Unfinished Construction - Illinois - Looking for any input

Started by ColeW • 26 replies • 824 views

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ColeW (Illinois)
Posts: 14

Posted:

Hi all,

I recently found this forum, which is surprising because I love forums and had never thought about searching for one that is strictly about HOAs. Anyway, thanks for having me.

My question is about an association that I don't live in, but own an rental condo in. 104 units, roughly 12 years old. The original plans for the development were to be 240-ish units, but about halfway through was 2008 and the developer went bankrupt.

Onto the issue at hand. There are 13 buildings on the property that make up the association, each building having 8 units (104 total). There are two giant slabs of cement that were poured just before the construction stopped, and they are eyesores. Another local builder bought the land that was never "improved" (the land for the other 120+ units), it's just a field that was originally intended to be a part of the association, but there aren't roads or anything done over there. When you search for this parcel, you see the new builder listed as the owner.

I'm wondering what we can do about these slabs. They are part of the association, meaning that they are inside the already developed association area. It's a gated community, and the slabs are within the gates. If you search any owner in that neighborhood, the parcel that is outlined is the entire association property, meaning the 13 buildings and the 2 slabs. This tells me that the assocation (owners) own the land that these slabs sit on. I'd imagine this has happened somewhere before, but at any rate, either the owner needs to keep them up, build them, pay dues, something. They've been sitting as concrete slabs for over 10 years.

Anybody have any input?

I appreciate any insight or direction. My father-in-law is the HOA president, so I'm trying to help him out.

TimB4 (Tennessee)
Posts: 21,059

Posted:

You will need to talk to the current developer/declarant.

This will be the bank who would have taken the property as security for their loan or whomever purchased the developers lots during the bankruptcy sale.

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By TimB4 on 04/05/2018 2:01 PM
You will need to talk to the current developer/declarant.

This will be the bank who would have taken the property as security for their loan or whomever purchased the developers lots during the bankruptcy sale.

The problem is the current "developer" owns about 50% of the real estate in this county and has ignored attempts to contact him over the last 10 years.

Does it make any difference if the management of the association has been handed over to the owner's? The "developer" has literally nothing to do with the property, other than owning the vacant land that is not a part of the association, and the two cement slabs that are.

TimB4 (Tennessee)
Posts: 21,059

Posted:

It's probably a good thing that the Association has been handed over.

Basically, unless you want to seek legal advice for options on how to force the developer to develop (which I personally don't think will occur), you're stuck.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Keep in mind, if you push too hard, the developer likely controls the votes and can force other things on the Association that they may not want (a possible unintended consequence of trying to make something happen).

AugustinD
Posts: 5,144

Posted:

Have you also checked the county property tax records to see who is paying property taxes on all the land on which your condo community sits?

I suspect the slabs themselves are legally abandoned property and your condo has the right to claim ownership of them. You can google for the law on this subject for Illinois. It looks like property that has been "dormant" for five years can be claimed by others. Though I wonder if the concrete slabs have any value. I'd be lobbying the board to talk to a real estate attorney.

ShirleyC (California)
Posts: 117

Posted:

can the property assessor's office tell you who the owner is? or maybe get a title search ?

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By AugustinD on 04/05/2018 4:06 PM
Have you also checked the county property tax records to see who is paying property taxes on all the land on which your condo community sits?

I suspect the slabs themselves are legally abandoned property and your condo has the right to claim ownership of them. You can google for the law on this subject for Illinois. It looks like property that has been "dormant" for five years can be claimed by others. Though I wonder if the concrete slabs have any value. I'd be lobbying the board to talk to a real estate attorney.

So, this is where there is a vast grey area. For each of the 104 owners, when you search their property tax records, they all show the same parcel map, which is the outline of the gated association. Think of it like a big neighborhood that the west half is developed (13 buildings, 8 units per building, and two 8 unit slabs) and the east half is the other undeveloped parcel that shows up as owned by the new builder/developer. I wish I could attach a screen shot to explain, but it wont let me. The 2 slabs have no address, no parcel number, nothing. Within the fenced/gated part of the association are the 13 buildings I've mentioned, and these slabs, but he slabs have no addresses assigned, or parcels. I'm not sure at which point in the building process this happens. From what I can tell, there is no property tax being collected on these slabs. There should be some, albeit little, but some.

The legally abandoned property is an interesting approach. We aren't even sure if the developer owns them, but just assume he got them because he got the other parcel.

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By TimB4 on 04/05/2018 3:38 PM
Keep in mind, if you push too hard, the developer likely controls the votes and can force other things on the Association that they may not want (a possible unintended consequence of trying to make something happen).

Controlling votes? Not sure what you mean. This guy is hated in this area and has nothing to do with the association.

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By ShirleyC on 04/05/2018 4:27 PM
can the property assessor's office tell you who the owner is? or maybe get a title search ?

