For some denizens of Chicago, an automobile is an essential part of city living. Equally important is finding a place to park an automobile with space being at a premium. Condominium Buyers in Chicago can be confused by the different ways parking can accompany a condominium unit. All condominium parking is not created equal. Whether it is covered, outdoor, or in a garage, there are generally three ways a condominium parking space can be owned.
Assigned parking is a parking space that is part of the condominium common elements. The Illinois Condominium Property Act at 765 ILCS 605/2(e) defines “Common Elements” as “all portions of the property except the units, including limited common elements unless otherwise specified.” In layman’s terms, this means that the condominium association, as a whole, owns the parking space and, accordingly, the condominium association can set up rules to assign the parking spaces. Usually, an association will assign a parking space to a certain unit. The association management usually maintains a list indicating which space is assigned to which dwelling unit.
If there are less parking spaces than condominium units in a building, it is possible that there could be a wait-list or that a new buyer may not be immediately entitled to a space. The new buyer may have to wait their turn until enough current owners sell their units and return their parking spaces to the association for re-assignment. It is also possible that the condominium rules may not require re-assignment.
An assigned parking space cannot be sold separately by a condominium unit owner. This is because the space remains a part of the common elements and is really “owned” and controlled by the association. The association merely allows the unit owner to use the space.
Because condominium association rules can be changed, and thus assigned condominium parking spaces can, in theory, be re-assigned, assigned parking is the least favorable method for holding title to a parking space. In addition, a title company will generally not provide title insurance on assigned parking spaces. To fully determine the nature and extent of the rights of condominium unit owners in an assigned parking space, it is necessary to make a detailed review of the condominium’s declaration, by-laws, and rules and regulations.
Limited Common Element Parking
More common than assigned parking are parking spaces that are owned as limited common elements. The Illinois Condominium Property act at 765 ILCS 605/2(s) defines “Limited Common Elements” as “a portion of the common elements so designated in the declaration as being reserved for the use of a certain unit or units to the exclusion of other units, including but not limited to balconies, terraces, patios and parking spaces or facilities.” Can someone translate that into English? I’ll be glad to. A limited common element (also known as an LCE) is still part of the common elements (ie. the part of the condominium project owned by everyone) however, the condominium declaration (think of the declaration as the rule book governing the condominium project) expressly limits the use of the common element (in this case, the parking space) to a certain unit. It is said that an LCE parking space is appurtenant (or belonging to) to the ownership of the condominium unit.
Typically, in the declaration of condominium or in the plat of condominium (the map or survey of the condominium project that is usually attached to the declaration), a particular parking space is linked or connected to the ownership of one specific condominium unit. Oftentimes, the designation will be made in either list form in the declaration or will be drawn directly on the plat.
The LCE is also specifically included as part of the “legal description” of the real property owned by the buyer on the deed. Limited common element parking spaces are insured on an owner’s title insurance policy. Sometimes the fact that the LCE parking is included as part of the legal description on the deed confuses condo buyers who mistakenly believe that a space listed on the deed is “deeded parking”. This confusion comes from the terminology and does not mean that an LCE space is “deeded parking”. In addition, although the condominium declaration, by-laws, rules and regulations may set out procedures or limitations, limited common elements can usually be transferred. The transfer of a limited common element (assuming it is allowed) is usually limited to other condominium unit owners within the condominium. Remember, the limited common element has to be linked with an actual condominium unit, so the LCE parking cannot be sold or transferred to an outsider. The method for the transfer is an amendment to the condominium declaration. This procedure is usually done by the seller’s attorney in cooperation with the association’s attorney and is not a “common” procedure. The unit owners buying and selling are usually required by the association to bear the costs of the transfer. Because LCE parking is “insurable”, transferable, and specifically listed in the condominium unit’s legal description, it is generally preferable to assigned parking.
A deeded parking space is one that is created just like any other condominium unit. It is specified in the declaration and plat as an actual condominium unit and is fully owned by the eventual owner. A deeded space, by its very nature, is not part of the common elements nor is it a limited common element. Legally, it is no different than a condominium dwelling unit.
Because a deeded space is an actual condominium unit, the owner of a deeded parking space will have to pay real estate taxes on the parking space. The space will have its own permanent index number (PIN) with the county. The parking space will also usually have to pay some portion of regular monthly condominium assessments and may even be responsible for a share of any special assessment confirmed by the association.
Depending on the declaration, bylaws, and rules and regulations of the association, a deeded parking space may or may not be freely transferable. Even though the space is a condominium unit, some associations impose transfer restrictions, procedures, limitations, or requirements. Deeded parking has its own legal description and can be separately insured on an owner’s title insurance policy. Because the space is owned by its owner, an association cannot retake or reassign the space. It is generally the most favored form of ownership for a parking space.
Why does this matter?
During the condominium building boom of the 2000s, many condominium projects were initiated in the City of Chicago. Some developers used assigned spaces, others used limited common element spaces, and still others maximized their returns by selling deeded spaces. Most developers did this correctly. Some did not. In the wake of the real estate crash, some associations fell apart. Sometimes records of space assignments were not kept. Some owners and associations didn’t really understand the repercussions of how their building’s parking was titled and made mistakes.
As a result, today we are finding mistakes from the past. Sometimes developers or subsequent sellers of condo units with LCE spaces failed to include the LCE in legal descriptions on sale deeds. Sometimes the parking space number on the physical space doesn’t match the numbering on the plat. Sometimes building owners have been parking in the wrong spot for years without even knowing it. Sometimes the same space was deeded by a developer more than once (that’s a story for another day!).
As a result, Buyers need to make a detailed examination of their specific parking situation. If they don’t, it is possible for complications to arise. Buyers need to be aware of what, exactly, they are buying. Condominium documents can be daunting to read and condominium plats can be confusing to interpret. A real estate attorney can help a buyer understand what they are buying and can help to interpret confusing rules and regulations. This can help to avoid costly and frustrating errors.
If you are purchasing a condominium with a parking space and are interested in exploring whether our firm can help you with your acquisition or if you are a condominium owner who needs to sell a unit and a space or just a space, please feel free to contact us to see if we are a match to assist you.