Evicted From Your Own Home: Understanding the Illinois Condominium Property Act

Did you know you can own your home and still get evicted? That’s right. If you own property regulated by an association – usually condos and townhomes – not paying your monthly association dues could get you kicked out of your own home.

The Illinois Condominium Property Act regulates property associations in the state and provides them with certain rights. One of those rights relates to common expenses. Common expenses are what make living in a condo appealing to so many people. Someone else shovels the sidewalk, cuts the grass, insures the building, saves for repairing the roof, pays the real estate taxes, and lights up the parking lot. Common expenses are also what can get you kicked out – if you don’t pay your share. 765 ILCS § 605/9.2

The legal process of getting someone kicked out of his townhouse or condo is called “Forcible Entry and Detainer.” 735 ILCS § 5/9-111. Unlike a foreclosure, which actually transfers ownership of the property, an action for forcible entry transfers the right of possession. Law school professors talk about property in terms of a bundle of sticks. Each stick is a right; for example, the right to exclude others from your property or the right to mortgage your property. The right to possess your property, or live in and on it, is another stick. You give up your right of possession when you rent your property to someone else. They pay you in exchange for your possession stick.

When a judge enters an “Order for Possession and Entry,” the association has the legal right to evict you from your condo or townhouse. The judge hands them your possession stick, even though you still own the property. The association can then rent out your unit to help cover the unpaid and accruing common expenses. 

You can get your property back, but at a cost. You must pay all outstanding common expenses (including the association’s attorney’s fees and costs for kicking you out) and be up to date on all monthly assessments since entry of the judgment. But once opened, the legal door has to be shut. The property owner must go to court to prove that everything is paid before the judge will hand him back his possession stick.

If you are having trouble paying your association dues, talk with the association and try to work something out before it goes to court and you end up on the street.       

Growing Your Law Firm

When it comes to expanding your business, everyone has an idea: network, write a blog, book speaking engagements, hire an expert to increase your SEO. But if your business partner happens to be your spouse, you might decide to grow your business the natural way. It ain’t cheap, and it ain’t easy, but it sure is fun. 

Meet the newest Haske and my excuse for inconsistent blogging.

CALEB LAWRENCE HASKE

Observing Corporate Formalities: Preserving Limited Liability Status

Tomorrow is the official one year anniversary of Haske & Haske, P.C! This milestone influenced my blog topic. Before we opened our doors, we incorporated our business as a professional corporation. The legal structure of our business is almost identical to an S-Corporation, except that we cannot limit our professional liability. S-Corporations are treated like partnerships for tax purposes, with the company’s income or losses recognized by the individual partners according to his or her proportionate share (and taxed at individual tax rates rather than at the corporate rate). But for all other purposes, the company is a corporation.

To protect your company’s limited liability protection (meaning its ability to shield your personal assets from the company’s creditors), it is not enough to keep the corporation’s records updated with the Secretary of State - although of course this is important. Even if your corporation is in good standing, you could lose the liability protection by failing to follow corporate formalities and keeping your company’s finances separate and sufficiently documented.

Avoiding any type of co-mingling of personal and corporate funds is essential. Why should a court treat your company as a separate entity, if you do not treat the corporation’s money as the corporation’s rather than your own? Keeping separate documentation of corporate financial transactions goes hand in hand with this concept. Once small business owners understand the importance of financial separateness and good record keeping, they are usually equipped to perform these tasks on their own, or with the help of an accountant.

However, many small business owners have no idea how to keep corporate minutes or follow their own bylaws. Observing corporate formalities is one of the most over-looked areas of corporate liability protection. Before you can observe corporate formalities, you need to be familiar with your corporation’s bylaws, which are the rules that govern how and when corporations can take certain actions. It is also important to hold annual shareholder and director meetings (yes, even if you are the only shareholder and the only director), and record the decisions made at those meetings in your company’s corporate minutes book.

Corporate minutes are a record of your company’s compliance with its bylaws. Certain decisions can only be made by shareholders. Others can only be made by directors. All decisions requiring approval by the shareholders or directors must be recorded. Without these records, your company looks less like a corporation and more like you doing whatever you want. If you can do whatever you want with the company, without following the company’s rules, courts will be less inclined to view your corporation as a separate entity. Instead, the court may decide that your company is just your alter-ego, allowing your creditors to “pierce the corporate veil” and reach into your pockets to pay the company’s debts.

