Category: Real Estate Contract Disputes

Understanding HOA Documents

When you are buying property, you may find a home you love which has a homeowner’s association. If you have never had a homeowner’s association, you may be wondering what documents you need and which documents are important before you close on your home. Luckily, with the help of a skilled attorney, they will provide you with the correct homeowner’s association documents well before you sign on the dotted line.

When you buy a home part of the requirements of the contract is that you are the receive copies of the home’s homeowner’s association documentation. This documentation includes, copies of all annual meetings minutes, copies of the financial records from the association, a paid assessment letter showing how much is owed on the property and up to that date, rules and regulation, bylaw, articles of incorporation, declaration of covenants, conditions and restrictions. These should all be provided to you before you close on the property so you have time to review them.  Your lender may also have an interest in the homeowner’s association documents. These can be very telling of the property’s financial state and some lenders may require a check list of items to be cleared before giving you a loan.

When you receive your documents, the first main document of the most importance is the rules and regulation. These are the day to day rules of your property. For example, there could be a rule stating your home needs to painted only one color, or any outside decoration are prohibited. Another big rule which many people see is pets. The homeowner’s association may only allow certain pets, the pets may have weight limits or even breed restrictions. This can be a big deterrent when finding a home, if your pet cannot come with you. These are day to day rules you need to live by and should be the first thing you check to be sure if you are in agreement. If not, there is not much room for any negotiation and you may need to find another property if there is a major rule which causes an issue.

The next documents you should look at, are the financials of the homeowner’s association. You should be checking how often the homeowner’s association’s monthly assessment has risen in the past few years. You should check the balance in the reserves the homeowner’s association has left over. You should look at upcoming projects as well. If you receive your documents and it appears there are not many funds, it means the property could be looking at raising the monthly assessment in the future or even a special assessment on the property. You need to read these documents clearly and reach out to a trusted real estate broker and attorney to help you make informed decisions. Often times, an attorney can even help you negotiate if there is an issue. You should read all the documentation clearly to make an informed decision regarding your new potential homeowner’s association.

Are planning on buying or selling property?

Local attorney Andrew Szocka, Esq. provides thorough and speedy real estate help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.



If you are buying or selling a house, one of the more complicated issues you may encounter is the real estate tax proration.  Properties in Illinois are subject to taxes set by the county in which the real estate sits.  The paid taxes are distributed to the local government.

Real estate taxes are paid in “arears.”  This means that in the year 2021, you are paying the taxes for the year 2020.  Tax bills are payable twice a year in two installments.  If your property taxes are $2,000 per year, you receive a bill for $1,000 generally due in June, and a bill for $1,000 generally due in September.

If you are buying or selling a house, the taxes should be prorated based on the amount of time the seller lived in the house prior to the sale.  In other words, the buyer should not have to pay property taxes during the time that the seller occupied the property.

A tax proration is not necessarily a difficult calculation.  But it can seem tricky without an understanding of the underlying equation.

First, most real estate purchase contracts prorate taxes at a rate of 105%.  This is because taxes generally increase each year.  A higher percentage is better for the buyer because it causes the seller to pay a larger credit to the buyer for past taxes.  In some counties, such as Cook County, a proration of 110% is standard because taxes tend to increase in Cook at a faster rate than in other Illinois counties.

For example, if you are buying property in an Illinois county other than Cook, the real estate taxes on the property you plan to purchase may be $2,000 per year.  To calculate the taxes to be prorated, multiply the yearly taxes by 105%.  Then, divide that number by the number of days in the year.  The sellers should be responsible for the amount of unpaid real estate taxes for the number of days that they lived in the property prior to the sale date.

The equation is as follows:

$2,000 in real estate taxes per year;

x 105% = $2,100;

$2,100 / 365 = $5.75 per day in taxes.


Assume that the closing transaction occurs on March 31, 2021.  Remember that the property taxes due in 2021 are actually paying the taxes from the year 2020.  As a result, the seller should provide the buyer a credit for the entire 2020 taxes when the seller lived in the property.  The seller also needs to provide the buyer with a credit for the portion of the 2021 year that the seller continued to occupy the property.

For the year 2020 taxes, the seller would owe the buyer a credit of $2,100 ($2,000 x 105%).  In addition, the seller owes the buyer a credit for the time the seller lived in the property in 2021 – January, February, and March.

The daily property tax amount is multiplied by the number of days in January, February, and March: $5.75 x 90 = $517.50.  The total credit that the seller must provide to the buyer would be the $2,100 in unpaid taxes for the year 2020, plus the $517.50 for taxes in the year 2021 when the seller occupied the property, or $2,617.50.

As a result, when the buyer pays the year 2021 property taxes in 2022, the buyer is only paying for the portion of 2021 that the buyer lived in the property.

The following is another example.  Seller and buyer agree to a closing transaction on July 31, 2021.  Seller already received the bill for the 1st installment of the 2020 taxes and made a timely payment in June 2021.  This payment covered the taxes through June 2020.  But seller still lived in the property from July 2020 to December 2020, and until July 31, 2021.

As a result, and at a 105% presumed increase, the equation would look as follows:

$2,000 in real estate taxes per year;

$1,000 was already paid by the seller for the first installment of the year 2020;

$2,000 – $1,000 = $1,000 x 105% = $1,050;

$1,050 / 365 = $2.88 per day in taxes;

$2.88 per day * 214 days that the seller lived in the property for the year 2020 (sub-total $615.62);

plus $2.88 per day * 182 days that the seller lived in the property for the year 2021 (sub-total $1,046.50);

with a total of $1,662.60 owed as a credit to the buyer at the closing.

If you are buying or selling a home, local attorney Andrew Szocka provides thorough and speedy real-estate assistance in the Chicagoland area.  To schedule a free initial consultation, visit Andrew Szocka, P.C. online or call the office at (815) 455-8430.