28 E. Jackson Blvd., Rm. 910 • Chicago, IL 60604 • 312-987-1906 • actha@actha.org • www.actha.org

28 East Jackson, Suite 910 Chicago, IL 60604

Actha Mastehead 2007:Layout 1 11/16/07 10:55 AM Page 1

September 2012

Tip of the Month 3

Collect Assessments cont. 4

Question of the Month cont. 5

South Expo Information 6

Expo Registration Form 7

Welcome New Members 7

Question of the Month 8

Inside this issue:

2012 PLATINUM SPONSORS AAA Painting Contractors

Adams Roofing Professionals American Decorating Inc. & Construction

Caruso Management Group CertaPro Painters � Community Advantage

Community Association Banc Dickler, Kahn, Slowikowski & Zavell, Ltd.

Frost Ruttenberg & Rothblatt Fullett Rosenlund Anderson PC

Kovitz Shifrin Nesbit � LP Building Products Mark Cantey Associates � Rosenthal Bros.

Smart Elevators WINDOWWORKS and HOMEWERKS

Woodland Windows & Doors

UPCOMING ACTHA EVENTS

ACTHA’S SOUTH EXPO SEPT. 29

WEBINARS EVERY MONTH!

OCTOBER is

THEME MONTH Vote for your topic of choice by going to www.actha.org

Fiduciary Obligation to Collect Assessments,

Use of the Forcible Entry and Detainer Act and its Impact upon Associations

By: Douglas Sury of Keay & Costello, P.C.

Obligation to Collect Assessments While few take pleasure in pursuing their neighbors, friends, colleagues, etc. for the collection of assessments, associations and their duly elected board members are charged with the duty of doing just that. By volunteering to become a board member of your association, you are submitting yourself to be held to a high legal standard; the standard of being a fiduciary. Individuals who fill fiduciary capacities such as attorneys, accountants and association board members are charged with the highest, most stringent duties under the law. A fiduciary must always put the interest of his or her constituency above his or her own interests and must always make decisions based upon what he or she believes is in the best interest of the community as a whole, not just a select few. Playing favorites is not an option. To that end, making decisions in a fiduciary capacity requires difficult and sometimes uncomfortable or unpopular decisions. One such decision charged to all board members in the State of Illinois is how and when to pursue a delinquent owner for past due assessments. The balance of the community, those owners who pay their assessments in a timely fashion, must have the trust and faith in their board members that the association is not asking them to carry the load for those who choose not to pay. Thankfully, in the State of Illinois, associations have an option for the collection of assessments that is superior to all others, and when used will reduce an association’s overall delinquency rate, the Forcible Entry and Detainer Act.

Continued on page 4

Note: Materials in this publication may not be reproduced without the written permission of ACTHA. The statements and opinions in this publication are those of individual authors and ACTHA assumes no responsibility for their accuracy. ACTHA is not engaged in rendering legal, accounting or other expert assistance. If required, the services of a competent professional should be sought. Acceptance of advertising in the ACTHA newsletter does not constitute an endorsement by ACTHA or its officers of the advertised products or services. The publisher reserves the right to reject any advertising.

Board of Directors Officers

President: Beth Lloyd Vice President: Diane Pagoulatos Treasurer: Bob La Montagne Secretary: Jacqueline Fanter

Directors Julie Cramer Joe Fong Mike Matthews Joyce Sampson Jeff Schmitt

Executive Director: Gael Mennecke

Lobbyist: Richard Lockhart, Social Engineering Associates, Inc. Legal Advisors: Rob Kogen, Kovitz, Shifrin Nesbit / Charles VanderVennet, Attorney in private practice

Accountant/Advisor: Garry Chankin, Frost Ruttenberg & Rothblatt, C.P.A.

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Continued from page 4

Conclusion In summary, a successful forcible will result in apossession order, which terminates an owner's authority tolive in his or her unit, until such time that all outstandingassessments and attorney’s fees are paid in full. The Forci-ble Act is a powerful collection mechanism that enables an association to obtain a money judgment and an order ofpossession against a delinquent unit owner. Prior to filingthe action, the association must send a demand letter thatgives the owner at least thirty (30) days to cure the default.The action requires proof of ownership of the unit. Theassociation must also prove the delinquency in the account.

