Click here to download the PDF version of the October edition of the Condominium & Common Interest Community Association Law AlertManager Licensing Rules Final; Time to Apply Under Grandfather Provision Begins to Tick
Robert M. Prince, Associate in the Bolingbrook OfficeEarlier this year, Tressler LLP let you know that the Joint Committee on Administrative Rules issued proposed regulations that would implement the Community Association Manager Licensing and Disciplinary Act (the “Act”), 225 ILCS 427/1. On October 1, 2011, the final rules were officially published.
The final rules are strikingly similar to the proposed rules that came out in May and can be found at: http://www.ilga.gov/commission/jcar/admincode/068/06801445sections.html. Since the rules were adopted on October 1, 2011, it will now be unlawful for a person to provide community association management services after October 1, 2012 unless the person has a license to do so or is otherwise exempt from licensure.
The qualifications for licensure have not changed under the final rules. Under the Act, a person must satisfy the following requirements in order to be qualified for licensure: 1) be 21 years of age or older; 2) complete 20 hours of community association management courses; 3) complete an examination on community association management; 4) not have committed actions that would be a violation of the Act; 5) be of good moral character; and 6) not have been declared incompetent by a court.
The 20-hour education requirement must be satisfied prior to taking the examination and can be satisfied by completing courses in state and federal laws governing associations, preparation of budgets and association finances, management, customer service and ethics, maintenance, insurance, and noticing and conducting meetings. The education requirements do not apply to individuals holding a valid real estate salesperson, broker or managing broker’s license.
Further, candidates will have to complete one of two approved examinations: 1) the National Board of Certification for Community Association Managers (NBC-CAM) Certified Manager of Community Associations (CMCA) examination, or 2) Institute of Real Estate Management (IREM) Common Interest Developments: Managing Condominium Association Properties (CID201). Grandfather Provision
Under the final rules, certain individuals can satisfy the second and third requirements for licensure under the Act’s grandfather provision. A person can qualify under the grandfather provision if the applicant has practiced as a community association manager for a period of five of the last 10 years. Otherwise, if the person has achieved a certain designation or certification, he or she can qualify under the grandfather provision. The acceptable designations and certifications include: 1) Community Association Institute (CAI) Association Management Specialist (AMS); 2) CAI Professional Community Association Manager (PCAM); 3) IREM Certified Property Manager (CPM); 4) IREM Accredited Resident Manager (ARM); or 5) NBC-CAM CMCA.
Persons who meet the grandfather provision’s requirements for either experience or designation/certification only have a limited time within which to seek licensure to claim the benefit of the grandfather provision. Under the Act, the Department of Financial and Professional Regulation may only grant licenses under the grandfather provision during the first six months after rules implementing the Act have been adopted. Since this occurred on October 1, 2011, applicants will have until April 1, 2012, to submit their applications for licensure. Unfortunately, it does not appear that the Department has made the applicable forms available to the public yet. Endorsement
Individuals who are registered or licensed by another jurisdiction can apply for licensure by endorsement. In order to qualify, however, the other jurisdiction must have had similar requirements and examinations as those required by Illinois’ final rules. Otherwise, the applicant must have possessed qualifications at the time that he or she applied for licensure that are substantially equivalent to the requirements in Illinois. If the applicant can clear this hurdle, he or she must receive a certification from the jurisdiction indicating when the applicant was licensed, the applicant’s disciplinary record, the examinations taken and scores received, and pre-license education requirements. General Rules
Individuals seeking licensure by examination or endorsement have three years to complete the application process from the date that he or she submits an application. If the individual does not complete the process within the three-year time period, he or she will forfeit the fees paid, will have to begin the application process again, and will have to satisfy the requirements in place at the time the new application is filed.
Licenses are valid for two years. However, the first licenses issued expire on August 31, 2013; two years after the final rules were issued. After August 31, 2013, licenses will expire on August 31 of every odd-numbered year. Every community association manager will be on the same deadline. Individuals may apply for renewal of their license during the month before the expiration.
The application fee for licensure is $300, plus the costs of the examination. If an individual is seeking licensure under the grandfather provision, the fee is also $300. The cost to renew a license is $150 per year, which is $300 for the two-year period. All of the fees are non-refundable pursuant to the Act.
The rules have not changed the requirement that associations have to pay an annual fee to the Department of Financial and Professional Regulation under the Act. If an association has 10 or more units, and if the association is registered as a not-for-profit corporation, then the association is required to pay $50 plus $1 for each unit within the association. This fee is required whether or not the association has a property manager.
