Q. I was elected to the board of directors of my self-managed condominium association in the Chicago Loop. I have been advised by the other board members that the association must comply with an annual inspection for the elevators pursuant to the city’s specific annual inspection certification (AIC) program, rather than a typical elevator inspection. Is our condominium association required to comply with the AIC program or is it optional?
A. Chapter 9-4-010 of the City of Chicago Municipal Code requires annual inspections of elevators, escalators and other conveyance devices for all buildings located in the central business district. The geographical boundaries of the central business district are defined in Chapter 9-4-010 and do include the Chicago Loop. For buildings that fall within the central business district, Chicago’s annual AIC program requires property owners to (i) hire an independent third-party inspection company to inspect their elevators and other conveyance devices annually and (ii) maintain an online account with the city for reporting inspection results.
Q. I am a prospective purchaser of a residential cooperative in Chicago. I understand the general difference between a condominium unit and a residential cooperative apartment. I have been told that if I want to purchase a residential cooperative apartment, my lender will require a recognition agreement and if I want to hold title to my shares in a revocable trust for estate planning purposes, I have to execute a trust guaranty. What is a recognition agreement and a trust guaranty?
A. Regarding a condominium unit, a purchaser will purchase a piece of real estate in a condominium building that has been subdivided pursuant to the Condominium Act. Regarding a cooperative apartment, the purchaser is not purchasing real estate, but purchasing shares of a corporation because a corporation owns the building and the purchaser is purchasing shares to be entitled to lease a residential apartment pursuant to a proprietary lease document.
Since a residential cooperative is merely a purchase of shares, and not real estate, a recognition agreement is a document requested by lenders relating to the residential cooperative loan where the lender requires the corporation that owns the building to recognize the lender’s rights including imposing certain obligations on the corporation, notice to the lender and rights to cure defaults by the shareholder. A trust guaranty document is a document where an individual person guarantees the payment obligations of the trust that intends to be the shareholder of the corporation.
Q. I live in a townhome association of approximately 50 townhome units, which is incorporated as an Illinois not-for-profit corporation. Several of the association’s board members contend that since the townhome association is a not-for-profit corporation, the townhome association is not subject to the terms and requirements of the Common Interest Community Association Act (CICAA). Is this accurate?
A. Common interest communities involve real estate other than a condominium or residential cooperative and possess the obligation to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration that is administered by an association. Common interest communities in Illinois are subject to CICAA unless an exemption for a small common interest community applies. The criteria to qualify for the exemption is (i) 10 units or less or (ii) an annual budget of $100,000 or less. Since a 50-unit townhome association is more than 10 units, unless the annual budget of the townhome association is $100,000 or less, a 50-unit townhome association is subject to CICAA.
Got a question for the Condo Adviser? Email ctc-realestate@chicagotribune.com.
