Condo buyers may have to pay past association dues according to law

Typically, when a buyer purchases a condominium unit all delinquent association dues are paid by the seller either before or at the time of closing. However, when the unit bought directly from a lender who obtained the unit through foreclosure, the buyer could be held responsible for some of the unpaid association dues that accrued prior to closing.

Basically, The Illinois Condominium Property Act (765 ILCS 605(g)(4)), provides for the buyer to pay delinquent assessments that became due during six months prior to any legal action being taken by the association for collection. By the same law, the lender owner is responsible for dues beginning after the first day of the month following the day they received possession of the unit.

The best interpretation of the statute provision is that the buyer is only responsible for assessments that became due prior to taking ownership of the unit if a law suit was filed in court by the association to recover the amounts owed by the former owner. In the event that the association never filed any collection case in court, none of the former owner’s liability should be charged to the new buyer.

Though this may sound straightforward enough, the statute isn’t always applied in the way that it should be. There are many instances in which the buyer is charged for the last six months dues prior to the bank taking ownership of the unit, whether any collection action was ever taken by the association or not.

Since the buyer of a foreclosed condo usually will not find out about the status of delinquent assessments until after the contract has been accepted, caution must be taken. The best defense against unknowingly getting stuck with somebody else’s bill is to make sure the sales contract is contingent upon the buyer’s approval of any delinquent dues that will be charged to the buyer. This may be achieved either when the offer is submitted or during the attorney review contingency period.

Since a sizeable and unexpected amount of past association dues could make what once was a great deal not so good, being proactive about this issue from the beginning is the answer.