ISBA Statehouse Review for the week of May 29, 2014

ISBA Director of Legislative Affairs Jim Covington reviews legislation in Springfield of interest to ISBA members. In this episode he covers Condominium Property Act (House Bill 4783), UM/UIM arbitration (House Bill 5575), Sale of distressed condominium units (Senate Bill 2664), Workers' Compensation Act (Senate Bill 3287), Transfer on Death Instrument (TODI) Cleanup (Senate Bill 2656), Marriage rewrite (House Bill 1452) and Eavesdropping. More information on each bill is available below the video.

Condominium Property Act. House Bill 4783 (Welch, D-Hillside; Steans, D-Chicago) makes the following declarations unenforceable as against public policy if the declarations affect the common elements or more than one unit and require any of the following before the board can take legal action on behalf of the association: (1) consent of a percentage of unit owners, (2) arbitration, (3) mediation before an action may be filed in court, or (4) a restriction or delay in the board’s ability to bring an action affecting the common elements or more than one unit.

An otherwise unenforceable provision may be enforced if it is approved by a unit-owner percentage vote of not less than 75% of the total in the aggregate of the undivided ownership of the common elements after the election of the first-unit owner board of managers.

House Bill 4783 has passed the Senate and is now in the House for concurrence.  

UM/UIM arbitration. House Bill 5575 (Zalewski, D-Chicago; Mulroe, D-Chicago) amends the Insurance Code affecting binding arbitration in uninsured motorist claims. Under current law, arbitrators’ decisions are binding only if the award doesn’t exceed $50,000 for bodily injury to or death of any one person or $100,000 for bodily injury to or death of two or more persons in one motor vehicle accident. House Bill 5575 increases those levels to $75,000 and $150,000 respectively. It has passed both chambers.  

Sale of distressed condominium units. Senate Bill 2664 (Hastings, D-Matteson; Yingling, D-Hainesville) seeks to protect innocent purchasers of foreclosed condominiums units. It amends the Condominium Property Act to stop the current practice in which purchasers of distressed condominium units discover at the closing table that they owe back assessments to the association. Under the current statute, there is no mechanism to determine the amount of back assessments and other charges that the purchaser will be liable for.

It clarifies and caps the total amount the purchaser may be liable for—no more than an amount equal to the unit’s unpaid regular monthly assessments for the nine-month period immediately preceding the judicial foreclosure. This maximum amount can include attorney’s fees and costs incurred by the association prior to closing because of the nonpayment of these assessments.

It will apply to distressed units in a purchase at a judicial foreclosure sale (other than by a mortgagee) and a purchase from a mortgagee that acquired title through a judicial foreclosure, a consent foreclosure, a common-law strict foreclosure, or the delivery of a deed in lieu of foreclosure.

The proposal also improves the notice provisions to prospective purchasers to be more clear and timely by requiring the board of managers to produce for the seller and the prospective purchasers within 14 days information about the condominium unit, such as a copy of the condominium instruments, amounts due, and any rules and regulations. (For associations without professional management, it is 21 days.) Current law allows 30 days that is often too slow, and the proposal allows the Board the flexibility to do it either electronically or in writing. Passed out both chambers.  

Workers' Compensation Act. Senate Bill 3287 (Raoul, D-Chicago; Bradley, D-Marion) provides that there is no right to recover damages for injury or death, other than the compensation provided under the Act, from a service organization that is wholly owned by the employer or the employer’s insurer or broker and that provides safety service, advice, or recommendations. Current law is from a service organization retained by the employer or the employer’s insurer or broker to provide safety service, advice, or recommendations. Passed out of both chambers.

Transfer on Death Instrument (TODI) Cleanup. Senate Bill 2656 (Barickman, R-Bloomington-Normal; Sims, D-Chicago). Makes these revisions to the Act as follows:

• Including a new Section 75 that makes the recording of a Notice of Death Affidavit a permissive action that can be taken by the beneficiary to confirm title to the residential real estate, but that this is not a mandatory requirement to perfect title.
• This proposal eliminates the right of an agent acting under a durable power of attorney from creating or revoking a transfer on death instrument. It does not affect the agent’s right or power to sell, transfer or encumber the residential real estate if so authorized under the terms of the power of attorney agreement. The main reason for the change is that it is inconsistent with the requirement that the owner be legally competent at the time he or she creates or revokes a TODI.
• This proposal clarifies that only substantial compliance with the execution formalities is required. The title industry raised concerns about the validity of a transfer on death instrument, if, for example, the notary clause failed to include in the acknowledgment the names of the witnesses who witnessed the owner’s signature, or if the attestation clause failed to contain a provision stating the witnesses believed the owner to be of sound mind and memory at the time of its execution.
• This proposal excludes residential cooperatives and expands the definition of common elements associated with condominiums to include “any parking unit or other amenity used with and owned by the owner of the residential condominium unit.”
• Clarifies that acceptance of the transfer on death instrument by the beneficiary during the owner’s lifetime is not a requirement.
• Section 90 added a bona fide purchaser provision to the statute of limitations.

Senate Bill 2656 has passed out of both chambers.

Marriage rewrite.House Bill 1452 (Kelly Burke, D-Evergreen Park; Mulroe, D-Chicago) is a 200-page rewrite of the Illinois Marriage and Dissolution of Marriage Act. It will be acted on in the fall veto session.

Eavesdropping. The eavesdropping article is probably going to be amended after the Illinois Supreme Court struck this down as overbroad. What that legislative solution will be is unclear and remains to be seen.