This is where we are planning to begin. It's been an ongoing issue for years that just keeps getting ignored. Now that my father in law is involved, I'm trying to help. The county assessor isn't very good (totally illogical assessed value, and can't even explain the assessments) but either way, someone at the county, or even the city, should have the transaction info of when the property was purchased out of bankruptcy, and what all the transaction included. It's just a matter of tracking down who has that info, and from there, what we can do about it.

I was mostly looking to see if there was anyone who had dealt with anything similar and may have known of what, if any, recourse the association would have.

I appreciate everyone's comments!

AugustinD
Posts: 5,144

Posted:

Cole, can you clarify what it is you think the HOA Board would like to do about the slabs? If the HOA can determine that the developer is responsible for them, do you want the developer to pay for their removal, so the HOA can, say, landscape the area? If the slabs are abandoned and the HOA can confirm that the land belongs to it, would the HOA pay for removal of the slabs and then landscaping? What is the end goal here, apart from wanting the eyesore gone?

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By AugustinD on 04/05/2018 7:23 PM
Cole, can you clarify what it is you think the HOA Board would like to do about the slabs? If the HOA can determine that the developer is responsible for them, do you want the developer to pay for their removal, so the HOA can, say, landscape the area? If the slabs are abandoned and the HOA can confirm that the land belongs to it, would the HOA pay for removal of the slabs and then landscaping? What is the end goal here, apart from wanting the eyesore gone?

The ideal situation would be completed construction. 16 additional units, would result in roughly $32k a year in added dues revenue. We know this is highly unlikely. So, the other option would be to turn the slabs into either: 1) an area for raised bed gardens; 2) convert the slabs to additional parking; 3) remove the slabs and use the space for a park.

Part of the issue with this association is that it was built with the intention of having 240-ish units. There is a pool, rec room, game room, gym, bike path, etc. It's very nice, but the expenses associated with all of the amenities are being spread among the 104 units, so the dues are very high. There were a few units that never paid dues (in over 10 years) and nothing was done until my father in law took over last year. So the next step is these slabs. I doubt there is any chance to get any backed dues/upkeep from these slabs, but obviously the association has had to pay to have the entire property mowed, plowed, and landscaped, etc etc.

LetA (Nevada)
Posts: 2,679

Posted:

The main problem here is, the HOA likely don't want to become a developer, and that is essentially is what needs to happen.

Someone needs to do a title search, has someone paid the property taxes on the slabs in the last 10 years? Since the slabs were poured, it is likely that the county
accessors office has assigned parcel numbers to the slabs and individual units. If the taxes are current, there isn't anything you can do.
If the taxes are delinquent, then explore the options of invoking adverse possession laws. Then again, you need capital to build, and your 104 members
are not going to want to pay special assessments to fund the building of 16 more units nor could you get any loans without collateral.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Don't forget to read your governing documents.
It's possible that once the Association was turned over to the membership that the developer has to start paying assessments. If this is the case, the Association needs to look at various methods to collect past due assessments.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Not sure what you mean by "Revenues"? A HOA is typically a non-profit. There isn't really any "revenue". It's just to pay for itself basically. So developing this would make the existing owners pay for that development and then have the dues split up in an additional 16 members. Your HOA would be adding an additional 16 and thus your dues would have to be divided equally amongst the added 16 to your total numbers. Which may or may not lower or raise dues. Depending on how much additional long term costs that added 16 units poses to the HOA.

Our HOA we can add additional homes if we chose. It's in our documentation. However, we would never do that as it just adds additional expense, maintenance, and doesn't benefit us. We aren't in the development business. We are in making sure the homes are kept attractive to potential buyers one.

Now doesn't mean that maybe your HOA shouldn't add like a clubhouse. A structure that would benefit all. You would all have to pay for it and then have use of it. Of course there would be the additional insurance costs, utilities, taxes, and other expenses with buildings. However, that may be much better option for the enjoyment of all the HOA members if it can get ownership of those slabs.

Former HOA President

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By MelissaP1 on 04/06/2018 5:09 AM
Not sure what you mean by "Revenues"? A HOA is typically a non-profit. There isn't really any "revenue". It's just to pay for itself basically. So developing this would make the existing owners pay for that development and then have the dues split up in an additional 16 members. Your HOA would be adding an additional 16 and thus your dues would have to be divided equally amongst the added 16 to your total numbers. Which may or may not lower or raise dues. Depending on how much additional long term costs that added 16 units poses to the HOA.

Our HOA we can add additional homes if we chose. It's in our documentation. However, we would never do that as it just adds additional expense, maintenance, and doesn't benefit us. We aren't in the development business. We are in making sure the homes are kept attractive to potential buyers one.

