Legal Question in Real Estate Law in Illinois

1. You should get the association's ruling (both denying the right to "rent" and how to avoid this issue) in writing. Perhaps grandpa has a copy of the declaration/by-laws/rules that's current; if not the association or its management company/agent should (grandpa may have to request it). REASON: (a) Taking legal action on an "oral" statement of policy or taking the association's advice on a legal matter is really not the way to do; for all you know the association is misreading its own governing documents. (b) It would be highly unusual for an association to prohibit family members (your friend) from occupying grandpa's condo, but it is possible especially if it is a "55+" community (special rules for certain "senior" housing). (c) Just because your friend is or becomes (through a deed process) entitled to occupy, that doesn't include you - you'd still be the non-owner and this could create a conflict of interest between you and your friend on this that could cause problems. (d) It doesn't make sense that it would be ok for your friend to occupy with you (as what, a renter?) but not the grandchild and friend? Again something sounds amiss.

2. As you can see from the analysis above, it could be more complicate that it appears on its "face". Plus, there are title insurance, property tax, transfer tax and other tax consequences to both grandpa and your friend. If it is a "gift" then there may still be tax consequences. If there's a mortgage loan a deed of any portion of ownership could be a violation of the mortgage loan documents. Preparing a deed and getting it recorded can be done in a week's time or less; that's the least of the issues. Plus, as noted, if this happens to be a "55+" community, grandpa could wind up becoming responsible for the entire development's falling out of compliance with federal law.

3. It may be as simple as the association says but any attorney would want to review the situation appropriately before concurring. In the end it generally doesn't pay to be penny-wise and pound foolish.