WEDNESDAY, DECEMBER 30, 2009
by Illinois Real Estate Journal ReportsChicagoA new law will be initiated on January 1, 2010 in Illinois to target the sale of distressed condo units that are creating blighted areas.
Public Act 96-0174 "provides procedures for addressing distressed condominium property that is a danger, blight, or nuisance to the surrounding community or the public and that is substantially unoccupied, without utilities, or in a serious negative condition."
The new act dictates that municipalities will now have the ability to initiate court-ordered receivership of distressed condo units, which can then be sold as rental units.
The bill has been pending in legislature for two years, says Mark Pearlstein, founder of Chicago law firm
Levenfeld Pearlstein LLC.
"The bill was prompted by the city's (Chicago) concern about the number of distressed condo products that were part of a scheme to perpetuate mortgage fraud," says Pearlstein. "Many of the units are just vacant. They have absentee owners or the unit owners are in foreclosure. To the outside observer it is a blighted property."
Rose Kelly, senior counsel Department of Law for the City of Chicago, says that with current laws it was too difficult for the city to manage these properties in a timely manner.
"The current laws made it almost impossible to go in and help protect the building and the neighborhood," says Kelly.
Pearlstein says that the normal process for condo conversion as cited in the condo act is a three-fourths vote from unit owners to deconvert the property.
However, as noted, many of these properties do not have owners or associations to complete this process. The new law was enacted to expedite this process.
"We will see how this plays out and whether it is applied in other municipalities as well," says Pearlstein.
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