Q&A: Charging the Renter for Delinquency

Q&A: Charging the Renter for Delinquency
Q We have an owner in our condominium association, who is several months behind in  his fees. He currently has a tenant in his unit. The association pays the bill  for his water, sewage, pool and other amenities. Do we as an association have  the right to take any of these amenities away from the renter, and would it be  possible to have the renter pay his monthly rent to the association until the  delinquency is resolved?”  

 —Concerned Homeowner  

A “The question arises often of whether or not an association can limit an owner’s rights if that person fails to timely pay assessments,” says David Hartwell, a partner at the Chicago-based law firm of Penland & Hartwell. “In Illinois, the simple answer no. If a person maintains ownership in a unit, that is the only qualifier for  possessing all rights of an owner as conferred by the association’s declaration and the Illinois Condominium Property Act (“Act”). Moreover, the Act prohibits associations for enacting rules or policies which  create two different classifications of ownership. In this case, disallowing an owner from using certain amenities based on timely  payment of assessments would improperly create two different classifications  and therefore would not be consistent with the intent of the Act. Furthermore a  tenant is entitled to and shall enjoy all of the rights and privileges accorded  to an owner. Therefore, a tenant cannot be treated any differently than an  owner.  

 “Boards often argue that it is unjust and unfair for delinquent owners to  continue to be able to enjoy all of the amenities and privileges of paying  owners; however this is the requirement of Illinois law. Delinquent owners are permitted to run for and serve on the board of directors,  serve of committees, utilize parking, use the pool and exercise facilities, and  all other common amenities. If adverse action is taken against a delinquent owner, claims of discrimination  often arise, which may be costly to defend. Boards should focus on aggressive  and uniform collection policies to minimize delinquencies.  

 “The next issue is whether or not the association can compel a renter to stop  paying a delinquent unit owner and instead pay rent to the association until  the arrearage is satisfied. Illinois law allows an association to execute an  assignment of rents and collect rents to offset the outstanding debt, however  only after the association has initiated a collection action pursuant to the  Forcible Entry and Detainer Act and obtained a judgment for possession. Upon  entry of a judgment and order for possession, rent is automatically deemed  assigned to the association unless and until such time the judgment is vacated.  Therefore, the association may collect rent from the tenant(s) until the entire  debt has been paid and an order vacating the judgment has been entered by the  court. This option provides both a benefit to associations, by granting them immediate  relief to collect rent payments and repay unpaid assessments; and a benefit to  paying tenants who do not wish to have their living situation terminated. Additionally, the association does not have to wait the 60-day statutory stay  period before enforcing its rights to recoup unpaid assessments.  

 “To facilitate the rent assignment, the association can and should obtain an “Information Certificate of Assignment” from the clerk of court. The certificate must be sent to current tenant(s) and  serves as notice to the tenants that a judgment has been entered against the  unit owner and that the unit owner’s right to collect rent has been extinguished. The tenant(s) must immediately begin making their monthly rent payments directly  to the association under the same terms as set forth in the lease agreement  with the owner.  

 “Tenants often question the legality of sending their payments directly to the  association, no doubt fearing a backlash from the landlord. While this might seem at first glance as a breach of the lease and the tenant’s duty to pay the landlord, the statute expressly provides that a landlord-unit  owner may not sue the tenant for failure to pay rent that is sent to the  association. Because the certificate of assignment does not provide all of this  information, it is helpful for the association or the association’s attorney to send a letter to the tenant(s) along with certificate explaining  that the unit owner has lost his/her right to collect rent and may no longer  demand rent from the tenant.  

 “What makes the rent assignment most advantageous for condominium associations is  that it allows the association to immediately begin collecting monthly rent  from a tenant, which often times exceeds the monthly assessment. Notably, the rent assignment is terminated upon satisfaction of the entire  judgment, costs, fees, unpaid assessments and after accruing assessments and  upon entry of an order vacating the judgment.”      

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