765 ILCS 160/1-20: How to Amend the Declaration of an Illinois Common Interest Community Association
The declaration of an Illinois common interest community association governs the administration and functioning of a common interest community association. Common interest communities in Illinois are governed by the Illinois Common Interest Community Association Act. The Common Interest Community Association Act was enacted in 2010 and has undergone a few amendments since its inception. Many common interest community associations have declarations that were drafted prior to 2010 and have not been updated to account for the changes in the law. Having an outdated declaration with provisions that conflict with the Common Interest Community Association Act may lead to conflict between the board and the owners and cause unwanted litigation. This article will discuss how to amend the declaration of an Illinois common interest community association.
What types of homeowners’ associations are subject to the Common Interest Community Association Act?
765 ILCS 160/1-5 of the Common Interest Community Association Act defines a common interest community as follows:
“Common interest community” means real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. “Common interest community” may include, but not be limited to, an attached or detached townhome, villa, or single-family home. A “common interest community” does not include a master association.
765 ILCS 160/1-75(a) contains the following exemption for associations with respect to complying with the Illinois Common Interest Community Association Act:
(a) A common interest community association organized under the General Not for Profit Corporation Act of 1986 and having either (i) 10 units or less or (ii) annual budgeted assessments of $100,000 or less shall be exempt from this Act unless the association affirmatively elects to be covered by this Act by a majority of its directors or members.
(b) Common interest community associations which in their declaration, bylaws, or other governing documents provide that the association may not use the courts or an arbitration process to collect or enforce assessments, fines, or similar levies and common interest community associations (i) of 10 units or less or (ii) having annual budgeted assessments of $50,000 or less shall be exempt from subsection (a) of Section 1-30, subsections (a) and (b) of Section 1-40, and Section 1-55 but shall be required to provide notice of meetings to members in a manner and at a time that will allow members to participate in those meetings.
Accordingly, many homeowners associations are governed by the Common Interest Community Association Act. A condominium or cooperative does not qualify as a common interest community. A townhome may qualify as a common interest community, and whether a townhome is a common interest community or a condominium will depend on how the real property and association were organized under the community instruments.
Who may execute an amendment?
Pursuant to 765 ILCS 160/1-20(a) of the Common Interest Community Association Act, amendments to community instruments shall be executed and recorded by the president of the board or such other officer authorized by the association or the association’s community instruments.
When is an amendment valid?
Pursuant to 765 ILCS 160/1-20(a) of the Common Interest Community Association Act, an amendment is not valid unless the amendment is duly recorded.
When is an amendment effective?
Pursuant to 765 ILCS 160/1-20(a) of the Common Interest Community Association Act, an amendment is deemed effective upon recordation, unless the amendment sets forth a different effective date.
What happens if a common interest community amends its declaration to prohibit leases?
Pursuant to 765 ILCS 160/1-20(c) of the Common Interest Community Association Act, if an association that currently permits leasing amends its declaration, bylaws, or rules and regulations to prohibit leasing, a unit owner incorporated under 26 USC 501(c)(3) which is leasing a unit at the time of the prohibition may continue doing so until such time that the unit owner voluntarily sells the unit. The association may not assess a special fine, fee, due, or penalty against the unit owner for leasing its unit.
Can a common interest community incorporate as a municipality?
Yes, however, an action to incorporate a common interest community association as a municipality shall commence until an instrument agreeing to incorporation has been signed by two-thirds of the members.
Do amendments require mortgagee or lienholder approval?
Pursuant to 765 ILCS 160/1-20(e) of the Common Interest Community Association Act, mortgagee or lienholder approval is required if the association’s community instruments require approval. Accordingly, there is no statutory requirement that mortgagee or lienholder consent be obtained prior to an amendment.
If the association’s community instruments do require approval, then the association must provide a request to approve or consent to the mortgagee or lienholder via certified mail. A mortgagee or lienholder will be deemed to have approved or consented to an amendment unless the mortgagee or lienholder delivers a negative response to the requesting party within 60 days after the mailing of the request.
What voting threshold is required to pass an amendment?
The Common Interest Community Association Act does not explicitly set forth a requisite voting threshold to pass an amendment. Generally, an association’s governing documents will set forth such a threshold. 805 ILCS 105/110.20(c) of the Illinois General Not for Profit Corporation Act requires that a proposed amendment be adopted by receiving the affirmative vote of at least 2/3 of the votes present and voted either in person or by proxy at a meeting at which a quorum of the members are present. However, 805 ILCS 105/110.20(d) of the Illinois General Not for Profit Corporation Act provides that an association’s governing documents may supersede the 2/3 vote requirement by specifying any smaller or larger vote requirement not less than a majority.
Conclusion
The declaration of an Illinois common interest community association is a vital document that should be regularly updated to account for changes in the law. An outdated declaration that conflicts with the Common Interest Community Association Act can lead to unwanted and avoidable litigation. Although 765 ILCS 160/1-20(e) of the Common Interest Community Association Act sets forth the mechanics of how to amend the declaration of an Illinois common interest community association, an association may wish to seek counsel to guide them through the amendment process to avoid any potential pitfalls. The attorneys at Hirzel Law, PLC can assist with the drafting and preparation of amendments to comply with the requirements of the Common Interest Community Association Act and the association’s governing documents.
Jeremy Fernando is an Associate Attorney at Hirzel Law, PLC. Mr. Fernando is licensed to practice law in the State of Illinois. He concentrates his practice on community association law, condominium law, homeowners association law, and real estate law. Mr. Fernando’s legal career includes serving in corporate practice where he represented insurance companies and institutional investors in U.S. and cross-border private placements of securities, including transactions in the Netherlands, England, Ireland, Australia, and Germany. Mr. Fernando earned his Juris Doctor from Marquette University Law School, where he graduated with honors and ranked in the top 15% of his class. He also served as an Associate Editor of the Marquette Law Review. Mr. Fernando is committed to providing effective legal representation to his clients and is passionate about helping communities navigate complex legal challenges. He may be reached at 312-552-7669 or jfernando@hirzellaw.com.