property;
(3) collect the rents, issues, and profits, including
assessments which have been or may be levied;
(4) insure the property against loss by fire or other
casualty;
(5) employ counsel, custodians, janitors, and other
help;
(6) pay taxes which may have been or may be levied
against the property;
(7) maintain or disconnect, as appropriate, any
essential utility to the property;
(8) make repairs and improvements necessary to comply
with building, housing, and other similar codes;
(9) hold receipts as reserves as reasonably required
for the foregoing purposes; and

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(10) exercise the other powers as are granted to the
receiver by the appointing court.
(f) If the court orders the appointment of a receiver, the
receiver may use the rents and issues of the property toward
maintenance, repair, and rehabilitation of the property prior
to and despite any assignment of rents; and the court may
further authorize the receiver to recover the cost of any
feasibility study, sale, management, maintenance, repair, and
rehabilitation by the issuance and sale of notes or receiver's
certificates bearing such interest as the court may fix, and
the notes or certificates, after their initial issuance and
transfer by the receiver, shall be freely transferable and when
sold or transferred by the receiver in return for a valuable
consideration in money, material, labor, or services shall be a
first lien upon the real estate and the rents and issues
thereof and shall be superior to all prior assignments of rents
and all prior existing liens and encumbrances, except taxes;
provided, that within 90 days of the sale or transfer for value
by the receiver of a note or certificate, the holder thereof
shall file notice of the lien in the office of the recorder in
the county in which the real estate is located. The notice of
the lien filed shall set forth (i) a description of the real
estate affected sufficient for the identification thereof,
(ii) the face amount of the receiver's note or certificate,
together with the interest payable thereon, and (iii) the date
when the receiver's note or certificate was sold or transferred

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for value by the receiver. Upon payment to the holder of the
receiver's note or certificate of the face amount thereof
together with any interest thereon to the date of payment, and
upon the filing of record of a sworn statement of such payment,
the lien of such certificate shall be released. The lien may be
enforced by proceedings to foreclose as in the case of a
mortgage or a mechanics lien, and the action to foreclose the
lien may be commenced at any time after the date of default.
For the purposes of this subsection, the date of default shall
be deemed to occur 30 days from the date of issuance of the
receiver's certificate if at that time the certificate remains
unpaid in whole or in part. The receiver's lien shall be paid
upon the sale of the property as set forth in subsection (d) of
this Section.
(g) The court may remove a receiver upon a showing of good
cause, in which case a new receiver may be appointed in
accordance with this Section.