Keep your corporation strong and healthy by keeping it separate from you. Separate finances. Separate records. Separate decision-making procedures as defined by the company’s bylaws. If you do not know how to run your company’s meetings or keep accurate minutes, talk to a lawyer. We love rules.  

Parent Child Relationships: Duties Owed to Minor Children

I have children on the brain these days since Paul and I are expecting the arrival of our first child this summer. To put a legal spin on my preoccupation, I decided to do a blog post on legal aspects of the parent-child relationship. Specifically, what parental duties does Illinois law recognize?

Photo by Jonathan Fitch

Duty of Support

The parental duty of support is driven by public policy. The reasoning goes something like this: Parents have a duty to provide financial support to their children because if parents fail to provide for their children, the State will be forced to use their resources to provide the support. By recognizing this duty, the State is able to enact child support statutes and enforcement procedures.

Under Illinois law, both parents have a duty to support their minor children. It does not matter if you are the mom or dad. So how much support is enough? Illinois uses statutory guidelines to determine child support payments. For one child, the guideline is 20% of the parent’s net income, with a upward scale as the number of children increases. The maximum percentage is 50% for six or more children.

Most of the law relating to child support happens in the context of divorce. The law assumes that the custodial parent, who is in charge of the physical care of the child, meets his or her support obligation by providing food, shelter, transportation, clothing and any other need that arises. The non-custodial parent meets his or her support obligation by paying child support, usually fixed by the guidelines.

Duty to Pay Medical, Educational and Legal Expenses

Under the Illinois Family Expense Statute, 750 ILCS 65/15, parents are responsible for paying the medical expenses of their minor children. Parents also have an obligation to pay for the educational expenses of their minor children. The law does not recognize an absolute duty for parents to pay college expenses, but a court can order this payment as part of divorce proceedings. Courts have even found parents to have an obligation to pay for the legal expenses of their minor children.

Duty to Protect and Shelter

Parents are also required to protect the physical safety of their minor children and provide shelter. This duty allows the State to bring actions against parents for neglecting or endangering their children.

Thanks for allowing me to indulge in my own education. Four more months to go before Baby Haske arrives.

Real Estate Financing: Making Sense of Mortgage Insurance

Fingers start pointing when people talk about the current real estate crisis in our country. The many players in this drama interest me because part of my job is to help individuals deal with the fallout. Helping homeowners negotiate loan modifications or try to short sale their property when facing foreclosure has introduced me to a new behind-the-scenes player: private mortgage insurers.

Here is the short and simple on mortgage insurance. The insurance protects the bank against your failure to pay the loan. Of course, you pay to cover the bank’s behind (those mortgage insurance premiums are bundled up into your monthly payments). Traditionally, mortgage insurance is required for any loan that does not come with a 20% down payment. That way, if you default on the loan, the bank has a cushion. Regardless of what the bank recovers at the foreclosure sale, it also collects from the insurance policy.

For distressed homeowners, mortgage insurance is a plague. It decreases the bank’s incentive to work out alternative payment plans or approve short sales. Why would the bank adjust your payment schedule or interest rate to keep you in your home when it is getting paid by the mortgage insurer for your missed payments? Banks are businesses. They calculate risks and returns and in the end, they look at the bottom line.

So what can you do about it? Well, if you do not currently own a home, pinch your pennies until you can put 20% down on your purchase. Shop around for a good loan and read the fine print. Make sure there is no mortgage insurance requirement. What about the rest of you who own a home that has mortgage insurance? There are several laws that provide protection. The greatest protection comes at the federal level in The Homeowners Protection Act of 1998 (HPA). The HPA requires, in most cases, automatic termination of mortgage insurance once you reach 22 percent equity in the home – based on the original property value. Under this law, you can request cancellation once you hit 20 percent equity. To accomplish the automatic termination or the termination request, you must be current on your payments.

If you have a high risk home loan or other liens on the property, the mortgage company may be able to require the continuation of mortgage insurance past the previously mentioned percentages. Illinois enacted the Mortgage Insurance Limitation and Notification Act (765 ILCS 930/1 et. seq). This law requires the bank to disclose the mortgage insurance cancellation process to the homeowner on a yearly basis. It also prohibits banks from requiring excessive amounts of hazard insurance on the property.    

It should be noted that these legislative protections only apply to single family properties that are used as the principal residence of the borrower. You are not entitled to the same protections on your investment property or summer home. Be informed home owners. Avoid mortgage insurance if you can, and if you cannot, then watch it like a hawk and terminate it as soon as you possible.