Buying a home or investing in real estate is often a momentous life event. Condominium living offers the convenience and amenities of a community-funded association with relatively affordable unit prices. Popular as a home, a second home or a pure investment asset as a rental unit, condominiums are a triumph of innovation in real property law in that they have lowered to barrier to entry into the franchise of real property ownership to a greater portion of the general public.
Yet condo owners, and all homeowners, are under siege in Chicago. Well-intentioned and populist activism by housing advocates for rental price caps and more stringent eviction restrictions comes at the price of condominium unit owners, whose hands are already tied with existing RLTO regulations. The City’s draconian anti-Airbnb ordinance is another attack on middle class and working class rights. The City, County and State’s need for increased tax revenue comes as a crushing blow from the top, as property tax burdens have increased.
An additional hidden cost on condo unit owners are ever rising condo association assessments. The dirty secret in condo land is that there are only a handful of big players in the property management sphere and they tend to gravitate to the same few lawyers or law firms who focus on representing Management in condo disputes. Management includes both the property manager and the condo board itself. Control of the condo board by a dominant individual or a small gang of incumbents bears witness to the cautionary adage: Absolute power corrupts absolutely.
Thus, the Illinois Condominium Property Act, 765 ILCS 605/1, et seq., attempts to strike a balance between the need for efficient and effective community governance and the rights of condo unit owners. However. It does not go far enough.
Individual condo owners are weak and divided, while Management is strong and politically powerful. Efforts to equalize the power imbalance are met with exaggerated cries of condo association boards being beset with the claims of disgruntled and litigious unit owners.
I have the privilege of focusing my practice on being a fierce advocate for the unheard and fighter for the disempowered in condo contexts and otherwise. I have represented dozens of condo owners in protecting and prosecuting their rights.
Nothing can be more stressful or costly to the health of a condo association community than an out of control or corrupt board. While bullying may work 80% of the time, 20% of the time it results in expensive litigation that comes at the cost of the very community being harmed - whether the plaintiff wins or loses.
These combined factors have not only made condo ownership less desirable, but have made the development of new condo buildings less profitable. The recent trend is towards condo deconversions - decreasing the number of “mom and pop” landlords who are more likely to keep rents low and be flexible with tenants in favor of large corporate apartment buildings. These large apartment buildings will hire the very same property management firms that caused the condominium to deconvert in the first place.
That is why I advocate the following Condo Unit Owner Bill of Rights:
1. Expanded 22.1 Disclosures on Financial Health of Association: A prospective purchaser of a condo unit should be entitled to full disclosures with respect to the governance history of the condominium, beyond what is currently required to be disclosed under Section 22.1. Specifically, while condo boards are currently required to disclose anticipated special assessments, they are not clearly required to disclose the existence of long term loans drawn to finance capital expenditures or used as operating capital. Thus, prepurchase disclosures only paint a partial picture of the financial health of a condo community.
2. Fee Shifting Against Board If Violations or Fines Are Reversed in Court. Currently, Section 9(g) of the Illinois Condominium Property Act, 765 ILCS 605/1, et seq., provides that if a condominium unit owner is found by the Board to be in violation of the rules or condominium instruments, and a fine is imposed against him or her, the amount of that fine can become a lien on the owner's unit, the same as unpaid assessments. If the Association subsequently incurs attorneys' fees and costs of collection of that balance due and owing, the Association is allowed to also add onto that balance the Association's attorneys' fees and costs. However, if a unit owner challenges that finding of a violation and/or fine in court, and wins, the unit owner may be faced with paying more in attorneys' fees and costs to challenge that fine than the amount of the fine itself. This leaves unit owners in a Catch-22 when faced with oppressive or retaliatory fines that are less than the cost of litigation.
There is no good reason why unit owners should be placed in this dilemma. If a unit owner is able to challenge a violation or fine in court - and win - despite the tremendous defense that courts give to condo boards, the unit owner should be made whole for their troubles. One simple change could deter rogue or oppressive boards from using their rules / violation process as weapons of retaliation against dissident or minority unit owners within an association.
