JANUARY 2013 | VOLUME 16 | NUMBER 4
THE SOURCE FOR INFORMATION ON COMMUNITY ASSOCIATIONS, CONDOS, TOWNHOMES, CO-OPS & HOAS
Report F E AT U R E S
Legal Q & A Elevator Modernizations on the Rise Three Best Practices When an Association Leases a Unit to Mitigate Unpaid Assessments Common Questions for Community Associations
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usfa.fema.gov/downloads/pdf/ usfa.fema.gov/downloads/pdf/ usfa.fema.gov/downloads/pdf/ publications/fa-223-508.pdf publications/fa-223-508.pdf publications/fa-223-508.pdf
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table of contents COVER STORY
03 CondoLifestyles State of the Industry Report By David Mack 06 Legal Q & A By David Mack MAINTENANCE MEMOS
10 Elevator Modernizations on the Rise By David Mack 17 Industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 18 Editors Message 19 Directory Advertising 26 Industry Happenings BOARD BASICS
28 Three Best Practices When an Association Leases a Unit to Mitigate Unpaid Assessments By Howard Dakoff and Jennifer L. O’Reilly EVENT HIGHLIGHTS
30 CondoLifestyles State of the Industry Program EVENT HIGHLIGHTS
32 ABOMA Diamond Jubilee BOARD BASICS
33 Common Questions for Community Associations
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By David Mack
As it has for a number of years, the Chicago Cultural Center served as the venue for the 2012 Condo Lifestyles State of the Industry Seminar, an annual event, as noted by MCD Media president and Condo lifestyles editor Michael C. Davids in his opening remarks.
elcome to the 17th annual State of the Industry,” he said to an audience composed of association board members and representatives and colleagues who serve the industry in various ways. “It’s an honor and a pleasure for us to provide a forum for idea exchange and learning,” adding that he hoped the attendees would be full participants in the program. “We want to hear your views and perspectives.”
Luminaries Lost in 2012 Davids then sadly recalled the passing during the year of several luminaries in the association field, specifically Tracy Hill, Terry
Dixon and David Berke, as well as just the day before, Mark Pearlstein, one of the founders of the law firm of Levenfeld Pearlstein and a frequent guest speaker at prior State of the Industry affairs and many other significant events on the annual association activity calendar. Having lost these great people, “we felt we wanted to take a brief moment to remember them.” He offered kind words describing their contributions to and impact upon the industry and its evolution to where it stands now. “We want to celebrate these folks because all were instrumental in shaping what we do.”
Special Recognition Before presenting the first program presenter Davids, along with Tom Skweres of Wolin-Levin, Inc. and Tony Briskovic of Chicagoland Community Management identified and thanked the many sponsors of the State of the Industry program with the latter two concluding their brief remarks by offering happy holiday greetings to all those present. Davids also gave recognition to the members of Condo Lifestyles and Chicagoland Buildings & Environments Advisory Boards as well as the State of the Industry Committee that had worked with him on the development and preparation for the
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annual program (see page 30 for a list of these companies and individuals).
Community Association Legislative Update Attorney Gabriella Comstock of Keough & Moody, P.C. presented then the 2012 Legislative Update but prefaced her comments by noting, “people are here to get their questions answered. I want to highlight some of the key changes and how we use them in practice and then get to your questions.” She first addressed the Illinois Condominium Act, pointing out that there had not been much activity on that front in the previous year except for an amendment to Sections 14.3 and 18.4 to include high speed internet cable in the easement for cable television. Approval of a majority of more than 50% of the unit owners is necessary to grant such an easement unless the condominium instruments provide otherwise.
Proposed Amendments to ICPA Comstock turned her attention to several proposed amendments that had been consid-
ered in 2012 but not enacted. HB4134 would, if adopted, allow condo associations to prohibit smoking in the units. This, “is a very sensitive topic, a hot issue right now,” she said, but, “it’s not yet been voted on, but has been sent back to the Rules Committee.” Another proposed amendment, HB3979 pertains to proxy voting and, in fact, would eliminate that form of participation in board elections. The change would require an absentee voter cast his/her ballot by mail but not by proxy. A further potential amendment, SB2817, would eliminate the need for an association to disclose any waiver it adopted of reserve payments for capital expenditures and deferred maintenance and also remove any liability on the part of a board or its manager for the inadequacy of reserve funds.
CICAA Revisions Comstock then proceeded to focus on the Common Interest Community Association Act (CICAA) and revisions to that law which have been enacted. “It’s nice that they’re fine tuning it and seeing the changes that
needed to be made,” she said, adding, however,” that (the law) still needs some work.” Here are some of the CICAA changes: • Section 1-5: the terms member and unit owner can be used interchangeably in a community’s instruments. • Section 1-15: a board can make any necessary changes to its governing documents to comply with CICAA without consulting unit owners. • Section 1-20: a common interest community cannot be incorporated until an appropriate instrument providing for this action is approved by 2/3 of the members. • Section 1-25: board elections need only be held every 24 months instead of annually. • Section 1-30: arbitration costs are added to attorney’s fees and court costs to become collectible charges. • Section 1-35: multiple owners of one unit in an association can both serve on the board as long as one of the persons owns another unit in that association. • Section 1-45: a revision to paragraph (d) requires that when an association’s common expenses exceed the budget, the board must alert unit owners to the overrun and identify any additional
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assessments necessary to offset such variation in future budgets. • Section 1-45: separate assessments for additions and alterations to common areas will now require approval of only a simple majority of owners at a meeting rather than 2/3. A proposed amendment to CICAA would permit the operation of licensed day care centers on the property. They, “would be ok even if business operations are prohibited by an association,” explained Comstock, adding that this would create additional liability exposure and associations would have to investigate further coverage to assure protection.
Manager Licensing Update Regarding manager licensing, a 2012 amendment clarified that only associations of 10 or more units that have a paid manager, and are not master associations are required to pay the $50 annual fee to the Illinois Department of Financial & Professional Regulation. Comstock noted, however, at this time that the Agency, “is not collecting the fee,” from anyone.
Comstock emphasized that, “it’s very important for Gabriella Comstock of everyone (board Keough & Moody provided members, managers) a community association legislative update. involved to make sure people are truly licensed. “This is very basic but now is the time to see that everybody (all those performing management functions) is living up to the law.” In trying to determine who is actually a community association manager “There may be a difference between an adminunder the law, “we just can’t look at a job title, istrative assistant and an assistant manger.” we have to look at the functions (a person) is Speaking generally about CICAA, Comperforming,” Comstock added. “The definition stock said, “It is a new act and we want to figure of manager needs to be understood and what out how it will work. That’s a group process is expected of one.” Board members must be and we’re going to learn it together. It’s going to certain their managers are licensed as well as take some time to work through it all.” any assistants they may have if they perform any of the listed management functions.
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FHA Mortgage Requirements She then turned her attention to new Federal Housing Administration (FHA) requirements for that Agency to approve mortgages in associations. “FHA is also a hot topic,” she said. “Each association has to determine its own needs but while it’s always good to be aware of what requirements are today, (those) can very easily change tomorrow.” Some FHA changes approved in September, 2012: • allowable delinquencies can be up to 60 days but for no more than 15% of the units, giving associations more time to work with owners to get back assessments paid to meet that guideline. • Previously a single investor could not own more than 10% of the units in an association but that limit has been increased to 50% as long as the other 50% are owner occupied. • New fidelity bond requirements have been established providing that HOA policies have an endorsement covering the management company as an agent or its employees that work under the direction of the HOA.
Legal Q & A Comstock took questions from the audience. Q- Didn’t an association always have the right to prohibit smoking in the units?
Q- If you have an accounting firm do your budget, does it have to be licensed as a manager?
A- In common areas you did but in the units is a little more challenging issue. Trying to enforce any such restriction raises a lot of legal issues.
A- Those who keep books are exempt from manager licensing but you have to look at the full scope of duties that your accountant performs to determine this. (someone who does a budget usually has to be a licensed manager) A cautious firm will be careful to see they don’t cross over the line into management.
Q- Does the licensing of two-way radios also affect the two-way radios that must be installed in Chicago high-rises for fire department use? A- No, they are not covered by the licensing requirement.
Q- Some of the language in the manager licensing law is confusing regarding when you have to have the license.
Q- Is manager licensing required for a self-managed association? A- It doesn’t apply to them. Volunteers serving on the board don’t need licensing. However, if any member is being compensated to perform duties that would commonly be performed by a manager, that individual would need to be licensed.
A- If you are new, you have up to two years to qualify for the license. One can’t hold oneself out as a CA manager until licensed, however, someone may need the two years to meet the educational requirement and some people don’t pass the test the first time.
Q- Can condo boards charge for cable and internet on a percentage of ownership interest basis? A- Yes, as would be done with all other common expenses.
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• Instead of requiring someone who submits an association project for FHA certification to report every 2 years on any issues that might impact a borrower’s ability to repay a loan, the submitter must only attest to not having any knowledge of such conditions, circumstances or issues that might harm a condo project. • No longer does an association submitting a project certification request have to accompany it with an attorney’s attestation that the submitter has read the application and that it complies with all local and state laws. Now the legal attestation only has to be that the package is true and correct and meets all FHA rules and guidelines.
