Condominium owners cannot stop paying their assessments because they are unhappy about how the property is taken care of, the Illinois Supreme Court ruled March 20.
Such is the verdict in a long-running dispute between a Highland Park condominium association and one of its owners.
Spanish Court Two Condominium Association in 2010 sued Lisa Carlson for nonpayment of assessments under the Forcible Entry and Detainer Act. This law allows associations to take temporary possession of a unit and rent it out until the delinquency is paid. Carlson countersued, citing the association's alleged failure to repair a leaking roof that severely damaged her unit.
The trial court ruled in favor of the association.
The 2nd District Appellate Court in 2012 disagreed. It found the relationship between owners and associations analogous to the relationship between tenants and landlords. Tenants may withhold their rent when a landlord does not live up to the terms of the lease.
The appellate court agreed with Carlson.
The Illinois Supreme Court differed: It said the relationship between a tenant and landlord is created by an agreement of the two parties, while the relationship between an owner and association is created by statute. Under the Illinois Condominium Property Act, board members have a duty to maintain the common elements, and owners have a duty to pay their proportionate shares of the common expenses.
"Because of the interdependence that exists among unit owners, the condominium form of property ownership only works if each unit owner faithfully pays his or her share of the common expenses," the court wrote in a 4-3 opinion.
"The opinion clarifies that the duty to pay assessments exists independently of the board's duties to repair and maintain the common elements," said Spanish Court's attorney, Diane Silverberg of Kovitz Shifrin Nesbit in Buffalo Grove.
Assessments are more appropriately compared to taxes than to rent, said Dawn Bauman, senior vice president of governmental affairs at the Community Associations Institute in Falls Church, Va.
"An association is a nonprofit association with a zero-based budget," she said. "Other unit owners have to pick up the slack and pay for the individual who is not paying, and that's not fair."
The organization filed an amicus curiae, or friend of the court, brief in support of Spanish Court.
In an email to the Tribune, Carlson's attorney, Norman Lerum, advocated amending the condo act. He wrote: "There is an unfair imbalance in favor of a board that fails to fulfill its obligations to maintain or repair common elements. The Court's decision promotes and encourages condominium boards to delay or refuse to repair and maintain common elements of the property. Dysfunctional boards and boards who operate in bad faith can continue to collect all monthly assessments and simply tell the aggrieved condominium owner to spend a lot of money on attorney fees for the purpose of chasing the board in court."
The Illinois Supreme Court noted that owners have several options available for disputing assessment charges and board performance. The options include challenging the association's record-keeping and manner in which the assessment was adopted, taking steps to remove offending board members, seeking election to the board and filing a lawsuit.
Carlson has a separate lawsuit against her board over the water damage that is pending in Lake County.
The verdict is good news for associations, but it does not allow them to shirk their responsibilities, said Jim Stoller, president of The Building Group management company in Chicago.
Stoller expects to see an increase in lawsuits against associations for not properly maintaining property or funding reserves. During the recent recession, many associations delayed or postponed capital projects and still haven't caught up, he said.
"Boards can't hide behind this ruling," he said. "All it says is owners can't withhold assessments. Boards still have to keep up the common elements and put adequate reserves aside."