Now doesn't mean that maybe your HOA shouldn't add like a clubhouse. A structure that would benefit all. You would all have to pay for it and then have use of it. Of course there would be the additional insurance costs, utilities, taxes, and other expenses with buildings. However, that may be much better option for the enjoyment of all the HOA members if it can get ownership of those slabs.

Revenue and income/profit/loss are not the same thing.

This was outlined in my last post. There is a clubhouse, pool, gym, rec room, patio/grill area and a game/pool room. The association is also entirely responsible for the roads on the property, so the upkeep, plowing, etc all falls on the HOA. The dues are roughly $225/month, which is unheard of around here and has kept the property values down. These units originally sold for $130k to $150k from 2004-2007, and the most recent sale was $85k just a few weeks ago (for perspective, values have recovered from the 2008 bubble in this area). Part of that reason is the dues. When they were initially built, dues were $100/month.

Let's say you get an extra 16 units (constructed and sold by the current owner/builder/developer, not the HOA), this would result in an additional $43,200 each year in dues received by the association. The added expense of having 16 additional units will definitely not be $43,200. To date, the HOA has had to do annual assessments and/or increased dues to cover expenses. For example, last year the dues were $200/month, a drainage issue came up and cost $13,000 that there were not funds for, so there was an assessment to cover that, as well as the dues went up to $225 to help cover items like this in the future. Those types of issues would be relieved/mitigated with the extra 16 units paying dues. Another thing to note is just the really poor management of the previous board. They were absolutely dreadful. A combination of a poorly thought out development/bankruptcy of the developer and bad HOA management has resulted in financial issues. There is maybe $20k in reserves now, and there should be something like $450k, which is a scary thought when in 5-7 years, roofs will need to be done and that is a $600k project.

That's the ideal option simply because it results in additional dues revenue, and like I said before, I know it's highly unlikely that the builder would complete those 16 units.

If the HOA is able to take/get control of those units, they will be used for something else that I've mentioned. This issue is easily the number 1 complaint by the owners, and has been for 10 years.

Regarding parcels, there are no parcels assigned to these slabs on the county assessors website. The only parcels that show up are the 104 completed units. There are not 16 parcels showing "unimproved" or something, which is what I would have expected. I don't think the county is collecting any property tax on these slabs, and the association doesn't have any common area parcels that it is paying taxes on. It does insure common areas, but it doesn't pay property taxes on them.

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By TimB4 on 04/06/2018 3:47 AM
Don't forget to read your governing documents.
It's possible that once the Association was turned over to the membership that the developer has to start paying assessments. If this is the case, the Association needs to look at various methods to collect past due assessments.

Now this is a good point because we've probably had $5-$7k in assessments in the last 11 years, per owner. Sometimes they've elected to roll them into increased dues, which in this case may be a bad idea. I'll have my father in law search.

ColeW (Illinois)
Posts: 14

Posted:

Also, there's a liability concern in case something were to happen. If a kid is running and trips over a piece of 3" PVC thats sticking up from the cement slab, who's liable? Right now, we have no idea and are just beginning to try to figure it out.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By ColeW on 04/06/2018 7:11 AM

I agree this is a good point. From my former HOA (stand-alone houses): The developer had long since turned the HOA over to member control; still owned some land; and had never built on this land. The plats are clear that this land is within the legal boundaries of the HOA. When a second developer came along talking about buying the land and developing it for a small apartment complex, it got the Board's attention. The HOA Board saw that the governing documents said the developer should have been paying an assessment on the land for the previous 10+ years. Granted the governing documents deeply discounted the assessment for undeveloped land. Still, several thousand dollars in back assessments plus interest and penalties were owed and eventually paid.

ShirleyC (California)
Posts: 117

Posted:

In CA for example; a friends neighbor replacing the fence during their rebuild of a home put their fence six inches into his yard along the side of his house; being this is Coronado CA and 6 inches is a lot of property and money my friend went to the planning dept they came out and surveyed to verify the fence was on his proprty. So, end result he let the neighor leave the fence and it is recorded at the county that it is on his property. etc. etc.

So, what I'm getting at is in CA the county has plats (maps ) with specific drawings and location of bouneries, etc.

just more info...........

ColeW (Illinois)
Posts: 14

Posted:

We have the same thing here in IL, but it's different with condo's because as a condo owner, you don't own the land. You own your piece of the building. You can't carve out a parcel because there isn't any land associated with the pin and these are two story buildings, so you have an upper and lower unit sitting on the same land. The collective owners, or HOA, owns the land. When you search for my name you will find my house, with the lot lines, exactly showing what I own. However, I also own this condo. So, when you search my name and select the condo parcel, it outlines the entire property of the association. There are 104 different parcels that you can search, and all show the exact same "lot lines", which is the perimeter of the developed property. Within these lot lines, are these 2 slabs. These slabs do not have parcels, only the 104 units that are completed have parcel information via the county assessor.