Keough & Moody 1250 E. Diehl Rd., Naperville 60563

630-245-5068 ^ grc@kmlegal.com ^ www.kmlegal.com

LEGISLATIVE CORNER

It’s no surprise to those living in community associations that sometimes “issues” arise. Barring hiring an attorney or at best seeking the counsel of professionals to assist and hoping their advice will suffice, there is no governmental body to act as an arbiter. As a result, several states have adopted laws to provide assis-tance to boards and owners. ACTHA has formed an ad hoc committee to look at doing the same in Illinois. We are working with Brian White and Julio Soriano of Lakeside CDC which has long been involved in trying to move this issue forward. We had our first meeting in early July. Others who volunteered for this committee are myself, Julie Cramer (owner), Sima Kirsch (attorney), Dawn Lennon (owner), Lou Lutz (former property manager), and Gael Mennecke, ACTHA’s Executive Director. This won’t be an easy task but it doesn’t mean ACTHA shouldn’t be involved and active in trying to make it happen. Right now, our biggest challenge is finding a Constitutional officer willing to house the office. We will keep our members and others posted on future activity. Bob LaMontagne, ACTHA Vice-President & Legislative Chair

If successful, the association will have a money judgmentfor assessments and an order of possession. It can be verydifficult to collect money from your neighbors. A clear,consistent policy will make it easier for the board. Collec-tion policies send a very loud message to members that thecollection of assessments is very serious to the board. It also protects the association to ensure that as much moneyas possible will be collected from all members.

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TIP OF THE MONTH What To Do With Property Damage

Nobody plans to have a pipe burst or a devastating fire. When the unexpected happens, there are some initial steps that a property owner needs to do in order to protect their property, possessions and investment. Below are some tips to help save you time and money in the event that the unexpected happens: Water 1. Most water damage tips also apply after a fire due to the amount of water necessary to extinguish it. 2. When photographs are wet, do not try and separate them! Place them in a freezer instead until a restoration

representative can take them to be restored. 3. Do move personal property out of any areas affected by water. If you are unable to move the furniture, put it

on wooden or cement blocks to minimize damage. 4. If you remove your wet pad and carpet before restoration arrives on the scene, keep a 12 inch by 12 inch

sample of each for identification purposes. 5. Do not turn on any devices requiring electricity. Wait for an evaluation of them. 6. Do not use heat to dry out a closed environment. 7. Lay wet fabrics out to dry. 8. Open drawers and cabinets to accelerate the drying process. Do not force them open if they are stuck. 9. Remove standing water by sponging or blotting. 10. Remove wet items from furniture tops. 11. Stay out of rooms where the ceilings are sagging from retained water. 12. If an area is wet, turn on the air conditioning if possible. During winter, alternate between opening the

windows and turning on the heat. 13. After damage occurs and the heat is off in winter, call a plumber to drain and blowout all water lines in order

to prevent freeze damage. Fire 1. Board up all openings to secure the premises. 2. After a fire, DO NOT open your refrigerator or freezer. The odor is overwhelming. 3. Throw out any medication that survived the disaster. 4. Do not eat or drink items that were in a structure during a fire. 5. Do not attempt to wash walls or ceilings yourself. Sewage 1. Do not try to clean sewage contaminated items and areas yourself with over-the-counter products. This is unlikely to fully rid the item or area of harmful organisms. 2. When there is sewage damage, take care not to track contamination into non-contaminated areas. Not all disasters are the same. Trust in a professional restoration company to determine the extent of your damage and who can suggest a protocol for remediation and reconstruction.

