HB5388 103RD GENERAL ASSEMBLY

LRB103 36945 JRC 67059 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5388

Introduced 2/9/2024, by Rep. Dagmara Avelar

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.1015 new
815 ILCS 505/2EEEE new

Creates the Homeowners' Association Bill of Rights Act. Requires the Office of the Attorney General to establish a separate HOA Department within the Consumer Protection Division. Provides that the HOA Department shall enforce and provide guidance for the provisions in this Act. Requires that each member of the association shall be assessed $3 per year to support the HOA Department that shall be remitted to the HOA Fund to be used exclusively by the Attorney General's Office for handling HOA enforcement and compliance. Provides that associations that do not have any special amenities such as a pool, gym, or community space may not increase their annual assessments for these amenities by more than 2% per year. Limits special assessments above $100,000 unless approved by a vote of the majority of the members. Provides that an association may be dissolved with a vote of at least 65% of its members. Creates a process for a homeowner to file a complaint against a board member. Stays any fines, late fees, and interest once a dispute is filed by a homeowner, and limits attorney's fees to less than 10% of the original amount owed. Provides that a person who violates the Homeowners' Association Bill of Rights Act commits an unlawful practice within the meaning of the Consumer Fraud and Deceptive Business Practices Act. Amends the State Finance Act to list the HOA Fund as a special fund.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Homeowners' Association Bill of Rights Act.

Section 5. Definitions. All definitions in the Common Interest Community Association Act have the same meanings when used in this Act.

Section 15. HOA Department. There is created in the Office of the Attorney General a separate HOA Department within the Consumer Protection Division to enforce and provide guidance regarding this Act. The HOA Department shall enforce and provide guidance for the provisions in this Act. The HOA Department shall be funded by contributions through an assessment by the board and remitted to the Secretary of State annually when the association renews its annual license. Each member of the association shall be assessed $3 per year to support the HOA Department that shall be remitted to the HOA Fund to be used exclusively by the Attorney General's Office for handling HOA enforcement and compliance. The HOA Department shall recommend that this assessment be evaluated annually to determine whether this $3 amount should be changed to adequately fund the HOA Department to ensure that all complaints under this Act are investigated within 60 days of receipt by the HOA Department. The HOA Department shall support the efforts of the Condominium and Common Interest Community Ombudsperson in resolving complaints from members.

Section 20. Governance requirements. Associations that do not have any special amenities such as a pool, gym, or community space may not increase their annual assessments for these amenities by more than 2% per year. Special assessments above $100,000 shall be approved by a vote of the majority of the members. The board shall supply an agenda to all members of the association at least a week before a scheduled meeting. Board members have a fiduciary duty to the members of the association. Associations must register annually with the Department of Financial and Professional Regulation. Boards must purchase and maintain directors' and officers' liability insurance for their board members. Upon a vote of at least 65% of the members, the association may be dissolved. Property managers shall report to the board any illegal or unethical actions by the board members. Before making such a report, the property manager shall attempt to recommend to the board corrective actions that can be taken to resolve the illegal or unethical conduct. If the board does not take corrective action within 5 days, the property manager shall report its actions to the HOA Department for further action.

Section 25. Penalties for violations of state or federal laws and governing documents. Board members and property managers must not knowingly violate state or federal laws or the association's governing documents. If the violation caused damage to a member, he or she may file a civil action against that board member or property manager under Consumer Fraud and Deceptive Business Practices Act. If a board member breaches his or her fiduciary duties under this Act or fails to comply with this Act, the Attorney General's Office may bring an action for equitable relief, including awarding attorney's fees and reimbursements to members.

Section 30. Process to file a complaint against a board member or property manager. The process to file a complaint against a board member or property manager is as follows:

(1) The member shall write a complaint to the board that includes the citation to the law or section of the governing document that the board member is violating.

(2) The board shall arrange to hear the member's complaint at its next meeting, and the board shall take action on it. The vote of each board member shall be recorded taking action on the appeal.

(3) If the board does not respond within 10 days from its receipt of the complaint, the member may submit to the HOA Department the following: a complaint with a summary of the issue, the correspondence sent to and from the board about the issue and the law or governing documents or both that the member alleges has been violated.

(4) The HOA Department shall investigate the matter. If the HOA Department finds that the complaint does not have merit, the HOA Department shall take no further action on it. If the HOA Department finds the complaint to have merit, the HOA Department shall submit a cease and desist letter to the board.

(5) If the board does not take corrective action to resolve the problem within 5 days of its receipt of the cease and desist letter, the HOA Department shall order the board member who has violated the law or governing documents be removed from the board.

(6) If the board does not take corrective action to resolve the problem within 10 days of its receipt of the cease and desist letter, the HOA Department shall file a lawsuit against the offending board member or members. The HOA Department may impose the following remedies against board members:

(A) removal from their existing board position;

(B) enjoining the board members from serving on any board for a certain period of time, or in perpetuity;

(C) personal fines or other financial penalties; and

(D) reimbursement of member losses due to the board's actions.

(7) Either party may appeal the decision under the Illinois Administrative Procedure Act. The Attorney General shall defend the decision of the HOA Department.

Section 35. Foreclosures and debts. All laws relating to fair housing, fair collections, fair lending and consumer protection laws regarding foreclosures shall apply to all members, boards, and board members.

Section 40. Fines, late fees, and attorney's fees. All fines, late fees, and interest are stayed once a dispute is filed in writing with the HOA and will resume only when the dispute is resolved in civil court or by the HOA Department. Attorney's fees in excess of 10% of the original amount owed, not including any fees or interest, may not be charged to the homeowner. Attorney's fees may not be requested until the dispute is resolved through court action or by the HOA Department and all appeals have concluded. Neither the board nor a board member or board members may use association funds to pay for attorney's fees if they are not the prevailing party in disputes with a member or members.

Section 45. Conflict of laws. If there is a conflict between the provisions of the Common Interest Community Association Act and this Act, this Act controls.

Section 900. The State Finance Act is amended by adding Section 5.1015 as follows:

(30 ILCS 105/5.1015 new)

Sec. 5.1015. The HOA Fund.

Section 905. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2EEEE as follows:

(815 ILCS 505/2EEEE new)

Sec. 2EEEE. Violation. Any person who violates the Homeowners' Association Bill of Rights Act commits an unlawful practice within the meaning of this Act.