Now that the rules have become final, it is important that property managers and associations begin the process of bringing themselves into compliance. Most importantly, the clock has begun ticking on the limited time to seek licensure under the grandfather provision. You should consult with legal counsel to determine what your obligations are under the Act and the final rules. Back to the top
Keeping Possession of Units During Bankruptcy: The Aftermath of In re Sarah DiGregorio
Robert M. Prince, Associate in the Bolingbrook Office
On September 28, 2011, the Bankruptcy Court for the Northern District of Illinois, Eastern Division, issued a ruling that may benefit condominium and common interest community associations when a unit owner files for bankruptcy after the association has completed a collection action against the owner. The court decision involves a Chapter 13 Bankruptcy and is captioned In re Sarah DiGregorio,
The issue on which the court ruled was whether the association should be sanctioned for not returning possession of a condominium unit to the owner once she filed Chapter 13 Bankruptcy. The court raised several key facts in coming to its decision, including that 1) the association filed a lawsuit under the Forcible Entry and Detainer Act seeking a judgment for unpaid assessments and for possession of the property; 2) it received a judgment and an Order for Possession for the condominium; 3) the owner failed to pay the judgment in full within the time the possession order was stayed pursuant to the statute; 4) the owner was evicted from her unit; and 5) after she was evicted, the owner filed for Chapter 13 Bankruptcy. The association did not return to the owner possession of her condominium after the bankruptcy filing.
When an owner files for Chapter 13 Bankruptcy, the owner’s property becomes part of the bankruptcy estate. In addition, when the owner files for Bankruptcy, an automatic stay is imposed that prevents creditors from enforcing judgments and from taking “any act to obtain possession of property of the estate or . . . exercise control over property of the estate.” If creditors, including associations, violate the automatic stay, they may be subject to sanctions under the Bankruptcy Code. While the owner believed that the association’s failure to turn over possession of the condominium violated the automatic stay, the court ruled that the automatic stay does not prevent the association from keeping
possession of units it had already obtained via an order from an Illinois court.
The owner argued that because she was the owner of the property she still had a right to possession of it. However, the court recognized that ownership was not the real issue in the case, but the right to possession of the property was the real issue. Looking to state law, the court stated that the right to have possession of the property was effectively transferred by the state court’s judgment in favor of the association. The court stated that the owner can-not rely on the automatic stay to regain possession of the property. Instead, the owner can only regain the right to possession of the property by paying the judgment in full and vacating the judgment pursuant to 9-111 of the Forcible Entry and Detainer Act.
Unfortunately, the court was not clear as to whether the opinion applies to common interest community associations. The opinion relies on a few provisions of the Condominium Property Act and does not reference the Common Interest Community Association Act. However, due to the court’s heavy reliance on the provisions of the Forcible Entry and Detainer Act, which are, in all relevant parts, the same for common interest community associations as they are for condominium associations, we expect that a court would apply these same principles to the common interest community associations.
Over the last few years, foreclosures and bankruptcies have affected associations’ ability to collect assessments. The court’s ruling in In re Sarah DiGregorio
will help associations collect past-due assessments. While not stated specifically in the court’s opinion, we believe that activities which would be protected if an owner files bankruptcy after he or she has been evicted would include placing a tenant in the property and collecting rent from a tenant already in the property. Unfortunately, it is unclear whether the Association would be entitled to continue collecting on an assignment of rent due from a tenant who the owner placed in the property. What remains clear, however, is that in order for an association to benefit from this decision, it must receive a judgment and Order for Possession of the property from a court and evict the owner before the owner files for Bankruptcy. If this does not occur, an association that attempts to take possession or withholds possession of a unit may be subject to sanction under the Bankruptcy Code. Back to the top
This newsletter is for general information only and is not intended to provide and should not be relied upon for legal advice in any particular circumstance or fact situation. The reader is advised to consult with an attorney to address any particular circumstance or fact situation. The opinions expressed in this dispatch are those of the authors and not necessarily those of Tressler LLP or its clients. This announcement or some of its content may be considered advertising under the applicable rules of the Supreme Court of Illinois, the courts in New York and those in certain other states. For purposes of compliance with New York State Bar rules, our headquarters are Tressler LLP, 233 S Wacker Drive, 22nd Floor, Chicago, IL 60606, 312.627.4000. Prior results described herein do not guarantee a similar outcome. The information contained in this dispatch may or may not reflect the most current legal developments. The articles are not updated subsequent to their inclusion in the newsletter when published.