Drapac said in her work at The Habitat Company, we have had a lot of success and it all starts with assessment delinquencies. “The best advice to boards is to be very aggressive, don’t let them go beyond 60 days. Also make your effort, a team approach with your manager and attorney.” Bialek added, “a collection process starts with a collection policy so everyone knows how they’re going to deal with delinquent assessments. And make sure all homeowners are aware of (the policy) and that they under-
stand it and that the board has the duty to collect assessments.” Also, she noted, “a firm written policy keeps a board from having to make decisions based on personal reasons.”(such as a delinquent owner asking a friend on the board for a favor by delaying legal action.)
Should You Fix Up a Unit Being Rented After Eviction A question from the audience- to rent out units after evicting some associations are
FCC Commercial Two-Way Radios Comstock briefly referred to a new Federal Communication Commission requirement becoming effective 1/1/2013. “Any commercial use of two-way radios will require a license,” she said, which, “can have a great affect on some of the bigger associations, that use that form of internal communication. Err on the side of caution and always make sure you comply with all new laws.”
Panel Discussion on Economic & Budget Issues Next on the agenda was a panel presentation on issues such as economic trends, delinquencies, foreclosures, rentals, FHA mortgages, elevator inspections and Chicago’s life safety ordinance. The panel was moderated by Tairre Dever-Sutton, owner of Tairre Management Services and included Patricia Bialek of WolinLevin, Natalie Drapac of the Habitat Company, Cathy Ryan of Property Specialists and Jim La Chapelle of Community Specialists. Dever-Sutton opened the discussion by saying, “we have a good cross section of elite property management professionals in Chicago (on the panel) but we want the audience to join us in the discussion today.” She also added, “we are not lawyers so we aren’t going to address any legal questions up here. However, there are lawyers in the audience who we will call on if we get questions with legal implications we can’t answer.”
Delinquencies, Evictions & Foreclosures The first issue raised by Dever-Sutton to the panel was how do you advise your associations to deal with delinquencies, evictions and foreclosures?
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afraid they’ll have to fix up units. Won’t that be a wasted effort if lenders are about to foreclose and take a unit? Cathy Ryan answered that she would recommend an association work closely with its collection attorney who can tell the board how far along a lender has gone in the foreclosure process and the association can decide what to do based on that information. Drapac added that another key is having a good relationship with a real estate agent who can market (for rental) a unit quickly when an association takes over. Bialek provided some further clarification regarding such a decision by an association. “What is involved is a mathematical formula - weighing costs against potential income on a rental unit,” she said. “And don’t assume the bank will get to the courthouse steps before the association. Don’t wait for banks to solve your problems with collecting (delinquent) assessments (by taking ownership and paying assessments themselves or selling to another buyer who will.)”
When to Move to Evict? Another question from the audience- Is there a minimum amount that should be owed before an association moves to evict and take over a unit? Dever Sutton said the collection process should be started within 45 to 60 days. An association has a responsibility to start collection action then.
Funds From Delinquent Assessments Question from the audience- How do you apply funds collected from delinquent owners?
Bialek responded by saying, “always apply funds to assessments first because associations have the responsibility to collect assessments. As far as any attorney’s fees are concerned, by the time you collect anything you will probably have paid them.”
Managing Rental Units for Associations Another question- Who should manage rental units for an association?
Dever-Sutton replied that she would
never manage rentals in an association she managed because that was a conflict of interest. Bialek added that it’s a slippery slope for a board to become a landlord. There are a lot of legal requirements to meet and I think a condo manager would need a separate license to manage rentals. Dever-Sutton raised the issue of banks that take possession of units paying their assessments in a timely fashion, noting that they should not get a free pass but should be held to the same procedure for paying as regular owners. Ryan concurred by saying that her company follows the same policy for banks as it does with other owners- if they don’t pay, they are sent to collection.
Drastic Increase in Rentals of Condo Units Moving on to another issue for the panel, Dever-Sutton described how it is a very transient time in condo buildings because owners can’t sell their units but that they still want to move and instead of selling, they rent out their units. How are associations handling this? There are a lot of tools they can use.
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Ryan said that PSI encourages associations to lay off stringent rental restrictions in these hard economic times. Bialek said “when there are rental restrictions in effect or caps on the number of permitted rentals those who still want to lease their units protest loudly to the board. It’s like a noose around the neck of associations. There are ways to deal with the issue in these circumstances. The policy on caps could be amended to raise or eliminate the cap. Or an association could simply place a moratorium on caps for a certain period. Another approach is to let current owners rent out their units but subject any new buyers to the existing restrictions.” Bialek added that under current economic conditions an association would find it difficult to get a rental restriction amendment to its governing documents passed.
FHA Mortgage Certifiction Dever-Sutton turned to the subject of the FHA and how associations differ on whether they want mortgages insured by that Agency on their properties. “Most of my buildings are FHA approved,” she said, “but there are dif-
ferent schools of thought out there. Some don’t want FHA approval. Certification (by FHA) can cost up to $1000 and the paperwork can take several days to complete. Some buildings it helps, for others it doesn’t matter. Whether to seek FHA certification will be an ongoing concern for associations and,” DeverSutton added, as Gabbie (Comstock) said, “FHA requirements keep changing,” regarding building eligibility for mortgages to be insured by that Agency. (See changes noted earlier in this article.) Only Bialek had a comment on this issue and that was in reference to what non-governmental lending institutions are beginning to do- more conventional lenders are tightening up much more on (buyer) qualifications for conventional loans, becoming more like FHA.
Life Safety Update To meet Chicago’s Life Safety Ordinance requirements, Dever-Sutton cautioned associations and their managers in the audience that, “your work should be underway or at least contracted for now.” Jim La Chapelle provided a brief history
of the fire at the Cook County building in downtown Chicago in 2003, which led to the City enacting a more rigorous life safety ordinance. He focused on the installation of 1 and 2-way communication systems that nonsprinklered residential buildings over 80 feet in height must install. They are used for fire department personnel to communicate with themselves and the occupants. He pointed out that those requirements also pertain to some residential buildings that were built after 1975 but are not fully sprinklered since they had automatic fire doors installed in each elevator lobby to compartmentalize the building if smoke is detected. “Associations must have this equipment installed by January 1, 2015,” he said. Originally 2012 had been the deadline. Bialek reemphasized that if associations had not started the contracting process, they needed to start it now and that the City was not going to budge on the 2015 deadline. She expects that Chicago will have inspectors on the payroll to go out and see what is being done. Mr. La Chapelle said that of the 21 associations managed by Community Specialists continued on page 31
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By David Mack
Elevator Modernizations on the Rise There is an old saying that,” what goes up must come down.” Gravity will eventually exert its pull every time.
levators are no exception to that rule although human beings and their technology can defy the earth’s attraction by controlling the timing of their descent. But elevators always do have to come down for to do otherwise would defeat their purpose as a means of getting people to a level where they can commence their horizontal journeys elsewhere. And they do this safely almost 100% of the time.
Failures are Rare but Do Occur As a means of relatively short range vertical travel, elevators have an admirable safety record, although there are those exceedingly rare occasions when they fail in their mission to bring their human cargos down comfortably without a hitch. When an
elevator does malfunction it will generally, at worst, leave riders perhaps somewhat shaken but with their bodies fully intact and capable of continued functioning when they emerge from the car. About 99.9% of the time when proper elevator operation is compromised, the car will drop in a safe way. But there is that other 0.1%.
Hydraulic Failure Some years ago a car fell four floors in a five story Chicago building to the bottom of the shaftalso know as the hoist way- as the result of the failure of a hydraulic cylinder. Fortunately there was no loss of life although all twelve passengers were reportedly injured to varying degrees with the most severe trauma being broken legs.
In a less serious vein in terms of bodily harm, at another local high –rise a couple of incidents occurred a decade or so ago. One rider was badly shaken when the car in which he was descending collided forcefully with the cushioning buffer which had been torn lose from the bottom of the shaft by a broken cable that was flailing about wildly. The car stopped abruptly, jarring the passenger but he was able to walk away without serious injury. In that same building a car stopped between floors causing a panic attack in the lone rider when the repairman was unable to respond in a timely fashion. The Fire Department was called and firemen chopped through the hallway wall to rescue the alarmed and trembling resident.
Old Equipment More recently reported incidents have had less serious outcomes. Scott Kinzie, General Man-
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ager of Naperville based Smart Elevators, described the problems one condo building was having with an elevator that frequently failed because of antiquated equipment. “The building was experiencing entrapments on a weekly basis,” explained Murray, as the result of equipment installed in 1961 that was 20 years behind schedule for modernization. The, “final straw was an entrapped pregnant woman who went to the Village Hall (afterward) to explain her disgust with the management company.”
Temperature in Machine Rooms Bob Meyer, Director of Engineering Services at Wolin-Levin, Inc., reported on one elevator system that was malfunctioning frequently because of the extraordinarily hot summer of 2012. “The equipment was failing due to temperature control of the elevator machine room,” he said. “The newer equipment with its solid state relays and micro- circuitry generate significantly more heat than most old electric relay equipment and (is) more susceptible to thermal overload.” Exterior and interior heat conditions combined to contribute to the periodic operational failure of the system but that was corrected by cooling things off. “Providing the right equipment for the elevator machine room remedied this problem.” Generally, though. Meyer added, “most newer systems are more durable overall but require some added upgrades such as air conditioning being installed in machine rooms that was not necessary with the old equipment.” Conditions were less problematic for other managers. Bill Earle, President & CEO of Legum & Norman Mid-West, an Associa Company, which manages numerous high rise condominium buildings in the area, said, “we are fortunate that no incidents have occurred.”
