Rental in Condo-Only Building Chicago

[Lindsey Matejak]

I own a unit in a small condo-only building in Chicago. I am interested in moving out and renting out the unit for extra income. Currently, our building has no rental restrictions in the governing documents but all 4 units are owner occupied. Out of courtesy, I informed my neighbors of my plans and am receiving pushback from some of them. They say it'll be a hassle and devalue their homes. As I mentioned, the condo association docs don't prohibit it, but they still may try to block it and get lawyers involved. I’m wondering... (1) If the association decides to implement a no renters policy and I already have the tenants in the unit, am I protected under a ‘grandfather’ situation, or could they force my tenants out? Or not let me rent again if there is a turnover of tenants? (2) I start renting my unit - does it hurt the others' resale value since the building is not 100% owner occupied anymore? (3) The association changes the bylaws to say no renters - does this hurt the resale value bc some portion of the market doesn't want to buy? Appreciate any input that can be provided!

[Chris Titcomb]

@Lindsey Matejak and @Brie Schmidt, if the condo declaration is currently silent on rental restrictions, you have the right to rent out your unit. The proper procedure to implement rental restrictions is to amend your declaration, which will include notice to, and voting among, the unit owners. If 67% of the unit owners vote to implement restrictions, you may be prohibited from renting, unless there are grandfather provisions or hardship provisions included in the restrictions.

If you're already renting when that vote passes, you should be able to continue to lease your unit for the remainder of the lease term. I can't predict the exact restrictions that will be passed because all HOA rental restrictions are different. But most rental restrictions that I read allow for grandfather provisions.

The board may also try to enact rental restrictions without an actual unit owner vote by adopting a rule and regulation that restricts leasing. Through this process, the board votes – not the unit owners – to adopt a rule/regulation. However, there is 2015 case law (Strobe v. 842-848 West Bradley Place Condo Assn) that states this rule/regulation is invalid if your declaration contains language that recognizes a unit owner’s right to lease without restriction. So keep an eye out for the leasing provision in your declaration (if any) because that is the controlling document.

So to recap, if the declaration is silent on leasing, you’ll be able to rent unless the declaration is properly amended, or if the board adopts a rule/regulation restricting rentals. If your declaration allows for leasing, the board will need to amend the declaration if they want to restrict rentals – a rule/regulation will be invalid per Illinois case law. Hardship and grandfather provisions are typically included in a rental restriction, so monitor the discussion and proposed language, should your board contemplate the restriction.

Good luck!