When his association levied a special assessment, a reader of this column was unhappy to learn he was charged 20 percent more than his upstairs neighbors. How could this be?
It turned out his unit came with a higher percentage of ownership than the identical units above him.
Association attorney Charles VanderVennet of Arlington Heights explained: “When you own a condominium, you own a box of air surrounded by a coat of paint and something on the floor. Then you own a percentage interest in everything else, which are the common elements.”
Common elements generally include the buildings, parking structure, swimming pool and other recreational facilities, streets, sidewalks, land and landscaping.
Condominium developers are required to assign each unit a percentage of ownership, and the total of the percentages must equal 100. Common expenses are divided among the owners according to their percentages. Those with higher percentages pay more, and those with lower percentages pay less.
The association’s declaration will include a list of unit numbers and their corresponding percentages of ownership, VanderVennet said.
“Every declaration has to have it,” he said. “Without it, no sale will be able to happen. The title company can’t guarantee title if they don’t know what the buyer is buying.”
Developers have a great amount of latitude in how they assign percentages. The Illinois Condominium Property Act states that percentages are to be calculated on the basis of the value of the unit in relation to the value of the property as a whole.
“Value” is a subjective standard, not an objective one, VanderVennet said.
Depending on the developer and the building, value could be determined by such factors as square footage, selling prices or views. Upper floors could have better skyline views in one building, but lower floors could have better park views in another building.
“Just because the unit number is the same doesn’t mean the actual layout is the same,” said Jim Stoller, president and CEO at The Building Group, a property management company in Chicago. “One could be a two-bedroom, one-bath unit versus a two-bedroom, two-bath unit. Also, a unit with an outdoor deck or terrace could be perceived to be of increased value.”
“Developers aren’t accountable to any governmental agency for how they set those percentages,” VanderVennet said.
Our reader isn’t the only one to question his ownership.
“It comes up occasionally, usually when someone gets upset about something and starts talking to his fellow owners,” Stoller said. “Typically, it’s the person with the higher percentage of ownership who raises the question.”
William DeMille, president at Chicagoland Community Management Inc. in Chicago, was more emphatic. “It’s always the person paying more, not the person paying less,” he said.
“Sometimes new buyers are uninformed and don’t really understand how assessments are determined, which is unfortunate,” Stoller said.
Association boards are empowered to make minor changes to percentages of ownership in event of a clerical error or if the total does not add up to 100. For any other reason, 100 percent of the owners must vote to approve the change.
“Do you think someone paying lower assessments is going to vote to pay higher assessments, so you can pay lower assessments?” DeMille said. “In reality, it’s not impossible, but it’s virtually impossible.”
A higher percentage of ownership isn’t all bad news. Your votes carry more weight because they are tallied by percentages, not by one vote per unit.
“You have a bigger say in the things unit owners are entitled to vote on, such as election of board members and the veto method if the proposed budget is excessive,” VanderVennet said. “Conversely, if you have one of the lower numbers, it means a little less when it comes to those votes.”
Written By: Pamela Dittmer McKuen
October 17th, 2017