Modernization Matters Rosemarie Wert, Director of management company Community Specialists, which oversees the operation of Chicago high rise condominiums, reported that five of her building managers told her that there had been no malfunctions of elevators with distressing consequences. “None had any tales of serious adversity to report,” she said,. What has helped in those particular buildings, however, is that all have had elevator renovations in the past two years and Wert added that not only has the upgrading work made the elevators more reliable but, “residents feel safer since there is less noise and less shaking.” Rosemarie said that altogether Community Specialists has had the elevators in 15 buildings renovated in the last ten years and is about to start two more. In every case the controllers, motor generators, door operators and fixtures were replaced. Also each had an automatic elevator recall system installed to replace the manual system. Most had the cabs interiors renovated and handrails installed to meet code. Only one building had the four elevator host machines themselves replaced.
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Infrequent Breakdowns Fortunately, as noted above, major elevator breakdowns are so infrequent that they don’t intimidate us into avoiding “lifts” as the British call them- out of fear of being maimed or worse in a uncontrolled plunge to the bottom of a hoist way. The worst experience most riders ever have is being stuck in a car for brief periods and except for those who have a phobia about small enclosed spaces most of us endure the event with at worst mild upset about the inconvenience of being delayed from going about our intended business.
Safety Features Safety is obviously the most important consideration in the manufacture, installation and operation of elevators. Enough safety features have been incorporated over the years into an elevator system for the protection of passengers that the point of redundancy has been reached. The governor intervenes when a car is sensed to be going over the set speed limit by 10%, at which point it
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trips an electrical switch, which shuts off the power to the elevator motor, stopping it immediately. If the governor fails to perform adequately and the car continues to gather speed, a mechanical jaw drops and grabs the governor cable, which in turn triggers the activation of devices called safeties that seize rails on each side of the car and stop it mechanically.
years have gotten smaller, smarter and faster,” he said. “Much like all other machines that are linked to human transportation, the safety features are always being upgraded and improved.” Earle feels the same as Meyer in a general way. “New technology and modernization have not only made elevator operations more comfortable but reliable,” he said.
While there haven’t been any newer safety products introduced recently into the industry, existing ones have been improved and, said Kinzie, “within the past five years code has changed that reflects higher safety standards when modernizing.” This, he declared, has made confined space “travel by means of elevators and escalators statistically the safest means of travel.” So while the basic nature of safety equipment hasn’t changed much in recent years it has been tweaked in quality and code modifications have required the best available equipment to be installed to replace that which, while generally safe, did not meet the highest standards of the industry. Meyer said he is not an expert on the subject but does feel that the latest technological improvements have made riding elevators safer. “The electronic contacts alone in the past five
However, despite technological and safety enhancements there are a number of other factors unrelated to those areas that can cause elevator dysfunction. ”Regular operation of any elevator with newer equipment is certainly less prone to mechanical failure,” Meyer said, but, “breakdowns are likely (to occur) due to numerous scenarios (such as) power failure, water damage and vandalism that are unforeseen,” and no amount of upgraded technology can anticipate and prepare for. As a result, Meyer indicated that because elevators are in service 24/7 the incidence of unscheduled stoppages of elevators unrelated to safety issues remains essentially unvarying. To sum up on safety, while the highest quality of the mechanisms to best assure it are found primarily in newer elevator systems, the core safety parts of all operating elevators, whatever
their age, are functional and effective but they do have to be properly maintained.(more on that later). And regardless of whom the manufacturer is, safety concerns always receive the greatest emphasis in the production and installation processes.
Types Of Elevator Systems Elevators are either hydraulic or electric with the former being limited to buildings of perhaps six to seven floors at most because for most of these a pit of equal depth must be excavated below the structure to permit the movement in the hoist way of the support member for the car as it goes about its two way vertical movements. Electrical elevators known as traction systems are either geared for lower speeds or gearless for high velocities in taller buildings where speed is essential to reach upper floors in an acceptable time frame. Older systems were and are still directed by controllers comprised of electro-mechanical relays while since about 1980 micro processors are used to handle the many tasks elevators must perform. State of the art elevator systems have multiple processors controlling various functions and communicating with other elevators in the group in order to efficiently utilize traffic within the group. These processors initiate motion commands to
particular elevators, process demand information coming from car and hall buttons and make the dispatch decisions as to which car should respond to specific calls.
Useful Life Of Elevators “Most reserve studies estimate the life expectancy at 30 years,” said Meyer, but that figure is not hard and fast by any means. It may be shorter for some and longer for others. Kinzie found it hard to put a number on durability but said, “for mechanical and electrical components, the systems typically have a 20-30 year life cycle.” But structural members can last for the life of a building. A lot depends on the frequency of preventive maintenance which can extend the service life of an elevator to 40 years. And the prevalence in an area of a particular type of elevator can have some bearing in terms of the proximity of parts as well as the availability of trained service personnel to respond in a timely fashion to distress calls.
Preventive Maintenance & Service Contracts It is essential therefore to have a regular service contract for all elevator systems. Spending for preventive maintenance is by far the wisest use
of money by an association, noted Meyer, to keep elevators operating at peak performance levels day in and day out. As noted above, “service contracts will extend the overall life expectancy of the equipment,” and the regular attention given to it through these agreements should prevent catastrophic failure. Unfortunately, “service contracts have been pared down over the last few years with associations trying to save where they can without (hopefully) risking the operating performance of the equipment,” Meyer added.
Site Visits One thing associations must be alert to is the wording of any service contract on the issue of site visits by the contractor. “Within the past few years, due to (their own) economic pressures many companies have scaled back on the routine maintenance visits,” said Kinzie. Contracts are often vaguely worded in this area and fewer visits may be made than in better economic times.
Inspection Certification Program But Wert pointed out that the City of Chicago implemented a new Annual Inspection Certification (AIC) Program three years ago for all buildings, including condominiums, in the central business district, which provides for a third party to conduct
an elevator inspection. “Managers report this has kept maintenance companies on their toes and that these inspections can prompt repairs or adjustments.” At least in this geographical area, service companies may have to keep to a higher frequency of site visits to prove to both the associations and the City that they are doing their job thoroughly. Kinzie emphasized that, “the key to reduce malfunctions is proper and routine maintenance by qualified individuals,” which, “leads to less time spent repairing an elevator in the long run.”
Evaluating Service Contracts Earle commented at length about service contracts. All of the buildings managed by Legum & Norman Mid-West have them, “to protect the integrity of the equipment and ensure safer elevator operations,” he said. “The company goes through a bidding process to get the best price but also evaluates bidding contractors in terms of their past relationship and the quality of their response time and work as part of the selection process.” And past feedback from a service contractor with recommendations for safety or service improvements is part of the evaluation process of bidders. Also, “it is not uncommon to have an elevator consultant physically inspect the equipment
Shown here is a gearless elevator machine.
Pictured here is a fire annunciator panel.
month while another 39 story building with four recently modernized elevators now pays $2500 per month for service versus the $7500 per month it paid before the upgrade work. The reduction in cost is because of the better reliability of new components and that in many cases the systems can self-diagnose problems ——-( Another association with seven elevators also went through a full scale renovation and the board is happy with the $5000 per month cost of its service contract.)
to ensure an elevator service contractor (has performed) to the expectations of (a prior) contract.” This arrangement provides double protection.
Hydraulic Vs Electric Comparing the cost of a service contract for a hydraulic versus electric elevator, Kinzie said, “given the same rise in travel, the traction elevator typically will cost twice the contract for the hydraulic.” Meyer noted that regardless of the type of elevator, “each contract is different and usually based on travel length,” and concurred with Kinzie that because of their shorter hoist routes and fewer moving parts hydraulic contracts are cheaper.
Modernization & Renovations At some point, either because of an aging elevator system or one beset with frequent failures, an association board will have to determine whether to continue routine maintenance or opt for major renovation. How best to do that? Meyer again referred to a reserve study, which WolinLevin recommends be done or updated every three years to help in this decision making process. “The reserve study helps associations plan for large
Modernizations Save on Service Contracts Wert provided some detail for the cost of service contracts for buildings her firm manages. One 27 story building with three elevators has a full maintenance contract that costs $1750 per
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capital expenditures including elevator replacement and/or upgrade,” he said. The boards of, “Wolin-Levin properties will usually work with a consultant from the idea stage through the completed (elevator) project.” Kinzie recommended getting opinions from a number of vendors and balancing their proposed options with the association’s budget constraints. “The rule of thumb is (for) thirty year equipment (a board) should start budgeting for modernization,” he said. But considering the cost of major upgrading, some examples of which are shown below, it might be preferable to begin the accumulation of funds for the work ahead of that time to be in a financial condition that enables the association to commence work as soon as possible, especially with an old elevator system that has been malfunctioning with greater than normal regularity. Dependability is an important consideration. Sometimes, though, with affluent associations the imposition of a one-time separate assessment large enough to cover the cost of the major upgrading may be an acceptable alternative funding approach. Rosemarie Wert said the elevators are modernized if and when they start to become less reliable and the elevator maintenance companies are having problems finding parts or diagnosing issues in old equipment. Sometimes that can be remedied by changing maintenance companies. If problems do arise we recommend using consultants that specialize in elevators to determine if there is a fix or if they should be modernized. If they need to be modernized, the consultant will prepare documents, bid forms, take the work out to four or five reputable contractors, negotiate, recommend, oversee and prepare an agreement for
subsequent maintenance that is fair and protects the association.
