Illinois General Assembly - Full Text of HB0688
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Full Text of HB0688  96th General Assembly



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



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1     Section 5. The Condominium Property Act is amended by
2 adding Section 14.5 as follows:
3     (765 ILCS 605/14.5 new)
4     Sec. 14.5. Distressed condominium property.
5     (a) As used in this Section:
6         (1) "Distressed condominium property" means a parcel
7     containing condominium units which are operated in a manner
8     or have conditions which may constitute a danger, blight,
9     or nuisance to the surrounding community or to the general
10     public, including but not limited to 2 or more of the
11     following conditions:
12             (A) 50% or more of the condominium units are not
13         occupied by persons with a legal right to reside in the
14         units;
15             (B) the building has serious violations of any
16         applicable local building code or zoning ordinance;
17             (C) 60% or more of the condominium units are in
18         foreclosure or are units against which a judgment of
19         foreclosure was entered within the last 18 months;
20             (D) there has been a recording of more condominium
21         units on the parcel than physically exist;
22             (E) any of the essential utilities to the parcel or
23         to 40% or more of the condominium units is either
24         terminated or threatened with termination; or



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



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



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



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



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



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