3. Punitive Damages Based On Attorneys' Fees and Costs for Intentional Breaches of FIduciary Duty. As a condominium association board member myself, I am sympathetic to the judgment calls that volunteer board members are being asked to make in their administration of a condominium. I get it. But when condominium board members, officers or managers cross the line, and maliciously or wrongfully violate their fiduciary duties to unit owners - for example, by cheating in an election - there is often no clear amount of compensatory damages that can rectify that harm. The law recognizes that harms for which monetary damages are inadequate, and uses the concept of "nominal damages" as a placeholder. Courts also recognize that punitive damage awards may be appropriate in such cases to deter rogue or oppressive boards from willfully violating fiduciary duties in the future. Such punitive damages can be measured as a multiple of the plaintiff's attorneys' fees and costs in bringing such action, especially in cases where the compensatory amount would not have ad deterrent effect. The many rules, procedures, obligations and restrictions on the conduct of condominium associations and their boards would otherwise be rendered meaningless. And this would violate Article I, Section 12 of the Bill of Rights in the Illinois State Constitution of 1970, which provides:
Every person shall find a certain remedy in the laws for all injuries and wrongs which he receives to his person, privacy, property or reputation. He shall obtain justice by law, freely, completely, and promptly.
4. Condo Unit Owner Rights To Unit Owner True Contact Information. On March 28, 2018, the City of Chicago enacted the Condominium Owners Privacy Ordinance, or "COPO," in reaction to Illinois General Assembly's amendments to the Illinois Condominium Property Act that expanded condominium unit owners' rights to obtain information about the condominium and the community from the Association. In particular, the amendments required Associations to disclose to requesting unit owners a list of not only the names, unit numbers and weighted percentage votes, but also the unit owners' disclosed email addresses and phone numbers, provided such information would not be used for commercial purposes.
The COPO was meant to address concerns about unit owner privacy from their fellow unit owners. This concern was misplaced from the beginning because Management - including fellow unit owner board members - would still have unfettered access to this "true contact information" - emails and cell phone numbers. Additionally, the original COPO went far beyond attempting to restrict unit owners' rights to true contact information - it also purported to restrict unit owner rights to inspect and audit election information.
On March 31, 2018, I filed a lawsuit in the Circuit Court of Cook County to enjoin and overturn this overbroad and misbegotten law. Recognizing their error, the City of Chicago repealed the most egregious portions of the law restricting unit owner rights to ballots and election information, by way of amendment to the COPO. However, the restrictions on unit owner email addresses and telephone numbers remains.
Unit owners should have equal access to the same basic contact information about their fellow unit owners that board members, as Management insiders, have. To hold otherwise places "insiders" over "outsiders," and strengthens the already strong hands of incumbent board members over the rest of the community.
5. Freedom of Speech and Extension of the Illinois Citizens Participation Act to Condominium Fines and Actions. Condominium associations are mini-governments that are not only creatures of state law, but have powers that include collecting assessments, levying fines, enjoining behavior, evicting unit owners from their homes and even foreclosing on unit owners and forcing a sale. The Illinois Citizens Participation Act, 735 ILCS 110/1, et seq. declares that
The public policy of the State of Illinois that the constitutional rights of citizens and organizations to be involved and participate freely in the process of government must be encouraged and safeguarded with great diligence.
Actions by those clothed with governmental powers to retaliate against citizens participating in or petitioning government are penalized with dismissal of retaliatory lawsuits and payment of the citizen's attorneys' fees and costs. However, the Citizens Participation Act only applies to civil actions or lawsuits filed in court. Since thousands of Chicagoans live under quasi-state authority within their condominium association communities, they should enjoy the same rights to participate freely in their hyper-local community associations without fear of retaliatory actions and fines by their condo boards.
These are just a few suggested reforms that could not only improve condominium governance, but also relieve some of the undue pressure that has been placed squarely on the shoulders of middle-class Chicagoans and their tenants.