A measure aimed at cutting costs and providing certainty for buyers of foreclosed condo units is still alive even though Gov. Patrick J. Quinn this week refused to sign it without some tweaks.

In reality, Quinn may have killed the plan by using an amendatory veto to change language that, if approved, would force banks to bear some of the costs of distressed condos during a sale.

Under Illinois law, buyers foot the bill for a certain amount of unpaid assessments and special fees owed by the previous owner of a foreclosed condo.

The Condominium Property Act, as it now stands, allows condo associations to charge buyers of foreclosed units up to six months of unpaid regular assessments — plus late fees, special assessments and fees for attorneys hired in legal claims against previous owners.

Senate Bill 2264, passed by the legislature this spring and backed by the Illinois State Bar Association and Illinois Association of Realtors among others, would limit the buyer’s responsibility to no more than the cost of nine months’ worth of regular assessments.

In most instances, the legislation would eliminate the added-on late fees, attorney costs and special assessments for the buyer.

The bill would also force condo boards to provide costs and other information to prospective buyers within a shorter time frame.

But condo associations said the bill would force them to raise fees on the rest of their owners because they wouldn’t be able to recoup all their losses from unpaid assessments.

On Tuesday, Quinn sided with the condo associations.

His veto language would keep the nine-month cap proposed in the bill but allow condo associations to charge lenders who foreclose on condos for any costs that exceed that limit.

“As [g]overnor, it is my duty to ensure that people can stay in their homes. Any changes to the foreclosure process must ensure that the interests of homeowners are protected and that the proper entity bears the cost when someone else loses their home,” he said in a veto message.

He said that while the nine-month stipulation was reasonable, the bill “would force the rest of the homeowners in the condominium association to bear the costs of a foreclosure.”

The legislation now goes back to the General Assembly, which could accept Quinn’s changes by a simple majority vote, override them with three-fifths support in both chambers or let the measure die.

Groups such as the Illinois League of Financial Institutions and the Illinois Credit Union League supported the bill when it passed originally but don’t support Quinn’s changes that put lenders on the hook.

Ashley R. Niebur, manager of state government affairs for the credit union group, said the organization is disappointed by Quinn’s move, and the increased cost to lenders will ultimately be passed to borrowers.

“The (original bill) significantly improved a bad process, so the amendatory veto kind of destroys what we were coming in to have the bill do,” Niebur said. “We need to have conversations with the sponsors to see where they want to go.”

In addition, other groups who supported the initial legislation — which passed by a razor-thin margin — are also disappointed.

“It appears to be absolutely unworkable. It makes current law worse on the purchaser, and it’s going to kill any lending for condominium units for new buyers,” said James R. Covington III, the top lobbyist for the Illinois State Bar Association.

Joel L. Chupack, a partner at Heinrich & Kramer P.C. who drafted the original bill, said the legislation is an attempt to provide clarity to a process in which prices “sometimes are not disclosed until either at or immediately before the closing.”

He said the current law leaves purchasers in a no-win situation.

“They sign a contract, they’ve got the loan. They’re sitting at the closing table. All of a sudden the seller’s attorney comes with a letter that has a heretofore unknown amount due,” Chupack said.

“So the purchasers find themselves in a Catch-22. If they don’t go ahead with the deal, they go into default, and if they do, they come out thousands of dollars in debt.”

David C. Hartwell, founding partner at Penland & Hartwell LLC who specializes in community association law, said unless the legislature overrides Quinn’s veto, the governor’s move makes condo groups the big winner in the debate.

Whether they’re paid by buyers or a combination of buyers and lenders, they can recoup their losses under the current law or if Quinn’s changes are approved by the legislature.

“I think the community association organization as a whole is very pleased that Governor Quinn listened to what they have to say,” he said.

Chupack said if the governor’s changes are approved, it would ultimately hurt anybody looking to purchase a condo.

“That’s because no lender out there will ever make a loan on a condominium unit knowing that if this unit goes into foreclosure, the lender will have to pick up anything more than nine months of regular monthly assessments,” he said.

He said he thought the changes would mean that fewer units would be purchased and financed and would ultimately result in higher costs for homeowners anyway.

“So it’s really not in the best interests of anybody,” he said.