Sheila Malchiodi • QCi restoration 1155 Bowes Road, Elgin 60123 • 847-891-2929

sheilam@qcirestoration.com • www.qcirestoration.com

Continued from page 1 Forcible Entry and Detainer Associations in Illinois may use the Forcible Entry and Detainer Act, or the “eviction statute” to collect delinquent assessments. Associations using the Forcible Act to collect assessments initiate collection by the service of a 30-day demand letter. The 30-day demand letter must be sent, by certified mail, to the owner at the unit, or to the owner’s off-site address, if an off-site address has been provided. The owner does not need to pick-up or sign for the 30-day demand letter. As long as the association is able to demonstrate that the demand letter was sent by certified mail to either the unit or the off-site address, no further notice is required and the owner has 30 days from the date of the letter to pay the delinquency. If the owner brings the account current within the 30 days, no further action can be taken. However, if the owner fails to pay any amount or if the owner makes a partial payment within 30 days, the Association is vested with the authority to file an eviction action against the owner in an attempt to collect all past due amounts. If suit is filed under the Forcible Act the association will be asking a court to award it all past due assessments, attorney’s fees and court costs. Additionally, the association will be asking a court to award it possession of the owner’s unit, i.e. to evict the owner for non-payment. If an owner does not pay his or her share of the assessments and if the association is awarded possession of the unit, the owner will be afforded between 60 and 180 days, as fixed by the court, to pay the delinquency from the date of judgment (known as the “stay” period). After expiration of stay, if the owner has not cured the delinquency, the association is authorized to schedule an eviction with the county sheriff. If an eviction is completed, the owner loses the right to live in the unit, but not ownership of the unit. At this point the association can place a renter in the unit and apply all rental payments received toward the owner’s past due balance. In addition to the past due assessments, attorney’s fees, late fees

and court costs, the costs incurred in making the unit rentable, such as repair costs and broker’s fees may also be recouped through rental payments. Keep in mind that leases with tenants are not unlimited in time and once the delinquency has been paid, the owner has the right to petition the court to regain possession the unit. The Impact upon the Association As you would expect, the number of completed evictions is relatively small in relation to the total number of cases filed to collect past due assessments. The possibility of losing the right to live in the owner’s home provides a great incentive for the delinquent owner to become current. If however, an owner does not pay and an eviction is completed, the impact upon an association as a whole can also be substantial, in a positive way. Once owners realize that the obligation to pay assessments is real and that the association’s rights to compel payment are substantial, the incentive to avoid the embarrassment of an eviction takes over. The end result of using the Forcible Act is often a reduction in an association’s overall delinquency rate and an association budget that on an annual basis sees no increase or a minimal increase in the owners’ assessment obligation.

Keay & Costello, P.C.

128 S. County Farm Rd., Wheaton 60187 • 630-690-6446 doug@keaycostello.com • www.keaycostello.com

ACTHA is sorry to say goodbye to KEVIN MILLER

Kevin joined us in July 2010 and did a

tremendous job —hosting webinars, managing our social media, overseeing our trade show

events and coordinating Learn and Lead: ACTHA’s certification program for owners.

Bruce Heeter who serves as ACTHA’s technical

advisor, will be filling in for Kevin.

Question of the Month continued from page 8 In an effort to keep the tax bills on time, the appeals process has been accelerated. Several townships have started their appeal process, even before the tax bills were mailed. For example, the Cook County Assessor has opened and closed 22 of 38 townships for appeals already. If your township has closed for appeals at the assessor level, the Cook county Board of Review offers the next opportunity to appeal. A 2012 appeal, if successful, would be reflected on the 2nd installment tax bills that will be paid in the summer of 2013.

Q. The association usually appeals the assessments on behalf of all of the owners. Should I go along with the association’s appeal or should I file an appeal on my own?

A. The Assessor’s Office and Board of Review, the two agencies empowered to change the assessed values, recommend that owners participate in an association’s appeal. Both agencies assess a condo or townhome association as a whole, assigning a total value to all the units. That overall value is then broken down by each unit’s percentage of ownership to determine each unit’s value. The most important aspect of assessing an association is creating uniformity. When individuals file on their own, it makes it more difficult for these agencies to maintain uniformity within the association. All units in a condominium with the same percentage of ownership should have the same assessed value. The same model of townhome should have the same assessed value as the other similar townhomes. In the association. The only way to ensure that all members of the association receive the same uniformed assessment is to appeal as a whole.

