Association Of Condominium, Townhouse And Homeowners Associations March 2009 Q&a - Updating Condo Delcarations?

March 2009

Question of the Month: By David Sugar, Partner, Arnstein & Lehr LLP

Q: Our association recently requested a legal opinion regarding whether we should update our declaration/bylaws. Our declaration hasn't been updated in 25 years. The firm suggested that we should, and pointed out some problems with our declaration. In the letter that the firm sent to us, they indicated that the association is required by law to have an updated declaration. Do you know if this is correct? If so, how do associations keep up with changes in the law as they affect condo declarations?

A: There is nothing in the Illinois Condominium Property Act (“ICPA”) that obligates an association to update its declaration to reflect changes to the ICPA. However, any association whose declaration was recorded more than 20 years ago should consider doing so. In an effort to create uniformity among all Illinois condominium associations on certain critical governance issues, many of the major changes that have been made to the ICPA over the last 20 years are deemed to be automatically inserted (that is, “incorporated by operation of law”) into the declaration of every Illinois condominium association. Added provisions are to be treated as if included in every declaration, and inconsistent provisions in declarations are deemed automatically invalidated. However, any director or owner who relies on the printed text of his or her association’s recorded declaration may be badly misled because “deemed amendments” do not actually appear anywhere in the text of the declaration unless an association has updated its declaration to actually reflect “deemed amendments”. A condominium declaration recorded more than 10 years ago will not reflect a decade of important ICPA amendments, including changes affecting annual elections, establishing minimum insurance coverage requirements, empowering boards to spend as needed for repairs mandated by law, and invalidating provisions in declarations that require more than 75% owner approval for amendments. Declarations that are more than 10 years old will also not reflect amendments requiring mandatory reserve funding, board authority to impose special assessments without need of prior unit owner approval, the lifting of limits on board spending authority for most expenditures, authority to enact a secret ballot voting system, and the imposition of uniform requirements for examination of association records, among many others. Any condominium association that wants to update its declaration should have its attorney prepare an Amended and Restated Declaration that incorporates all ICPA amendments, as well as any recorded amendments to the original declaration. As long as no other changes are made, the association’s board may authorize the recording of an Amended and Restated Declaration without need of any unit owner approval. So why doesn’t every association update its declaration? Cost is a major deterrent. The cost of updating a pre-1990 declaration will often be more than $5,000, with older declarations costing even more. In today’s harsh economic climate, many associations – especially smaller associations – may find it hard to justify spending thousands of dollars to update a document that is rarely consulted by most unit owners. Another concern is that no updated declaration will stay current for very long because of frequent ICPA amendments. However, it is far preferable to have an Amended and Restated Declaration that will someday be a few years out-of-date than a declaration that is a few decades out-of-date.