Impact of Service Disruptions Not every board or board member will react the same to chronic elevator breakdowns. The
diverse attitudes of board members will motivate some to prefer continued repairs because they can tolerate malfunctions and downtime while others will want to do a complete overhaul to eliminate the annoyance of frequent service disruptions. Generally, though, any differences of opinion on how to proceed are based on the comparative costs of repairing or renovating. A major undertaking will Shown here is a either deplete associarelay logic elevator tion funds, require a loan controller. or a major separate assessment that might be difficult for some members to afford and for the association to collect. In the long run, continuing with a regimen of frequent repairs that can be more easily paid for at any one time may be penny wise and pound-foolish. And there are other benefits that putting off the large scale overhaul will
jeopardize. One is the convenience of having elevators that are responsive in a continuing and timely fashion to the vertical riding needs of residents. Another area impacted by elevator quality is the marketability of their homes. Prospective buyers who have to wait long for a car might choose to go elsewhere or make a lower offer to sellers.
“As New” Quality The modernization of elevator systems can vary in scope but the objective should always be to return the equipment to an “as-new” quality. Generally, a complete makeover includes refurbishment/replacement of the door close/open equipment, replacement of the controllers and generator, which drives the motor to raise and lower a car, along with installing new fixtures throughout the system. Because most overhauls are performed on original equipment, the control systems are the primary components to be replaced due to their shorter life cycles when compared to other, more durable, elements of a system. Relays are replaced with microprocessors. Occasionally, the work is so extensive that the car housing is the only part of an elevator that remains in place but in extreme cases even it might go. The hoist ropes, which
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really are steel cables with rope cores that raise and lower cars in traction systems, may have to be replaced also.
Time Required for Major Overhaul How long will a major overhaul take? ”In my experience it has always varied and is typically tied to the height of the building and sometimes the availability of some of the finishes,” said Meyer, “but on average three months is a good working number.” Kinzie was in essential agreement with that estimate. “Depending on scope and building height, a hydro may be able to undergo modernization in a month where (as) a traction elevator may go 2-3 months per unit,” he said.
Life Safety Ordinance Elevator renovations will likely be on the rise in the near future. ”Over the next few years we
anticipate a substantial increase in the number of elevators to be modernized or overhauled as a result of the Life Safety Ordinance in Chicago,” explained Earle. Initially an expert is brought in to analyze the problems and the kind and degree of upgrading needed. “The project starts with hiring a consultant who determines the scope of the work including evaluation of current equipment.” He would likely also assist in preparing plans and specs, taking and evaluating bids and recommending the contractor(s) to be approved by the board. Once the work has commenced he would do periodic inspections to assure the improvements are being completed as planned. Added Earle, in expectation of the expense of such work, “the cost for one building (two cars) is estimated to be in the neighborhood of $290,000 and (will) take several months to complete. Another building is scheduled for 2013 (and) the cost is anticipated to
be (also) $290,000.”
More Cost Examples Wert provided information on three buildings in the portfolio of Community Specialists that have undergone large scale elevator modernization in the last few years. “A 450 unit building we manage paid $724,000 to totally renovate four elevators three years ago, while another building of that size is just finishing a similar renovation of five elevators at a cost of $738,000,” she said, adding that the lesser price per car of the more recent job seems to indicate that the cost for that kind of work may be coming down. Also, three years ago, “another association in two buildings with 6 total elevators paid $2,000,000 for a complete renovation,” which included modernization of the cab interiors. (A twenty nine story downtown edifice, also managed by Community Specialists, completed total overhauls of several elevators about seven years ago. The property’s, “five traction elevators (were) renovated in 2005 at a cost of $877,500,” said Wert. “They are now, obtaining current bids to modernize three hydraulic elevators and have received estimates of $180,000 each which includes replacement of older hydraulic cylinders as required by code. Three association projects included cutting openings for new floor stops for passenger to access floors with storage rooms, laundries and garages. Two projects included adding inconspicuous riser controls so that one elevator could operate independently of the others. Bob Meyer detailed a very recent upgrading at a Wolin-Levin managed property. “This summer (they) just completed a (total) elevator (modernization),” he said. “This Gold Coast building replaced two hoist motors, two control cabinets, two cabs, rails and created an additional opening where none existed (at) an overall cost in the neighborhood of $725,000.” The building that Scott Kinzie of Smart Elevators had referenced earlier in which a pregnant woman was trapped in a car was partially revamped soon thereafter because, “the building had lost 5 long term (residents) in previous months (due to) the unsatisfactory condition of the elevators,” he said. “The control system, power unit and fixtures were upgraded to code (at) a price tag of $40,000.” Elevators are not streets that can be clogged with traffic and slow us down. Those who live in buildings with them and pay for their proper operation are entitled to get where they want to go as efficiently as possible. Y
industry happenings Vanguard Community Management Vanguard Community Management, an Associa company, welcomes Donald Kekstadt as executive vice president. Kekstadt will focus on marketing, client retention and executive planning. “I couldn’t be more pleased to welcome Don to our team,” said Vanguard CEO Christine Evans. “Don is a tenured professional in the industry and brings with him a wealth of experience, evidenced by his many designations and extensive involvement with Community Associations Institute.” Having attended Western Illinois University, Kekstadt brings more than 25 years of experience in community management industry. He earned his PCAM and AMS designations from CAI, and currently sits on the CAI board of directors and the State of Illinois community association management and disciplinary board.
helped grow the number of community associations served by his previous employer and assisted with employee development, increasing the number of community managers. Prior to entering Chicago association management, Kekstadt managed the grounds, buildings, residences and schedule at Arlington Park Race Course, a premier race course in the United States, for more than 17 years. “I am very excited about my new endeavor with Vanguard and Associa,” Kekstadt said. “I look forward to playing a part in their future success.”
In his recent work in property management, Kekstadt
Since 1976 Vanguard Community Management, AAMC, has provided community association management and developer services to the greater Chicago area and surrounding suburbs. Based in Dallas, Associa and its 8,000 employees operate more than 150 branch offices in the United States, Mexico and Canada.
Vanguard Open House
Woodland Windows & Doors Woodland Windows & Doors and Ken Mariotti are pleased to announce that Liz Foley, CMCA, AMS, PCAM has joined the firm as an HOA Representative. Liz brings over ten years of management experience and will be responsible for the HOA market along with Ken and Phil Mariotti. Woodland Windows recently opened a new division, Woodland Exteriors and will be offering siding and sunrooms to offer a more complete exterior package to our customers.
First Community Management ▲ Vanguard Community Management held an open house event for board members at their corporate offices on December 6, 2012. The event's theme was "How to Manage the Greatest Show on Earth" and featured food, beverage and fun stations staffed by people from various Vanguard Departments and vendors. Shown here are Arlington Club Board Members, (LtoR) Olin Apgar and Jack Adams, with Christine Evans Vanguard Community Managment, and Emily Jansen - VCM Collection and A/R Supervisor.
Effective immediately, the property management firm formerly known as First Properties, LLC, is now First Community Management. The renamed First Community Management will continue to provide management of condominium, homeowner (townhomes) and co-op associations in Chicago. “We feel First Community Management more accurately describes what we do for our association clients on a daily basis,” said Michael E. Rutkowski, who founded of the firm in 1988. “We see the community as broader than just the property or buildings. It includes the people and personalities as well. It is a complete community.”
Professional Community Management C O N TA C T
Michael D. Baum, CPM, PCAM
From the Editor
lack of snow and cold has made this another relatively mild
winter here in the Chicago area (at the time of this writing late in the first week of January). Although a streak of cold weather
typical of Chicago winter did just help us welcome in the new year and forecasters ®
▲ Mike Davids
are predicting another batch of extremely cold weather to arrive later this month. Our troubled economy appears to be making some improvement. At least housing market conditions have been improving somewhat. Predictions are for economic improvement in 2013 but a host of financial
JANUARY 2013 | VOLUME 16 | NUMBER 4
issues continue to challenge many of us. Despite our challenges, we hope that you and your association(s) are off to a good start in 2013.