There is an adjacent lot that was originally intended to be a part of this association, it's even within the fenced in part, but it is a separate lot/parcel. The new builder/developer owns that lot, and you can see that on the tax assessor website.

ColeW (Illinois)
Posts: 14

Posted:

Went to the county assessors office and was directed to the recorder of deeds. She looked for about 30 minutes and concluded that the slabs are property of the association. To confirm, we went to a title company who is going to pull the information on the bankruptcy transaction.

JeffT2 (Iowa)
Posts: 880

Posted:

I would first study and try to completely understand the condominium as planned and described in the Declaration.

This would include the legal description of the land that was originally committed to the condominium and probably a plat of the land. You (or someone) has to figure out this surveyors description of original land to see if is the same or different than what the assessor is now showing. The land may have changed due the bankruptcy or the unfinished construction.

The Declaration will also have a description of any phases and additions of the condominium.

What does the original Declaration say about the slabs or that area?

The Declaration will also include a list of all the units and each unit's percentage (or fraction) of the total property. The unbuilt units, or the rights to build the unbuilt units, may be owned by the developer or the successors. Even if the developer does not own your land, the developer may own the rights on your existing land. In any case, you will need to find out and deal with the unbuilt units. The unbuilt units have an ownership interest in the property.

The development or declarant rights will be listed in the original Declaration, and may contain the right to build on the slabs.

The Recorder of Deeds will not know all of the development rights and background issues concerning the slabs.

Then you have to figure out the effect of the bankruptcy on all of this and any transfer of development rights.

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By JeffT2 on 04/07/2018 9:33 AM
I would first study and try to completely understand the condominium as planned and described in the Declaration.

This would include the legal description of the land that was originally committed to the condominium and probably a plat of the land. You (or someone) has to figure out this surveyors description of original land to see if is the same or different than what the assessor is now showing. The land may have changed due the bankruptcy or the unfinished construction.

The Declaration will also have a description of any phases and additions of the condominium.

What does the original Declaration say about the slabs or that area?

The Declaration will also include a list of all the units and each unit's percentage (or fraction) of the total property. The unbuilt units, or the rights to build the unbuilt units, may be owned by the developer or the successors. Even if the developer does not own your land, the developer may own the rights on your existing land. In any case, you will need to find out and deal with the unbuilt units. The unbuilt units have an ownership interest in the property.

The development or declarant rights will be listed in the original Declaration, and may contain the right to build on the slabs.

The Recorder of Deeds will not know all of the development rights and background issues concerning the slabs.

Then you have to figure out the effect of the bankruptcy on all of this and any transfer of development rights.

I began reading the declaration, as painful as it was. Seems like the first phase of the project is all that is outlined in the declaration. The declaration does mention additional phases, but nothing about what those ownership percentages would be, just that it would be recalculated by the developer. The first phase was 11 buildings, 88 units. The second phase was begun by building two buildings and pouring slabs for two more. Even though each building is identical, the 11 outlined in phase 1 all have different ownership percentages. The only thing i can think of is that the designs of the buildings changed between the declaration and construction. Within each building, there are four models, two of each.

ColeW (Illinois)
Posts: 14

Posted:

An interesting bit of information is that it seems like maybe the construction didn't follow the declaration. I'll need to investigate further, but it's weird that each building in this development is the exact same building, but in the declaration, every building has different ownership percentages ranging from 7% to 10.8% (phase 1 was 11 buildings, 88 units). Seems odd to me that they would have ownership variation when the buildings are identical. Each building has 4 models, A, B, C and D, two of each model. So each building has two A's, two B's, two C's and two D's for a total of 8 condos per building.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By ColeW on 04/09/2018 8:59 AM
An interesting bit of information is that it seems like maybe the construction didn't follow the declaration. I'll need to investigate further, but it's weird that each building in this development is the exact same building, but in the declaration, every building has different ownership percentages ranging from 7% to 10.8% (phase 1 was 11 buildings, 88 units). Seems odd to me that they would have ownership variation when the buildings are identical. Each building has 4 models, A, B, C and D, two of each model. So each building has two A's, two B's, two C's and two D's for a total of 8 condos per building.

Do you mean .7% and 1.08%? It can't be 7% to 10.8%. The total has to be 100%. If each of the 88 units was equal, the percentage would be 1.36% (100% / 88 = 1.36%).

ColeW (Illinois)
Posts: 14

Posted:

Quote:

Posted By JeffT2 on 04/09/2018 9:17 AM

Do you mean .7% and 1.08%? It can't be 7% to 10.8%. The total has to be 100%. If each of the 88 units was equal, the percentage would be 1.36% (100% / 88 = 1.36%).

No, I mean each building. Building 1 is 10.622%, building 2 is 7.517%, building 3 is 10.303%, building 4 is 7.437, etc. The eight identical units make up a single building.

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