Q. How do I know if my association is or will appeal the assessed value?

A. Ask! Most associations have open meetings where discussion of issues such as this are discussed.

Q. How often should we appeal?

A. Previously it was encouraged that associations only appeal in the year the property was re-assessed. Those times are gone. No property owner has felt the impact of this free-fall in real estate value more than condo and townhome owners. Most association tax appeals are based on sales. As long as values continue to drop, it may be beneficial to analyze and appeal the assessed value every year.

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EFFECTIVE SEPTEMBER 15 ACTHA IS MOVING!

OUR NEW ADDRESS:

11 E. ADAMS, STE. 1107

CHICAGO, IL 60603

ACTHA’s SOUTH EXPO

8:30 - 9:30 a.m. Choose from one of two seminars Ongoing Foreclosure Issues Whether an on-going issue for your association or starting to become one, this seminar will focus on the importance of collections, rentals, hardship policies, short sales and FHA Certification. Presenters: Lara Anderson of Fullett Rosenlund Anderson PC and Jory Carrick of Williamson Management The Three P’s Plus That would be Pets, Parking and Pests. And oh, yes, odors, smoking, noise, hoarders, unsightly decorations and people! This session is designed not just to complain but to provide useful tips and tools to minimize these "nuisances", if not control them. Presenters: Dawn Moody of Keough and Moody and Martin Stone of HSR Property Services

11:30 - 1:00 p.m. Choose from one of two seminars 10 Things a Board Should Be Aware Of This is the flip-side of the association pitfalls seminar being offered at the North Expo. Our legal and manager experts will each provide 10 crucial points for ensuring your association runs smoothly and efficiently. Presenters: David Hartwell of Penland and Hartwell and Mike Roche of Eagle Rock Management Insurance: Stuff You Need to Know Many would say a dry and complex subject. That's why this panel was specifically selected - to provide you with the key information you need to know as a Board Member and as an owner. This session will discuss key policy information, negligence and responsibility, claims, legal requirements and risk management. Presenters: Karyl Foray of Rosenthal Bros., Michael Shifrin of Kovitz Shifrin Nesbit and Tom Skweres of Wolin-Levin

Educational Programs

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SOUTH EXPO REGISTRATION FORM Free Parking! Free Breakfast!

Trade Show and Exhibitor Showcase Presentations from 8:00 - 11:30 a.m.

THE FEE TO ATTEND ANY OF THE EDUCATIONAL PROGRAMS is:

ACTHA Member rate: $ 30 Non-member rate: $ 45 per person ____ Attending the Trade Show only (Free) ____ Attending the Trade Show & Educational Seminars Name of Association: ___________________________________________________________________________ # of Units: _____ Name of Property Manager (if applicable): _______________________________________ PLEASE PRINT: Name Address: Email: _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________ Amount Enclosed: $ __________. Make checks payable to “ACTHA” and remit to 11 E. Adams, Chicago, IL 60603 or register online at www.actha.org: Education/South Expo

WELCOME NEW COMMERCIAL MEMBERS

ALL SEASONS MECHANICAL SERVICES Dan Martinez 181 Wheeling Rd. Wheeling, 60090 T: 847-947-4822, F: 847-465-9733 Email: dan@allseasonsmechanical.com Web: www.AllSeasonsMechanical.com

NIKKO ASSOCIATES, LTD Louis Agnos 910 W. Madison, #608 Chicago, 60607 T: 312-730-0774 Email: louagnos@nikkoassociates.com

Question of the Month By: Matt Panush and Fran O’Malley of Worsek & Vihon

180 N. LaSalle, Chicago 60601 * 312-368-0091 mpanush@wvproptax.com * fomalley@wvproptax.com

For the first time in the past 38 years, the property tax bills for Cook County were mailed on time! Per Illinois State statue, tax bills for Cook are to be mailed by July 1, payable August

1. There are many positive aspects to getting bills collected in a timely manner, none more important than local school districts being fully funded by the time the school year begins. Property tax revenue is the main source of financing for school districts. In past years, collections of these revenues were pushed back to November and December. Several school districts were forced to obtain short-term loans to fund their school systems. Having to secure financing in order to start the school year became more difficult with each passing year. So other than paying these tax bills, what does this mean for your association?

