Condominium Managers & Disclosure Requirements
Condominium Buyers should do at least some due diligence investigation of the Association's over-all financial condition. No one wants to buy a new condominium and then learn about the $20,000 special assessment that they have to pay the month following.
Illinois law allows for this. If a Buyer asks, the Seller must produce information, such as the organisational documents (Declaration and By-Laws) and financial records (Budgets and Financial Statements). The association must also state whether there are any known liens against the individual unit, known or planned special assessments or capital improvements for the property, and whether or not there is a reserve of funds set aside to pay for those improvements.
Collectively, the list of required disclosures are set out in Section 22.1 of the Illinois Condominium Property Act. Creative minds that we are, Buyer's lawyers ask Seller's lawyers for "22.1 disclosures." (Some Chicago area real estate agents refer to them as Rider 5 disclosures, a reference to the form number for the Chicago Association of Realtor's contract attachment that formalizes a request for this information.
If a Buyer does asks, but does not receive this information, or if a Buyer receives, but does not approve of the information provided, the Buyer can cancel the contract, and demand a refund of Buyer's earnest money.
Whoever makes the request, and whatever the request is called, some one has to provide the requested information. When an association is professionally managed, the property manager is charged with making the disclosures.
Condominium Paid Assessment Letters
At closing, Sellers must also produce a letter from their association(s) confirming either that all monthly assessments have been paid in full or otherwise stating the amount that must be paid to bring the unit's account current. Property closings cannot take place without this letter. Again, when an association is professionally managed, the property manager is charged with generating paid assessment letters ("PALs").
Wolin-Levin has been managing Condominiums, Co-ops and rental properties in Chicago for more than 50 years. Reports suggest that they manage over 300 properties totalling more than 17,000 residential units. About five years ago, they were acquired by FirstService Corporation, a publicly traded national provider of property management and related services.
The New Wolin-Levin Web Platform
Wolin-Levin recently migrated all requests for 22.1 disclosures and PALs to a web site - welcome-link. Sudler Property Management implemented CondoCerts.com a similar web-based platform in 2006.
It would appear that the new web site is an "efficiency" that was driven by the parent entity, and created without little or no regard for Chicago area lawyers or condo owners. The product is unreasonably expensive, unduly burdensome, the system conflicts with local custom and practice, and the web site is anything but welcoming.
The Problems (besides the cost)
Wolin-Levin's new web site troubles me, and I believe will aggravate many transactions, for a number of reasons:
- Selection: Wolin-Levin has taken an all or nothing approach to the delivery of sale packages. Whereas Sudler allows uses to pick and choose from an a la carte menu of documents and disclosures (i.e., just a paid assessment letter; just a declaration and by laws; just a 22.1 disclosure, etc), Wolin-Levin requires that everyone order (and pay for) every single stinking document - whether they want 'em or no).
- Delivery: Documents ordered from a Chicago area property manager by a Chicago area requester are sent in some as yet undetermined (but I'll bet electronic) format to Lexena, Kansas, where they are sent by UPS in hard-copy format back to the Chicago area requester. By contrast, Sudler allows for immediate electronic delivery of documents. A much more efficient, and environmentally friendly approach. Easier and cheaper to forward things to a Buyer or Buyers' attorney this way too.
- Timing: Wolin-Levin gives users only two timing options: 30 day delivery, or, for a significantly higher fee, expedited handling. The condo act allows property managers 30 days to respond to requests for 22.1 disclosures, but the typical real estate contract calls for delivery of these materials within two or three days of contract acceptance. Sellers must choose to either pay the expediting fee or delay their contract contingencies and closing dates.
- File Identification: Local Attorneys, title companies, real estate agents, and parties to a deal refer to the transaction by the property address and/or the Buyer and Seller names. These are universally known and understood. Not Wolin-Levin. Even though they require a use to input the condo's property address and buyer/seller names, all welcome-link communications refer to their order number ONLY. If you do not know your order number, you will not be able to identify any email or correspondence to any given file. (How hard would it be to reference orders using any descriptor the rest of the world besides Wolin-Levin & Welcome-Link uses?
- expect to pay more for these transactional services. for the sole and simple reason that Wolin Levin is making you use Welcome-Link
- don't expect to close within 30 days of signing that contract, unless you are willing to shell out an additional $100-150 for the privilege of doing so.
- understand that the condominium due-diligence contingency is likely to stay for a long, long period of time after your contract is signed.
- expect to pay a fee to produce and deliver the condo declaration and bylaws to your buyer - whether you need to order those documents or already have them. Since there is no a la carte selection, your gonna pay whether you need them or not.