Editor & Publisher Michael C. Davids Vice President Sherri Iandolo Art Director Rick Dykhuis Special Events Coordinator Mary Knoll Contributing Writers Pamela Dittmer McKuen, Jim Fizzell, David Mack, and Cathy Walker Circulation Arlene Wold Administration Cindy Jacob and Carol Iandolo
Our cover story is a report on our “Condo Lifestyles State of the Industry” program held in December at The Chicago Cultural Center. Attorney Gabriella Comstock provided her insight on current trends and recent legislative and government activity concerning community associations. A panel of leading property managers shared their perspectives on current trends and issues at the SOI event as well. Comstock’s lead topic was the relatively new Community Manager Licensing law in Illinois. Manager Licensing is a topic that provokes a lot of discussion and undoubtedly there is more to come on this important issue. Our panel session’s lead topic was the continued widespread use of condominium units in Chicago as rentals and what this means to the Community Association and its board of directors. Foreclosures, evictions, delinquent assessments, FHA mortgages, scavenger rebates, life safety & elevator issues were also discussed. Additional coverage of this special event is also featured in this edition including photo highlights. You can also view all the event photos from this event at the MCD Media facebook page. A special feature on elevator modernizations, including examples of experiences that other community
Condo Lifestyles Magazine is published quarterly by MCD Media, a wholly owned subsidiary MCD Marketing Associates, Inc. For editorial, advertising and subscription information contact: 935 Curtiss Street, Suite 5, Downers Grove, IL 60515. 630-932-5551 or 630-202-3006.
associations are having with their elevators, is inside this issue. Our Board Basics column features a discussion of best practices of leasing a condo unit by an Association to mitigate unpaid assessments. Our regular Industry Happenings column appears in this edition as is customary. Sadly, we said good bye to Tracy Hill and Mark Pearlstein in late 2012. Both Tracy and Mark were
Circulation: Condo Lifestyles is available for a single issue price of $8.95 or at a $30.00 annual subscription. Distribution is direct mailing and delivery direct through authorized distributors to over 5,000 officers and directors of Common Interest Communities, 500 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 7,000.
pioneers and well known fixtures in the Chicagoland community association arena. Both were long time
Condo Lifestyles attempts to provide its readership with a wide range of information on community associations, and when appropriate, differing opinions on community association issues.
Tournaments will be held for 8-ball (billiards) and darts. Other events for Condolympics competition will also
All material herein is copyrighted 2013©. No part of the publication may be reproduced whatsoever without written consent from the publisher. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is issued with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal advice is required, services should be sought. Advertisers assume liability for all content of advertisements printed, and also assume personal liability for any claims arising therefrom against the publisher relating to advertising content. The publisher and editors reserve the right to reject advertising or editorial deemed inappropriate for the publication.
friends of Condo Lifestyles and will be sorely missed. We continue to keep their families and loved ones in our thoughts and prayers. MCD Pool Party to feature Condolympics Games The 17th annual MCD Pool Party will be held on March 15, 2013 at The Pyramid Club in Addison. be held at the MCD Pool Party. The Condo Lifestyles Condolympics donations will benefit Special Olympics. Other upcoming MCD special events include our annual golf outing, which will be held in July at Eagelwood Resort in Itasca, and a luncheon at Arlington International Racecourse in late summer. We will provide more information on these events as you request and as details are available. Thanks to the many new subscribers that have found our publication useful and informative. Special thanks to the firms, associations and groups that are Authorized Distributors of Condo Lifestyles. Those of you who are not current subscribers can obtain subscription information on our website www.condolifestyles.net or by contacting our office. As we welcome in another new year, we encourage you to make your association and your community all it can be. If you have an idea that would benefit other Community Associations, a story to share, or some advice on how to avoid a problem or failure, please call our office at 630-932-5551 or send us an e-mail (firstname.lastname@example.org) Y
Michael C. Davids Editor and publisher
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Creating Lifestyles From The Outside In…™ www.kinsellalandscape.com
SPRING-GREEN LAWN CARE (800) 830-5914
AAA PAINTING CONTRACTORS, INC. (630) 231-8350
ABBOTT PAINTING, INC. 312-636-8400 773-725-9800
MAILBOX WORKS (630) 355-9989 (773) 528-3111
KINSELLA LANDSCAPE, INC. (708) 371-0830
Large Variety of Commercial and Residential Mailboxes Intercoms and Tele-Entry Address Signage & Engraved Nameplates Installation Services
Quality Painting & Decorating since 1973 Our Mission: Guaranteed Committment to Quality Now offering Parking Lot Painting www.Abbottpainting.com
LANDSCAPE CONCEPTS MANAGEMENT, INC. (847) 223-3800 www.landscapeconcepts.com
CERTAPRO PAINTERS 630-742-5119
Interior & Exterior Painting • Wallcoverings Stucco, Masonry & EFIS Repair • Drywall Repair www.certapro.com email@example.com
QCI RESTORATION (847) 891-2929 866-832-6724
SEBERT LANDSCAPING, INC. 630-497-1000
PARKING GARAGE CLEANING
NON PROFIT/EDUCATION ZENITH LANDSCAPE GROUP (847) 360-1010
EXTREME POWER CLEANING INC. (630) 532-0345
Association of Townhome and Condominium Associations
firstname.lastname@example.org | www.actha.org
LAUNDRY SERVICES & EQUIPMENT FAMILY PRIDE LLC (630) 827-6362 Contact Paul Anzell email@example.com
COMMUNITY ASSOCIATIONS INSTITUTE OF ILLINOIS 847-301-7505 Conference & Exposition @ Arlington Park Racecourse Education, Exhibits, Information
February 1 & 2, 2013 firstname.lastname@example.org www.cai-illinois.org
pics CondOl1y5m , 2013 n visit For more informatioes.net yl st ife ol www.cond
FM&J ASPHALT PAVING, INC. 708-544-6700 / 630-279-0303 Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com
HARD SURFACE SOLUTIONS (630) 674-4520
DUBOIS PAVING (847) 634-6089 (800) 884-4728
MAUL ASPHALT & SEALCOATING (630) 420-8765
HEIL, HEIL, SMART & GOLEE (847) 866-7400
SUDLER PROPERTY MANAGEMENT (312) 751-0900
Sealcoating / Crack-sealing / Striping Asphalt Installation www.maulasphalt.com
HILLCREST MANAGEMENT (630) 627-3303 / (312) 379-0692
TAIRRE MANAGEMENT SERVICES (847) 299-5740
SMITHEREEN PEST MANAGEMENT SERVICES (847) 647-0010 / (800) 336-3500 www.smithereen.com
WERK MANAGEMENT (630) 241-0001
LEGUM & NORMAN MIDWEST (312) 944-2611
For All Your Property Needs www.werkmanagement.com
PROPERTY MANAGEMENT LIEBERMAN MANAGEMENT SERVICES (847) 459-0000
Contact Jennifer Feldman, Tom Skweres
REAL ESTATE TAX ATTORNEY
RESIDENTIAL & COMMERCIAL
MCGILL MANAGEMENT, INC. (847) 259-1331
BAUM PROPERTY MANAGEMENT, LTD. (630) 897-0500 www.BaumProp.com
CARUSO MANAGEMENT GROUP, INC.
WOLIN-LEVIN INC. (312) 335-1950
ELLIOTT & ASSOCIATES (847) 298-8300
PARAGON PROPERTY MANAGEMENT (847) 465-1483
CHICAGO PROPERTY SERVICES, INC. (312) 455-0107 X102
contact: Tracy Davis email@example.com www.paragonmanagement-inc.com
“Premier Community Management”
CHICAGOLAND COMMUNITY MANAGEMENT (312) 729-1300
PROPERTY MANAGEMENT SPECIALISTS, LTD. (847) 845-6067
“A Management Company with Values” contact: James Krech firstname.lastname@example.org
COMMUNITY SPECIALISTS (312) 337-8691 www.communityspecialists.net
MANCIONE IMPROVEMENTS, INC. (630) 241-0001 www.mancioneinc.com
S&S CUSTOM BUILDERS AND RESTORATION SERVICES (847) 568-1440 Call Ed or Sam for a free quote.
PROPERTY SPECIALISTS INC. (847) 806-6121 (630) 633-5450 WOODRIDGE OFFICE
THE HABITAT COMPANY (312) 527-5400 www.habitat.com
For more information, visit our website at
www.condolifestyles.net No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2013©.
J. HERSHEY ARCHITECTURE (847) 549-5900
S&D ROOFING SERVICE (630) 279-6600
THE WINTER WERKS (630) 241-0001
100,000 roofs installed TEAR OFFS • SHINGLES • FLAT ROOFS Our experience & technical know-how gets the job done right the first time! Serving the area since 1963 www.sdroofing.com email@example.com
RESERVE ADVISORS, INC. Reserve Studies & Transition Defect Studies
1-800-221-9882 Conducted by Professional Engineers Enhanced Report / Most Customized Studies www.reserveadvisors.com Long-term Thinking. Everyday Commitment.
Established 1965 Maintenance & Repairs Roofing/Sheet Metal/Tuckpointing www.activeroofing.com
SPMS 630-692-1500 Heaters Pumps • Repairs • Chemicals Pool Maintenance • Complete Water Analysis Pool Guards, Inc. firstname.lastname@example.org
PREMIER SECURITY CORPORATION (773) 867-8813
ACTIVE ROOFING CO., INC. (773) 238-0338 (708) 430-8080
AUTUMN TREE CARE EXPERTS, INC. (847) 729-1963
SIDING / RENOVATIONS
A comprehensive aboricultural firm building relationships in every season for more information, please visit our website: www.autumntree.com
ACCURATE EXTERIORS (630) 830-9191 B.T. LAKESIDE ROOFING (630) 628-0093 www.lakeroof.com
www.csr-roofing.com See our ad on page 8.
WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)
We’re Here When You Need Us! www.protoproofing.com
KRAMER TREE SPECIALISTS, INC. 630-293-5444
B.T. LAKESIDE ROOFING (630) 628-0093
CSR ROOFING CONTRACTORS (708) 848-9119
PRO★TOP ROOFING (847) 559-9119
Tree Pruning, Tree Removal, Cable Bracing, Plant Health Care, Tree Planting & Transplanting www.kramertree.com
TV-BULK CABLE & SATELLITE
Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com
COMCAST (866) 594-1234 www.comcast.com
RCN (312) 955-2322
HARD SURFACE SOLUTIONS (630) 674-4520
ADMIRAL SECURITY DOOR STAFF SOLUTIONS (847) 588-0888
ZENITH LANDSCAPE GROUP (847) 360-1010
TV-BULK CABLE & SATELLITE
CHICAGO WINDOW SYSTEMS, INC. (312) 915-0591
WINDOW WALL SERVICES, INC. THE CAULKING COMPANY (708) 361-9333
Window and Patio Door Replacement Aluminum and Wood Clad Steel UL Rated Windows Aluminum Store Fronts email@example.com
USA WIRELESS SATELLITE TVS/DIRECT TV 847-831-4561 www.usadishtv.com
WASTE SERVICES LAKESHORE WASTE SERVICES (773) 685-8811
All Types of Window Restoration Weather Stripping / Hinges Handles and Adjustments Curtain Wall Repair Specialists
WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)
WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)
Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com
Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com
For Display or Professional Services Directory Advertising Info, Call (630) 202-3006
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industry happenings In Memoriam
Mark D. Pearlstein
We are saddened to report that our partner Mark Pearlstein passed away on December 11, 2012 after a battle with cancer. A founding member of Levenfeld Pearlstein, Mark has always been, and will remain, a pillar of our firm. The imprint he leaves in his chosen and cherished field of community association law is difficult to overstate. Mark was a pioneer - he was one of the first to specialize in condominium law. His even temperament, encyclopedic knowledge and genuine connection with clients, gave him the respect that made him, among other things, a selection to the inaugural class of the Community Associations Institute's prestigious College of Community Association lawyers. That honor is just a small mark of his considerable national stature. While Mark received many accolades, it is fitting that he viewed his greatest accomplishment as his large role in the drafting and passage of an Illinois statute that heightened professional standards in the property management industry. It is fitting because Mark embodied the professional ideal; he dedicated himself not only to immediate client needs, but to the larger good of his profession, the industry he served and his community. He gave generously of his talents in drafting many of the statutes that regulate community associations in Illinois, and relished opportunities to speak to the many neighborhood associations that coveted their time with him. A quiet presence but never a small one, Mark carried an integrity and decency about him that spoke louder than words. All of us at Levenfeld Pearlstein are proud to be associated with a firm that carries his name, and it is an honor for us to continue his professional legacy.
Levenfeld Pearlstein Rob Romanoff will succeed Bryan Schwartz as managing partner of Levenfeld Pearlstein Schwarts has served in that capacity since the formation of Levenfeld Pearlstein and is the primary architect of the firm’s growth over the last 14 years. He will continue as Chairman of the firm. Widely recognized as a leading trusts and estates lawyer, Romanoff came to LP eight years ago and became a driving force behind the LP Asset Planning and Preservation practice. Rob will also continue practicing during his tenure as Managing Partner. LP does not believe in occupying any attorneys with full-time management responsibilities- that will continue to be handled by LP Executive Director, Angela Hickey
It is with great sadness that Property Specialists, Inc (PSI) announces the passing of our founder and past president, Mr. Tracy Hill. Surrounded by loved ones, Tracy passed on Sunday, October 14th of complications related to lung cancer. As founder and President of PSI, Tracy established the firm as a strong regionally based company, competing with technology offered through larger national firms while maintaining the personal attention of a local entity. Considered a giant in the emerging field of residential property management, Tracy’s goal was to establish the communities in which he managed as a profitable return on the homeowner’s investment. He understood the importance of a home to the homeowner, always wanting his communities to be a place where his clients were proud to reside. Tracy was always quick to share his passion for the industry he so dearly loved. He served as a mentor to his entire staff, passing along his beliefs to future generations of community managers. A firm believer in continuing education, Tracy received his Professional Community Association Manager (PCAM) designation, the highest designation afforded to an individual property manager by the Community Association Institute (CAI). He encouraged his staff to follow suit, offering scholarships for continuing education classes. Tracy was an active member of the Condo Lifestyles magazine advisory board since its inception and he was often a featured speaker at community association industry events. Seeing others in which he mentored succeed was one of Tracy’s greatest joys in life. In June of 2012, Tracy retired from active management of PSI, handing over the company to longtime employee and personal friend Cathy Ryan. A succession plan, developed by Tracy prior to his passing is now moving forward. Cathy Ryan is in the process of purchasing PSI, continuing on Tracy’s wishes and legacy ensuring high quality services to our clients. Tracy is well known for his charitable contributions, including substantial contributions to Special Olympics. Each year Tracy would personally match dollar for dollar the contributions raised by his employees for this cause at the Condo Lifestyles Condolympics event. Among his many charitable donations, Tracy has served on the Illinois Board for epilepsy research and has donated heavily to Harper Community College for the purposes of establishing a center for the hearing disabled, both afflictions suffered by members of his immediate family. Tracy’s deep love for country is known throughout the industry as Tracy’s annual speech thanking our servicemen and women has become a staple of the CAI’s Winter Formal. He was known to offer incentives to those employees who exercised their duty and voted each election day, regardless of which candidate they supported. Though if asked, he never shied away from giving his thoughts on a candidate or political party. He is survived by his wife Sandy Hill, grown sons Tracy Kimball and Andy Hill, teenage daughter Morgan Hill and grandchildren.
Keough & Moody Holiday Party Tom Engblom
CMCA AMS PCAM
Assistant Regional Account Executive
Vice President/Regional Account Executive
779.435.2937 Toll Free 866.800.4656 ext. 7429 larry.myers@ mutualofomahabank.com
312.209.2623 Toll Free 866.800.4656 ext. 7498 tom.engblom@ mutualofomahabank.com
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Member FDIC. Equal Housing Lender
National Corporate Member of Community Associations Institute.
Keough & Moody, P.C. held their annual holiday party on December 7, 2012 at the Naperville Country Club in Naperville, IL. Shown here is Sean Deering, Patty Deering - Vanguard Community Management, Dawn Moody - Keough & Moody, P.C. and Ryan Applehans - Washington Square at Barrington Ridge Condominium.
No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2009©. 2013©.
industry happenings Water Leak Seminar
Keough & Moody, P.C. Keough & Moody, P.C. is proud to announce the addition of two attorneys to its team. Robert "Bob" Prince and Rosario Spaccaferro have been added to our legal team to further assist our clients.
A seminar program on the various aspects of Water Leaks was held on October 30, 2012 at The Newberry Library, Chicago, IL. Presentations and lunch were provided by a group of companies that included Woodland Windows & Doors, Waldman Engineering, Masonry Technologies, CSR Roofing, Community Advantage, A Wintrust Company, and moderator Carol Marcou of Vanguard Community Management. Condo Lifestyles and Chicagoland Buildings & Environments were participating sponsors. Over 30 property managers and community association board members attended the program. Another seminar program on this topic is planned for April 2013. For more information, contact firstname.lastname@example.org or email@example.com.
ACTHA ACTHA will hold it's annual Spring Conference and Expo at Drury Lane in Oak Brook Terrace on Saturday March 16, 2013. This event hosts: • Nine different educational seminars for board members, owners and managers • "Ask an Attorney" panel • Morning trade show with 100+ exhibitors • "Ask an Expert" information booths • Networking lunch and please save the date for ACTHA's Fall Expos: SOUTH EXPO: Saturday, September 21 Tinley Park Convention Center NORTH EXPO: Saturday, October 12 The Westin in Wheeling
Robert "Bob" Prince graduated summa cum laude with his J.D. in 2009 from the Valparaiso University School of Law. He also received a Master of Science in International Commerce and Policy from Valparaiso University in 2009. He received his undergraduate degree from Illinois College. Bob is a member of the Illinois State Bar Association and is authorized to practice before all Illinois courts and the United States District Court for the Northern District of Illinois. Bob has spent his legal career representing condominium and community associations in a widerange of issues, including collection of assessments, interpretation of covenants, enforcement, developer litigation, discrimination claims and transactional matters. He is regularly asked to speak on issues affecting community associations. Rosario M. Spaccaferro received his J.D. from IIT Chicago-Kent College of Law in 2011. He received his Bachelor of Science in Business Administration degree from DePaul University College of Commerce in 2008. Rosario is a member of the Illinois State and DuPage County Bar Associations and is authorized to practice before all Illinois courts and the United States District Court for the Northern District of Illinois.
Before coming to Keough & Moody, P.C., Rosario was a solo-practitioner, working on a variety of cases, including a volunteer project for a criminal case argued before the United States Supreme Court in 2012. Rosario now focuses his practice on representing condominium and community associations in a wide-range of issues, including collection of assessments and interpretation of covenants, as well as other general matters.
For more information please visit www.ACTHA.org
Dickler, Kahn, Slowikowski & Zavell, Ltd. ~ concentrating in ~
VP Director of Property Management
Condo & HOA Representation
5215 Old Orchard Road, Suite 300 Skokie, Illinois 60077 F 847-965-8600 P 847-866-7400
Corporate • Real Estate • Litigation • Wills Personal Injury
1250 East Diehl Road, Suite 404 Naperville, Illinois 60563 F 630-245-1448 P 847-245-4208
85 W. Algonquin Rd., Ste #420, Arlington Heights, IL 60005
847-593-5595 No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2013©.
