Condominium Ownership
Two Types of Ownership in a Condominium
- The owner of each unit holds a fee simple title to the air space described by the 3D survey.
- The individual unit owners also own a specified share of the undivided interest in the remainder of the building and land, known as the common elements, as Tenant in Common.
Common Elements These include:
- land,
- courtyards,
- lobbies,
- the exterior structure,
- hallways,
- elevators,
- stairways,
- roof,
- recreational facilities.
As such, each condominium owner has a fractional, undividable interest in the common elements, meaning the interest can be sold (along with the condo) but not any actual part of the common elements.
Illinois law provides, however, that unit owners do not have the same right to partition that other tenants in common have.
Creation of a condominium
In Illinois, creation of condominiums is governed by the Illinois Condominium Property Act (765 ILCS 605/). Under this law, an owner/developer may elect to submit a parcel of real estate as a condominium situation by recording a declaration to which is attached a three dimensional plat of survey of the parcel showing the location and size of all units in the building. Every unit purchaser acquires the fee simple title to the unit purchased, together with the percentage of ownership of the common elements that is set forth in the declaration and that belongs to that unit. This percentage is computed on the basis of the initial list prices of each unit.
3D Survey
The survey required with each declaration of condominium ownership must indicate the dimensions of each unit. This survey will show the outlines of the lot, the size and shape of each unit, and the elevation or height above base datum for the upper surface of the floor level and the lower surface of the ceiling level. The difference between these two levels represents the airspace owned in fee simple by the unit owner.
Many Illinois municipalities have adopted conversion ordinances to protect tenants in rental buildings whose owners wish to convert to condominiums. The ordinances also protect prospective purchasers. These laws typically allow tenants an opportunity to extend their leases
and often guarantee first purchase rights. Additional protections often include disclosure of all material information, structural soundness of the building, adequacy of parking, and a variety of other concerns. These ordinances generally have been upheld by the courts as a valid exercise of police power.
Ownership of a Condominium
Once the property is established as a condominium, each unit becomes a separate parcel of real estate that is owned in fee simple and may be held by one or more persons in any type of ownership or tenancy recognized by state law.
A condominium unit may be mortgaged like any other parcel of real estate.
The unit can usually be sold or transferred to whomever the owner chooses unless the condominium association provides for a right of first refusal. In such a case, the owner is required to offer the unit at the same price to the other owners in the condominium or the association before accepting an outside purchase offer.
Real estate taxes are assessed and collected on each unit as an individual property. Default in the payment of taxes or a mortgage loan by one unit owner may result in a foreclosure sale of that owner’s unit. One owner’s default, however, does not affect the other unit owners.
Operation and Administration of a Condominium
The condominium property is administered by an association of unit owners, often called a homeowners’ association (HOA) The association may be governed by a board of directors or another official entity, and it may manage the property on its own or hire a property manager.
The association must enforce any rules it adopts regarding the operation and use of the property. The association is responsible for the maintenance, repair, cleaning, and sanitation of the common elements and structural portions of the property. It also must maintain fire, extended coverage, and liability insurance.
The expenses of maintaining and operating the building are paid by the unit owners in the form of fees and assessments. Both fees and assessments are imposed and collected by the owners’ association). Recurring fees (referred to as assessments or condo fees) are paid by each unit owner. The fees often are due monthly, but the schedule may be quarterly, semiannually, or annually, depending on the provisions of the bylaws. The size of an individual owner’s fee is generally determined by the percentage of the unit’s selling price in relation to the total of the selling price of all units when originally converted or built, but occasionally the percentage of square footage of the unit compared to the total square footage of all units in the condominium.
If the fees are not paid, the association may seek a court ordered judgment to have the delinquent owner’s unit sold to cover the outstanding amount.
Special assessments are special payments required of unit owners to address some specific expense, such as a new roof. Assessments are structured in the same way as condo fees, owners of larger units pay proportionately higher assessments.
These general condominium guidelines apply under the Condominium Property Act in Illinois. However, the property may be removed from condominium status at any time by the unanimous consent of all owners and all lienholders, as evidenced by a recorded written instrument. All owners would then be tenants in common.
