CBA Record

When condominiums first appeared in Illinois, there was some controversy over who could file suit for construction defects in the common elements. Did the individual owners have to bring suit based on their respective ownership interest in the common elements, or could the condominium association file suit on its own? This questionwas answered in 1979, when the Illinois General Assembly amended the Illinois Condominium Property Act.

T HE LEGISLATURE RECOGNIZEDTHATTHEQUESTION of who could sue was acting as an unjustified barrier to enforcing warranties. This was because individual unit owners, who held small, fractional shares in the common elements, lacked the financial incentive to bring suit to enforce warranties. In response, Illinois enacted Section 9.1(b) of the Act, as follows: The board of managers [of a condominium association] shall have standing and capacity to act in a representative capacity in relation to matters involving the common elements or more than one unit, on behalf of the unit owners, as their interests may appear. 765 ILCS 605/9.1. This amendment made it clear that the individual owners did not themselves need to bring suit to enforce warranties as to common elements. But this provision raised other questions, two of which are addressed in this article. First, if Section 9.1(b) applies, and an association does have standing to assert a claim, do the individual unit owners also have standing? The answer to this question–at least in the First District– is a clear “no.” Under the guiding authority, when Section 9.1(b) confers standing on an association, that standing is exclusive. Second, what is the scope of Section 9.1(b)? The answer to this question is less clear. But the resolution of the question should be informed by the answer to the first. The language of Section 9.1(b) could be read very broadly to cover a much broader swath of claims than the warranty claims the legislature had in mind. Yet, if Section 9.1(b) grants standing to an association, it takes it from the individuals who otherwise would own the claims. Thus, as developed more fully below, it seems that Section 9.1(b) should not be liberally expanded. Rather, it should be limited in its application to those situations where it is necessary to allow an association to bring suit to enforce rights that the individual unit owners would not have sufficient incentive to enforce on their own. This second question has not yet been decided by the Illinois Supreme Court. Worse, it has engendered a conflict between the First and Second Districts of the Illinois Appellate Court. Briefly stated, the First District has adopted an interpretation of Section 9.1(b) that limits it to claims that arise from rights held in common, rather than individual rights. Whereas the Second Circuit appears to have interpreted Section 9.1(b) much more broadly, and included claims arising out of individual rights–such as fraud–within its scope. The uncertainty resulting from these conflicting interpreta-

tions of Section 9.1(b) creates problems in litigating and settling disputes that arguably are covered by Section 9.1(b). We believe that the Illinois Supreme Court should, therefore, take the next opportunity to resolve this conflict and, as shown below, should endorse the interpretation accepted by the First District History of Section 9.1(b) Under common law, it was frequently held that unincorporated condominium associations could not sue on behalf of their mem- bers. As a result, if there was a construction defect in a common element of a condominium, there was often no one willing to incur the expense to bring a lawsuit to require it be corrected because each unit owner individually owned only a small portion of those common elements. Thus, a unit owner suit would bear the entire burden of a lawsuit, but reap only a fraction of the benefit. This created a category of warranty rights that were particularly dif- ficult to enforce. This concern appears to be what drove the legislature to enact Section 9.1(b). The historical notes to the amendment specifically mention that the types of suits that the legislature believed would fall within the scope of Section 9.1(b) were generally construction defect cases, where the defect affected multiple unit owners in the building. These are the types of cases that were economically de-incentivized by the fractional ownership structure of a condominium. The First District’s Interpretation The year after it was enacted, the Illinois Appellate Court had its first opportunity to interpret the scope and meaning of Section 9.1(b) in Tassan v. United Development Corp. , 88 Ill App. 3d 581 (1st Dist. 1980). The Tassan case, interestingly, did not involve a condominium association that was trying to invoke Section 9.1(b) to establish its standing. Rather, Section 9.1(b) was being used defensively by a developer that was trying to defeat the standing of individual unit owner plaintiffs. In Tassan several individual condominium unit owners brought a purported class action on behalf of the unit owners against the developer of the building, alleging that the developer breached the warranties in each unit owner’s purchase contract by failing to properly construct certain common elements. Plaintiffs sought a lump sum award of damages on behalf of the class. The defendant- developer argued that claims like these–for defects in the common

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