By: Howard S. Dakoff, Esq. and Jennifer L. O’Reilly, Esq. Levenfeld Pearlstein, LLC M I T I G AT I N G T HE ASSESSMENT NIGHTMARE:
Three Best Practices When an Association Leases a Unit to Mitigate Unpaid Assessments The common scenario: A unit owner is delinquent in the payment of their monthly assessments. The Association enforces its remedies through an eviction lawsuit by obtaining possession of the unit and a judgment for the delinquent assessment plus legal fees and costs, evicts the unit owner and is then encouraged by its legal counsel to rent the unit to reduce the assessment delinquency. What does a condominium board need to know? What to Do At 60 Days When a condominium unit owner falls 60 days behind in their assessments, the board should commence immediately enforcing its legal remedies to collect the assessment delinquency. Pursuant to the Forcible Entry and Detainer Act, a 30-day demand notice is sent
board should then file an “eviction” lawsuit (aka a Forcible Entry and Detainer lawsuit), obtain an order for possession of the unit and a judgment for the delinquent assessment plus legal fees and costs, and evict the unit owner from the condominium unit.
What to do After Eviction
to the last known address of the unit owner stating the amount of the assessment delinquency.
Once a unit owner is evicted from the unit, the board should lease the unit to reduce the delinquent assessments of the unit. It sounds easy enough, but what many boards forget is that the association is entering into a binding contract with a tenant when it leases a unit, and with any contract, there come rights and responsibilities.
What to do at 90 Days If the unit owner has not paid the assessments in full by the end of the 30 day notice period, including attorney fees and costs, the
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Mitigating Liability However, with sound policies, condominium boards can ensure they mitigate the association from liability when leasing a unit to reduce the amount of unpaid assessments. 1. REQUEST THE COURT TO EXTEND THE LEASE Once an association has possession of the unit and has evicted the unit owner, a board has the right and authority to lease the unit to a bona fide tenant. However, most boards are unaware that the lease, in these circumstances, cannot exceed 13 months after the expiration of the stay of judgment unless extended by a court order. Therefore, it is necessary for association to request the Court to extend the lease prior to the expiration of the current lease if there remains an outstanding assessment balance after 13 months. The request to extend the lease should provide the Court with the amount of assessments that remain delinquent, the intended rent price, and requested lease period. If the judgment has been paid in full and the account balance is $0, a unit owner may make a motion to recover possession of the unit. The board should never promise a renter a lease renewal until approved by the Court. The board must apply all rental income first to the judgment amount from the eviction lawsuit and then the board can apply the rent to assessments that accrued after judgment until assessments are current. The association may not keep rental income that exceeds the amount due by the unit owner. If the rental income eventually exceeds the amount due, the amount in excess of what is owed must be returned to the unit owner. 2. BEWARE OF SECURITY DEPOSITS When a condominium association leases a unit to reduce delinquent assessments, the association is deemed to be a landlord and local landlord-tenant ordinances will apply. Boards must familiarize themselves with such ordinances to understand their responsibilities. Within the boundaries of the City of Chicago, the Chicago Landlord Tenant Ordinance (“Ordinance”) applies. Under the Ordinance, a landlord must hold all security deposits received by him/her/it in a federally insured, interest-bearing account in a bank, savings, or other financial institution located in the State of Illinois.
The account must be separate from the association’s general account and cannot be commingled with the assets of the association. The association must also disclose to the tenant the financial institution where the security deposit will be held and pay the interest at the end of each 12-month rental period by cash or credit the tenant’s rent that is due. If the landlord fails to comply with any of the requirements under the Ordinance, the tenant will be awarded damages in an amount equal to two times the security deposit, plus interest and any other damages the tenant is entitled to under the Ordinance. There is one way for an association leasing in Chicago, Illinois, for example, to preclude itself from the security deposit laws – do not require a security deposit. Requiring a security deposit is time consuming and opens the association up to liability if the requirements of the Ordinance are not met. However, there are alternatives to security deposits. Move-in/move-out fees have become quite popular with landlords and tenants. A move-in fee is not as much of a hassle for the landlord and ensures funds for reasonable expenses for repairing damage to the unit. At the same time, tenants are fond of move-in/move-out fees because it is easier for them to muster up a few hundred dollars for each versus a full month’s rent at the beginning of a lease. 3. DO NOT LEASE WITHOUT A “KICK-OUT” CLAUSE A common mistake boards make when leasing a unit to reduce delinquent assessments is the failure to include a “kick-out” clause in the lease (i.e. early termination provision). When a condominium association obtains an order of possession from the Court, it does not own the unit; the association merely obtains possession of the unit until delinquent assessments are paid in full. Under Section 9 of the Illinois Condominium Property Act (Act), any unpaid assessments act as lien on the unit. Generally, when a unit is sold, the assessments are paid in full at time of the closing. Otherwise, the purchaser buys the unit subject to the assessments due and owing (plus applicable late fees and/or legal fees and costs). During difficult financial times, a foreclosure is often filed during the time when the association is leasing the unit to collect
unpaid assessments. If the unit is sold in foreclosure, a deed-in-lieu of foreclosure, or even a tax sale, the assessment lien is wiped out; however Section 9 of the Act allows a condominium association to recover the six months of unpaid assessments that become due immediately preceding institution of an action to enforce the collection of assessments from the purchaser of the lender who obtained title by foreclosure or deed-in-lieu of foreclosure. If an association must return possession back to a unit owner, but is locked in a yearly lease, the association could theoretically have a lawsuit for breach of lease by the tenant on its hands. The last thing the association should be worrying about is paying damages for terminating a lease early. For example, the purchaser of a unit from a lender who obtained title from a foreclosure, deed-in-lieu of foreclosure, or a tax sale does not buy the unit subject to the lease. Therefore, the tenant may be forced to pack up their belongings and find a new home. Subsequently, the tenant may have a cause of action against the association for terminating the lease early if there is no “kick out” clause. The association could be liable for the tenant’s moving expenses, the difference in rent prices, or depending on the facts, even damages for consequential claims like emotional distress. In order to prevent a lawsuit for early termination of a lease, the association should include a “kick-out” clause in its lease of no more than 60 days, but as early as 30 days. The clause will enable the association to terminate the lease in the event the unit is sold and protect the association from a lawsuit for breach of lease. Boards may have experience that renting a unit with a “kick-out” clause is more difficult. In order to increase the likelihood of leasing the unit if this becomes an issue, the board could consider a “kick-out” clause that limits termination of the lease to only circumstances where title of the unit is transferred. For example, if the unit is sold at a foreclosure sale, the board can provide notice to the tenant that the unit has sold and the tenant must move-out within 60 days. Y
1. Shown here is Marla Jackson, Phil Pritzker and Diane White of The Habitat Company.
2. Pictured is Lindsey Daehnke Keough & Moody, Rosemarie Wert -Community Specialists, Jackie Loftis -EMCOR Services Team Mechanical
3. Pictured is James Taff - Premiere Security Corp, Carla YoungKennedy -Lieberman Management, Sal Sciacca Chicago Property Services and John Santoro -Lieberman Management,
4. Dave Lewin -Lewin Law Group/Querrey & Harrow, Mary Daniel - The Habitat Company, Judy Cole and Bill Palm Community Specialists
6. Shown is Craig Finck Alliance Association Financial Services, George Markoutsas -Landscape Concepts Management, Jeff Semler - Heil Heil Smart & Golee, Suzy Martin - Smart Elevators Co, Sheila Malchiodi -QCI Restoration, Karen Corral - HomeWise Documents, Dave Gelfand -The Building Group.
5. Pictured are John Matranga - 3600 Lake Shore Drive Condominiums, Tony Briskovic -Chicagoland Community Management, Brad Schnieder -Condo CPAs, Pat Bialek -Wolin-Levin, Inc. and Tony Dister -Community Advantage, A Wiintrust Company
CO - S P O N S O R
CO R P O R AT E S P O N S O R S
Chicago Police CAPS PREMIERE SPONSOR
Xfinity Comcast MAJOR SPONSORS
Keough & Moody P.C. Chicagoland
Buildings Environments CondoLifestyles
Admiral Security Services/ Door Staff Solutions Brouwer Bros. Services
Lake Shore Waste Services LLC
Quality Restorations .
Community Advantage, A Wintrust Company
ConTech MSI Co.
Chicagoland Community Management
The W.J.McGuire Company
Community Specialists CSR Roofing Heil, Heil, Smart & Golee J.Hershey Architecture Kinsella Landscape, LLC
Fodor Engineering & Design, LLC.
Wolin-Levin, Inc. GENERAL SPONSORS
CTL Group Full Circle Architects
Premier Security Corporation Sebert Landscaping Tairre Management Services INFORMATION TABLE SPONSORS
CertaPro Painters EMCOR Services Team Mechanical Simplex –Grinnell Landscape Concepts Management QCI Restoration NIFSAB -Northern Illinois Fire Sprinkler Advisory Board
Popular Association Banking
Shown here is Cathy Ryan of Property Specialists, Inc. and James LaChapelle of Community Specialists.
from page 9 that needed upgrades, all were completed except for three which would be completed in the first half of 2013.
Scavenger Rebates Bialek advised associations to get their scavenger rebates in now as the reimbursement program is being phased out and money will not be available after year 2015.
