Understanding 765 ILCS 605/25: Adding Additional Property to an Illinois Condominium

Understanding 765 ILCS 605/25: Adding Additional Property to an Illinois Condominium

Under Section 25 of the Illinois Condominium Property Act (the “Act”), developers may reserve the right to add additional land to a condominium after it has been created, so long as the original declaration includes certain language required by the Act.  See 75 ILCS 605/25.  The fact that a developer may expand an already existing condominium may sometimes come as a surprise to owners who have purchased units within a condominium that has already been largely constructed.  The Illinois Condominium Act seeks to protect the expectations of purchasers by requiring that developers include certain information in the recorded declaration to advise prospective purchasers of the possibility of the addition of new land and the terms under which such land may be added.

Specifically, Section 25 of the Act states that the developer may reserve the right to: (i) add additional property to a condominium; and (ii) reallocate percentage interests in the common elements in the event of an addition of property by recording an amended plat in accordance with Section 5 of the Act and an amendment to the declaration in accordance with Section 6 of the Act.  Further, approval of the unit owners is not required so long as the declaration contains the following minimum requirements:

(a) Reservation of Option: An explicit reservation of the option to add additional property to the condominium (75 ILCS 605/25(a));

(b) Reallocation of Percentage Interests: A statement of the method by which the reallocation of percentage interests, voting rights, and the rights, and changes in liability for common expenses will be determined if additional units are added (75 ILCS 605/25(b));

(c) Description of Additional Land:  A description of the land which may be added (75 ILCS 605/25(c)); and

(d) 10-Year Time Limit:  A 10-year time limit on the period of time within which the option may be exercised.  (75 ILCS 605/25(d)).

These minimum requirements would place a prospective purchaser on notice of the possibility of the addition of additional land, describe the potential impact of the addition of additional land on their percentage interest, and also physically describe the land to be added.  Lastly, the required language would also clarify for all owners that the developer’s option must be exercised within 10 years of the recording of the original declaration.

In addition to the above provisions which are mandatory in all cases, the following statements must also be included to the extent applicable:

• • A Description of Phases of Additional Land: A statement as to whether portions of the additional land may be added to the property at different times; and if so, (I) whether there are any limitations on the order thereof, (ii) any limitations fixing the boundaries of these portions, or (iii) whether any particular portion of it must be added (75 ILCS 605/25(e));

• • Any Limitations on Improvements: A statement concerning limitations, if any, on the locations of improvements which may be made on the additional land added (75 ILCS 605/25(f))

• • Maximum Number of Units: A statement of the maximum number of units, if any, which may be created on the additional land. (75 ILCS 605/25(g)). If portions of the additional land may be added to the property and the boundaries of those portions are fixed in accordance with 75 ILCS 605/25(e), the declaration must also state the maximum number of units that may be created on each such portion to be added to the property. If portions of the additional land may be added to the property and the boundaries of those portions are not fixed in accordance with 75 ILCS 605/25(e), then the declaration shall also state the largest number of units which may be created on each acre of any portion added to the property (75 ILCS 605/25(g));

• • Compatibility of Improvements: A statement of the extent to which structures, improvements, buildings and units will be compatible with the configuration of the property in relation to density, use, construction and architectural style (75 ILCS 605/25(h)); and

• • Plats and Site Plans: Any plat or site plans or other graphic material which the developer may wish to set forth in order to supplement or explain the information provided.

These provisions may not apply in all cases, but in those instances in which they are applicable, the above provisions must also be included.

Under Section 25, the developer automatically retains an easement over the common elements of the condominium “for the purpose of doing what is reasonably necessary and proper” in conjunction with implementing the addition of the “additional land” to the condominium.

The inclusion of an option to add additional land does not require the developer to exercise the option.  Accordingly, a developer may include the right to add additional land in the original governing documents, but may never exercise the option.  And while a developer may include new complementary provisions in the amendment which adds the additional land to the condominium which are “necessary to reflect the differences in character, if any” of the additional land and its improvements, the process of adding additional land cannot be used to “revoke, modify, or add to the covenants” already contained in the original declaration for the property already subject to the declaration.  In other words, amending the declaration to add additional land cannot also change the restrictions applicable to the land already within the condominium.

Both developers and owners should be aware of the statutory requirements for adding additional land to a condominium in Illinois.  Developer that fails to follow these requirements risk losing the ability to add land to the condominium without having to seek a vote of the owners.  Owners aware of the developer’s obligations would ensure that any expansion of their own condominium complied with Illinois law and reduce the risk of a later challenge to any expansion.

 

Matthew W. Heron is a Member at Hirzel Law, PLC, where he concentrates his practice in real estate, community association law, condominium law, real estate litigation, and zoning and land use.  Mr. Heron also has extensive experience in a variety of litigation matters, including insurance coverage, non-compete agreements, automotive supplier disputes, and breach of contract. He may be reached at 312-552-7669 or mheron@hirzellaw.com.