When Lisa Carlson stopped paying her condominium dues six years ago, all she wanted was to force her homeowners association to fix a leak that was damaging her unit as she was trying to sell the property.
“I just wanted to sell my place and move, and I was being held in prison,” Carlson said. “I couldn’t sell my place; (the board) wouldn’t fix the damage.”
Her act of protest would spark one legal battle that would lead all the way to the state Supreme Court and prompt a hearing scheduled for Wednesday on proposed legislation inspired by her case to expand the rights of condo owners.
Her actions launched a separate legal fight in which a judge awarded $195,000 in damages — including $25,000 in punitive damages against the former board president in order to deter her and other homeowners association boards from “allowing personal malice to influence the making of important decisions affecting the common elements.”
“The board did not want to take ownership of the problem, and there has to be something in the law where if an owner has a proven problem like water damage, that the board has to be concerned and take action to fix the damage,” said Carlson, who has since moved out of her unit in the Spanish Courts II condominiums in Highland Park.
Opponents to a series of bills proposed by state Rep. Scott Drury, D-Highwood, claim the legislation would expose homeowners associations and their boards to a flood of frivolous lawsuits from disgruntled unit owners, taxing the courts with unnecessary litigation and draining the associations of vital financial resources
Community associations can range in size from a small three-flat to massive high-rises or sprawling retirement communities. While it is difficult to determine how many community association properties exist in Illinois, there are more than a half-million units in Cook County alone, according to the county assessor’s office.
Prompted in part by Carlson’s case, Drury said a trio of bills he filed last month would level the playing field for property owners in disputes with their homeowners associations.
Among other things, they would enable unit owners who withhold their assessment fees to defend themselves against an eviction suit by offering evidence of the board’s failure to address major problems with the common areas all owners share, or other significant breaches of contract. They would also allow unit owners to collect attorneys’ fees from their associations if they prevail in court, and would bar associations from simply tacking on legal bills to the unit owners’ assessments without an order from the court.
Currently, owners of condominiums or town homes must continue to pay their assessments to their homeowners associations, even if the associations are failing to keep up the common areas that all unit owners share. Failure to do so enables associations to obtain a court order for Forcible Entry and Detainer, which allows them to evict unit owners and rent out their properties for up to 13 months until the assessments are paid. Even after they are paid, unit owners may be forced to pay their associations’ legal bills.
The Tribune wrote about Carlson’s legal battle in 2013, which included an Illinois 2nd District Appellate Court decision that Carlson’s condominium association was in material breach of contract due to its failure to address the water damage that was ruining Carlson’s top-floor unit.
A year later, in a 4-3 decision, the state Supreme Court reversed the lower court’s decision, saying Carlson and others in her situation have an absolute duty to pay their assessments, after which they can file suit to address their concerns with the board. The case is once again before the appeals court.
In the other case, Carlson and her attorney are still fighting to collect approximately $200,000 in legal fees from the condo board.
Two of Illinois’ largest community association trade organizations have expressed opposition to Drury’s proposed legislation.
“I think (our) position is that the Supreme Court made the right call,” said attorney Patrick Costello, who co-chairs the legislative action committee for the Community Associations Institute-Illinois. “If the unit owner believes the association is breaking any of its obligations, there’s nothing to preclude the unit owner from pursuing those claims in court.”
Gael Menneke, executive director of the Association of Condominium, Townhouse and Homeowners Associations, said that while she sympathizes with unit owners who have unresponsive boards, the proposed legislation will encourage disgruntled owners to withhold assessments, starving the association of the funds it needs to cover shared expenses.
“If every owner, or a majority of owners, decided to act in that manner and not pay their assessments, you don’t have any money coming in to support the community as a whole,” Menneke said.
Drury believes those concerns are unfounded because a unit owner who brings a frivolous lawsuit could get hit with substantial legal fees.
“I just think those are talking points, but they’re not accurate,” Drury said. “The concern I think CAI has is that they have worked very hard to put their thumb on the scale so that it weighs in favor of the associations and (their) lawyers. And they’re terrified of the scale being balanced once again.”
Carlson’s attorney, Norm Lerum, said his client’s case shows the need for reform because current laws place too much financial risk on unit owners.
“Based on the calls that I receive, a lot of people just can’t afford to litigate and they get run over,” Lerum said. “All this (legislation) does is it just levels the playing field … I think it’s going to reduce litigation because for the first time there’s risk on both sides.”
Carlson is hopeful the legislation will help condo owners and boards avoid the kind of protracted legal battle that has entangled her.
“What I want to do is make sure that what happened to me will never happen to anyone else in the state of Illinois,” she said.