Shown here is Natalie Drapac of The Habitat Company and Patricia Bialek of Wolin-Levin, Inc.
Elevator Inspections Elevators in the central business district of Chicago must be inspected annually by a private inspection company. This program is also open voluntarily to buildings outside that core area. “Make sure you’re getting your elevators inspected,” Dever-Sutton warned associations. The City will review these annual surveys as to quality and accuracy of the work by the contractor performing it. The City is holding elevator inspection companies
accountable, for their analyses. And as far as permits are concerned, associations must post them by the elevators. Dever-Sutton closed the seminar by advising associations, “if a fire department inspector calls and wants to inspect your building, you’d better do it. Failure to be accommodating could lead to greater subsequent oversight being given by authorities to the building. “You could go on a list.”Y
THE SOURCE FOR INFORMATION ON INDUSTRY NEWS AND TRENDS
Interested in Green Building Issues Chicagoland
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ABOMA Diamond Jubilee ABOMA celebrated it's 75th anniversary (Diamond Jublilee) and held it's annual meeting and holiday luncheon on Dec. 7, 2013 at the University Club, Chicago.
2013 ABOMA OFFICERS President, William O'Leary DK Condo
Treasurer John Bieg Draper & Kramer, Inc.
1st Vice President Christine Friend Community Specialists The Parkshore
Secretary Robert C. Wiggs
2nd Vice President Tony Briskovic Chicagoland Community Management, Inc.
Immediate Past President Tom Skweres Wolin-Levin, Inc. ABOMA Counsel Steve Adelman Locke Lord LLP
We Manage Your Property as if it was Our Own.™ You shouldn’t accept anything less than
excellence, attention to detail, experience and a commitment level unsurpassed by any other firm.
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| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |
| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |
| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT |
| ACCOUNTING | ADMINISTRATION | BOOKKEEPING | CONSULTING | MANAGEMENT | 32
By David Mack
Common Questions for Community Associations Editor’s note: Below are some questions that have been sent in by our readers. The answers provided are of a general nature and should not be construed or used as legal advice for any specific association or situation. You should seek the advice of a qualified attorney that is familiar with community associations for specific situations at your association. Q/ Could you tell me if a condo association can evict you if you do not pay your assessments. I have a neighbor who says no but I have been told by others that the association can. A/ An owner can be evicted for non-payment of assessments. Some associations prefer not to do so but instead place a lien on a delinquent person’s property, which has to be settled before the property can be sold. However, when an association needs the money eviction may be preferable. Attorneys generally recommend that associations refer their non-paying cases for legal action within 2 to 3 months of the beginning of delinquency. Legal costs are added to the judgment against an owner who is evicted. Once an owner is removed from the premises the association can take over and actually rent out the unit until the debt is satisfied. When full payment is finally received, possession of the unit reverts to the owner. Q/ Is there anything in the Condominium Act governing repairs to a unit when the damage is caused from a leak outside of the individual unit? My understanding is that the association would be responsible for repairs up through and including the drywall but the unit owner is responsible for the paint and other coverings. A/ There are a couple of sections of the Act that would be relevant. Section 4.1 (a) (2) identifies wallpaper, paint, finished flooring and any other materials that constitute any part of finished surfaces as part of the units and essentially the bare walls, floors and ceilings as parts of the common elements. Section 18.4(a) places upon an association’s board of directors the responsibility for the repair and maintenance of the common elements. So your understanding is correct in that the owner would generally be responsible for the paint and coverings. Those sections of the Act may also be set forth in your association’s governing documents- the declaration and bylaws- so check them for confirmation.
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CONDO LIFESTYLES Q/ How often is a condo association required to have a reserve study done. Our managing agent tells us the study is mandated by law. What is a reasonable cost for such a study? A/ Section 9(c)(2) of the Condominium Act lists the criteria that can be used to determine how much money an association should accumulate in its reserve. One of them is,” any independent professional reserve study which the association may obtain.” That is not mandatory language as indicated by the words any and may. But having one done is a fundamentally sound idea to enable an association to come up with a reasonably reliable figure, although reserve studies are not infallible documents as some components may fail before their estimated useful lives and others may last for a lot longer. Some associations misguidedly guess at how much to put in their reserves rather than have a study done to save the cost, which varies depending on factors such as the size of an association and the complexity of their physical plants. Think somewhere in the area of $5000 although I can’t put a high degree of certainty on that amount. You can get bids from companies that do reserve studies and you can find a number of them at such web sites as www.actha.com or www.cai-illinois.com. At
one time there was a company that promoted a do it yourself reserve study and provided software and instructions on how to do so for a price a lot less than a professional would charge but I don’t know how reliable this self analysis was nor whether that vendor is still around. Perhaps you can Google around the web to see if it is still in business. Q/ When I purchased my condominium unit I did so to be able to rent it out. I was able to do so then but now the association has changed the rules against my wishes and doesn’t allow renting at all. Now I have a place I can’t sell because of the market conditions and I’m pretty much stuck with it. Did the association have the legal right to ban renting? A/ The first thing to know is how did the association go about prohibiting renting? Did the board process an amendment to the declaration or bylaws to do it? If so, they would have needed at least 2/3 of the owners to approve the amendment. If the board simply adopted a rule to ban renters, that would not have required the owners to approve the change but this is a little trickier to do. If the by-laws permitted renting beforehand then a rule would not supersede the bylaws. An official amendment would have been required to end renting.
Often in banning renting, boards allow for some flexibility in their action, usually for those who are leasing out their units when the ban is initiated. They may exempt all owners who have renters in place then for as long as they own their units or they may permit them to continue the rental arrangement until the expiration of the current lease or the renter moves out or they may provide for some other arrangement. So based on what I have said above, try to determine whether the board acted appropriately. If you don’t think the directors did, bring to their attention what you believe was incorrect in the manner in which they prohibited leasing. But if they followed the proper procedure, then it would likely have been with full legal authority. Q/ What besides fines can the board do about a unit owner who blatantly ignores the rules and regulations of the association? We have repeatedly fined the person, which seems to make them more aggressive about violating the rules. We are fed up with their behavior and arrogance. I thought I read in the Condo Act or our declaration that the board could call a special meeting with the unit owner and warn them that they would have to move if this type of situation did not change. Is that correct? Any suggestions?
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McClurg Court Center residents are protected with fire sprinklers after building owners chose to retrofit. After purchasing the McClurg Court Center twin towers, RMK Management Corporation began a six-month project to modernize the building’s life-safety systems including the installation of a fire sprinkler system, providing the maximum fire safety protection for 1,080 residential units as well as occupants in the common areas and commercial spaces. Although Chicago’s fire sprinkler ordinance only requires Life Safety Evaluations for residential buildings, the National Fire Protection Association (NFPA) Life Safety Code 101 (2000 Edition), which has been adopted by the Illinois State Fire Marshal’s Office, requires existing high-rise buildings in excess of 75 feet in height to be equipped with fire sprinklers or an engineered life-safety system. RMK Management should be commended for voluntarily choosing to retrofit McClurg Court Center with fire sprinklers for the safety of the property, its residents and responding Chicago police and firefighters.
With fire sprinklers, McClurg Court Center provides the maximum fire safety protection for 1,080 residential units.
The Fire Department’s Ladder Reaches 10 Floors. You Live on the 23rd. A HIGH-RISE WITH FIRE SPRINKLERS IS THE ONLY PLACE TO LIVE HighRiseLifeSafety.com
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A/ Per Section 9.2(a)&(b) of the Condo Act, a board has remedies against unit owners and/or tenants. The board can evict a tenant for violations of the governing documents. If the problem individual is a unit owner, the proper course of action is filing a lawsuit seeking a mandatory permanent injunction requiring compliance with the declaration, by-laws and rules and regulations and/or seeking a judicial foreclosure (forced sale) of the unit. Judicial foreclosures are rare as courts must be quite angered with a unit owner’s conduct to dispossess someone of their home. Simultaneously with the aforementioned remedies, the board can fine the unit owner, as you have already, and also for the conduct of tenants and/or guests. (The preceding answer provided by legal counsel.) Q/ The way I understand condo law, the expense of a special assessment cannot exceed 5 percent of the total budget. Is that correct? The board is trying to justify the expense as an emergency but we do not feel that replacing operating boilers in March constitutes an emergency. Also, why do attorneys only represent associations and not unit owners? A/ Section 18.4(a) of the Condo Act provides that one of the duties of the board of managers is to care and maintain the common elements. In the event a repair or replacement of the common elements is mandated by law or is an emergency, the board may proceed to have the work done at its discretion. If it is not mandated by law or is not an emergency and replacement constitutes an improvement over the existing system or component, 20 percent of the unit owners can petition, within 14 days of the board’s approval of the expenditure, to have a meeting of the owners to vote on the expenditure, but only if it exceeds 5 percent of the annual budget. To be rejected a majority of the total vote of the unit owners must be cast against the work - otherwise it can proceed. Whether you could invoke this voting process by the owners would depend on whether the new boiler constitutes an improvement, which might be hard to prove. From my perspective due to my lack of professional technical credentials I could not offer an opinion as to whether replacing an operating boiler in March is an emergency. Also, there may be circumstances surrounding the board’s decision to do the replacement then that you are not aware of. There are attorneys, by the way, who do represent unit owners and will do so depending on what they view as the merits of a particular situation.
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January 2013 CondoLifestyles