The purpose of this article is to discuss common disputes between condominium owners and condominium associations, condominium boards, and individual members of condominium boards in Illinois. We will provide an overview of the primary sources of litigation between condominium owners and condominium associations, as well as an explanation of how such litigation is typically handled according to Illinois law.
First, let’s discuss the source of condominium law in Illinois. The Condominium Property Act, 765 ILCS 605/1, et seq. Is the Illinois statute governing condominium associations. In addition to the Condominium Property Act, the relationship between condominium owners and the condominium association is governed by three documents that are particular to each condominium association: the condominium declaration, the condominium association’s bylaws, and the rules and regulations of the condominium association.
The declaration establishes the rights and obligations of unit owners and sets forth any restrictions on the use of the property. The bylaws establish how the condominium association is to be managed. If there is a conflict between the bylaws and the declaration, the declaration controls. The rules and regulations promulgated by the condominium association’s board set forth the restrictions on day-to-day interactions between unit owners. In determining how a dispute between a condominium owner and the condominium association is to be resolved, the parties must refer to the Condominium Property Act, the declaration, the bylaws, and the rules and regulations as a whole.
In addition, condominium associations have the responsibilities imposed upon a not-for-profit corporation by the Not For Profit Corporation Act, whether or not the association is incorporated. To the extent that the Not For Profit Corporation Act conflicts with the Condominium Property Act, the Condominium Property Act controls with respect to condominium associations.
Below, we will discuss some of the most common issues between Illinois condominium associations and unit owners.
The Condominium Property Act and the Illinois forcible entry and detainer statute (735 ILCS 5/901, et seq.) establish the process for a condominium board to deal with a unit owner’s failure to meet his or her obligations. If a unit owner fails to make a timely payment of an assessment, the amount due is considered a lien on the unit owner’s interest in the property, upon which the board can foreclose. This means that the board of members can initiate an eviction action if the owner fails to pay an assessment when due.
One of the most common types of disputes between a condominium owner and a condominium board is an allegation that the board’s actions have violated the declaration, the bylaws, or the rules and regulations. This type of dispute claims that the board failed to give proper notice of a potential action or a vote prior to acting, that the board failed to follow the procedures to obtain a necessary vote prior to taking action, or that the board took an action that violates the rules set forth in the defining documents.
A common defense to claims that the board breached the governing document is the “business judgement defense.” Courts will not penalize boards or board members for exercising their business judgment in interpreting or acting on the government documents if the board’s action was reasonable. Another defense is reasonable reliance by the board on the board’s attorney’s recommendations.
Another common claim against condominium boards is breach of fiduciary duty. The elements of a breach of fiduciary duty claim are: (1) the existence of a fiduciary duty, (2) a breach of that duty; and (3) damages to the claimant caused by the breach. Condominium board members and the board itself have a fiduciary duty to exercise care and act in the interests of the condominium owners. A breach of fiduciary duty may be either intentional or negligent, and the claim can be stated against either the board or its individual members, or both.
While the board itself can be held liable for a negligent breach of fiduciary, the individual members of the board cannot be held liable for a negligent breach of fiduciary duty. The condominium declaration may limit the fiduciary duty for which the board is responsible, for example a breach of the duty may be limited to willful misconduct. Examples of breach of fiduciary duty claims that have been upheld are claims against directors who violate the bylaws and against boards who fail to make requested financial records available to owners.
The use of condominium units can be restricted by the declaration, the rules and regulations, or by board action, so long as the restriction is non-discriminatory and applies to all unit owners. Such restrictions are strictly construed, but typically upheld. Associations may place reasonable restrictions on the use of common areas.
One specific situation has become particularly relevant in recent years: condominium associations can prohibit leasing of units by board action or by a vote of the membership. If the restriction is passed by a vote of the membership, it is presumed to be valid and will not be overturned by a court unless the restriction is shown to be arbitrary, against public policy, or violative of some fundamental constitutional right.
On the other hand, if the restriction is passed by the board without a general membership vote, or if the board has some discretion in enforcing the restriction, courts will only uphold the restriction if it is affirmatively shown to be reasonable in its purpose and application.
It is unlawful to refuse to sell or rent or otherwise deny a dwelling to any person because of race, color, religion, sex, familial status or national origin according to the FHA. In addition, the Illinois Condominium Property Act prohibits association rules that prevent the reasonable accommodation of religion. The FHA also protects unit owners from discriminatory enforcement of rules, even if the rules are not discriminatory on their face.