10-Apr-17 – A bill in the Illinois House of Representatives that would help unit owners recover attorney’s fees after successfully suing their condominium association has moved forward, passing the Judiciary-Civil Committee on a 7-3 vote.

HB3755 would amend the Illinois Condominium Property Act to allow unit owners to recover “reasonable attorney’s fees and costs” if they are the “substantially prevailing party” in a lawsuit against their condo association, condo board, or any individual member. The law would also apply to arbitration.

58th District Representative Scott Drury, sponsor of the bill, says its purpose is to “level the playing field” and reduce the amount of litigation.

“When both sides have skin in the game, then they will try to work out the disputes,” said Drury (left). “They’ll work it out instead of going to court and thinking they’re going to get a lot of money. At the end of the day, the only ones who benefit from the current regime are the attorneys. But the unit owners and the associations are the ones who lose.”

At a hearing in Springfield on March 23, Ralph Schumann, president of Illinois Real Estate Lawyers Association, comprised of more than 2,500 practicing attorneys, said the bill would “provide a check and balance where one is sorely lacking.”

“Right now, there’s no incentive for an association to do something such as agree to pay for a small repair to head off a larger battle, agree to correct an improper imposition of a fine, because it’s more advantageous for the association attorney to litigate it, rack up the attorney’s fees, and bury that unit owner,” said Schumann (right). “The collateral damage in these kinds of situations can be extensive.”

One HOA familiar with the expense of litigation is Spanish Courts II Condominium Association in Highland Park, about 30 miles north of the Loop. After its board refused to help a unit owner, Lisa Carlson, with a water infiltration problem, a state court found the association in breach of contract, all its board members in breach of fiduciary duty, and that its president, Maria Cassabaum, acted with malice.

Drury, who met with the condo board at Spanish Courts II, says the result of that litigation was “devastating.”

“That association is now bankrupt and unit owners there cannot sell their homes because the homes have become worthless because no bank will give a loan to anybody. No one can get a mortgage. So, unless someone can do a cash sale, their property has become worthless because of this litigation.”

Carlson says the bill will benefit thousands of unit owners in Illinois.

“Most people can’t afford to litigate,” Carlson (left) told state lawmakers. “If HB3755 was the law when I was literally forced to litigate, I am confident that there would not have been prolonged litigation created by the other side if they were informed by their lawyers that I would be awarded fees and expenses if I prevailed in court.”

It would have motivated her condo association to repair the water problem, she says, making it unnecessary to litigate.

Opponent says bill would increase number of lawsuits

HB3755 would end up increasing the number of lawsuits, says an opponent of the bill. Kristofer Kasten, a unit owner, condo board member, and lawyer with Michael C. Kim & Associates of Chicago, says it would encourage “and almost require” associations to file lawsuits.

“This bill is not as simple as its proponents say it is,” said Kasten (right). “If this bill only said prevailing party is entitled to attorney’s fees, then perhaps I wouldn’t be here. But it doesn’t say that, it says something much more. It doesn’t level the playing field, it binds the hands of the association from administering and operating the association, from enforcing its rules and regulations, which it’s obligated to do as part of its fiduciary duty.”

Kasten used as an example an intoxicated unit owner breaking a window in a common area of a condominium. The association could fine the owner, incurring the expense of its attorney, but then decide to suspend the fine if the owner behaves.

“If this bill gets put in place, then the association can’t charge back those attorney’s fees to the unit owner as a compromise. Instead, they’d have to fine them and then they’d file a lawsuit so they can get the attorney’s fees…and so this bill encourages litigation.”

The bill now goes back to the Illinois House for a second reading.