Q. The current tax bill is higher than last year. Can we appeal these taxes?

A. The current tax bill, which in Cook county was due August 1, cannot be appealed. The time to appeal the current bill would have been last year, when the assessment was originally proposed. In Illinois, we pay taxes one year in arrears.

Q. So when can a property tax assessment be appealed?

A. Once the assessment is initially proposed by the assessor, which depends on your property location. Continued on page 5

Question of the Month By: Steve Silberman of Frost, Ruttenberg and Rothblatt, P.C.

111 S. P�ngsten Rd., Suite 300, Deer�eld, IL 60015 ^ 847-236-1111

ssilberman@frronline.com ^ www.frronline.com

Q. I recently got elected to the board of our association. I was reviewing our financial statements and noticed that our financials are prepared on the cash basis method of accounting. What are the differences between the cash basis method and the accrual basis method and which method of accounting should our association be using?

A. The cash basis method of accounting is a very easy method to understand, which is why many associations use this method. Income is recorded when cash is received and expenses are recorded when they are paid, therefore, it is easy to tie out your cash balance each month. You add income (cash received) to your beginning cash balance and subtract out expenses (cash paid out) to arrive at your month end cash balance.

The accrual basis method of accounting records income (assessments) when billed or earned and expenses when incurred. It is very difficult to reconcile beginning and ending cash balances each month on the accrual basis, but it is the best method to determine your association’s true financial position. Your balance sheet will show accounts receivable, since you record income when billed, not when received, so all income may not have been collected. If you are on the cash basis you will not know if everyone has paid their assessments. Your balance sheet will also show accounts payable, since not all expenses incurred are always paid each month. If you have a big project that was completed but not paid by the end of the month, you will not know if the project was finished and how much is owed at the end of the month. It is even more important at year end, since you may have budgeted the project for the current year, but if the project is completed and not paid until the next year, you will not show that project until the next year on the cash basis and therefore not match your current year budget. Continued on page 4

Question of the Month By: Steve Silberman of Frost, Ruttenberg and Rothblatt, P.C.

111 S. P�ngsten Rd., Suite 300, Deer�eld, IL 60015 ^ 847-236-1111

ssilberman@frronline.com ^ www.frronline.com

Q. I recently got elected to the board of our association. I was reviewing our financial statements and noticed that our financials are prepared on the cash basis method of accounting. What are the differences between the cash basis method and the accrual basis method and which method of accounting should our association be using?

A. The cash basis method of accounting is a very easy method to understand, which is why many associations use this method. Income is recorded when cash is received and expenses are recorded when they are paid, therefore, it is easy to tie out your cash balance each month. You add income (cash received) to your beginning cash balance and subtract out expenses (cash paid out) to arrive at your month end cash balance.

The accrual basis method of accounting records income (assessments) when billed or earned and expenses when incurred. It is very difficult to reconcile beginning and ending cash balances each month on the accrual basis, but it is the best method to determine your association’s true financial position. Your balance sheet will show accounts receivable, since you record income when billed, not when received, so all income may not have been collected. If you are on the cash basis you will not know if everyone has paid their assessments. Your balance sheet will also show accounts payable, since not all expenses incurred are always paid each month. If you have a big project that was completed but not paid by the end of the month, you will not know if the project was finished and how much is owed at the end of the month. It is even more important at year end, since you may have budgeted the project for the current year, but if the project is completed and not paid until the next year, you will not show that project until the next year on the cash basis and therefore not match your current year budget. Continued on page 4