Class action law suit against MC: IL supreme Court Reverses Apelllet ruling

Channon v. Westward Management, Inc., a case from Illinois issued on Nov. 28, 2022, an owner sued the management company for charging an excessive fee. The supreme court ruled their version of our Condo Act prohibited an owner from suing a management company as they have no contractual relationship with the owner, so it can charge what it wants.
HOWEVER, THE COURT NOTED OWNERS CAN SUE THE BOARD OF DIRECTORS FOR ALLOWING EXCESSIVE FEES TO BE CHARGED.

https://www.seacoastonline.com/story/business/2023/01/12/condo-column-case-law-update/69803018007/?fbclid=IwAR19bNteSMiLhZX8dFt6gqn2Nu0-cr8V7Ltz7yM1EhcgGm8C_iJpc55oLS4

scroll half way down to read the entire court text.

So what's next? Class action lawsuit against the HOA board?

I find it amazing that the entire decision was based on the courts interpretation on who the law was meant to protect. I think the apellet court got it right when it let the Homeowner win/sue against the MC.

What you provided above says the homeowner can sue the Board or directors and not the MC.

I prefer to get info directly from the documents themselves vs. news articles on the issue.

If you prefer the same, here are some links:

2020 IL District Court Ruling
Channons' motion to remand (Dkt. No. 14) is granted. This action is remanded to the Circuit Court of Cook County, Illinois, Chancery Division

2021 IL Appellate Court Ruling
our [the courts] answer to the certified question is that section 22.1 of the Condominium Property Act (765 ILCS 605/22.1 (West 2016)) provides an implied cause of action in favor of a condominium unit seller against a property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed to a prospective buyer under that statute.

2022 IL Supreme Court Ruling
we [the court] answer the certified question in the negative and reverse the judgment of the appellate court, and remand the cause to the circuit court for further proceedings consistent with this opinion.

What the Illinois Supreme Court said is that the plaintiffs did not pursue a potential statutory claim against the association or its board. The claim would potentially be for violating the statute's requirement that, "A reasonable fee, not to exceed $375, covering the direct out-of-pocket cost of providing such information and copying may be charged by the association or its Board of Managers to the unit seller for providing such information." See page 7, paragraph 20 of the decision here: https://www.wilsonelser.com/writable/files/Client_Alerts/channon_v._westward_management_inc._2022_il_128040_277808740.1_.pdf

yep which is ridiculous. If anything the MC should be held to a higher standard because they of all people should know the laws. they are paid "professionals" not volunteers.

cause in this case the MC broke the law and charged more than they legally could. Probably cause they thought no one would notice. If the lawmakers set a fee limit the MC should know about that. Otherwise!
MC can charge whatever the hell they want?

From my reading of the available court documents:

That question was never ruled upon.
Hence, until an actual ruling occurs, what is a reasonable charge in this case is left as an unknown.

The issue decided by the appellate and supreme courts of IL was if the Seller, as well as the purchaser, were protected under the applicable statute and whom should the legal action be directed at.

Regarding reasonable charges, the Legislature amended the statute and put a cap of $375.
Again, it is unknown what the statute said at the time the legal action began.

for those that do not want to sign up to read the article it is below. the article is outdated because in fall of 2022 the State supreme court overrulled the case and said plantiff had to sue the BOD, not the MC.
Jan 2022

Every condominium owner, director and property manager will be impacted by a recent Appellate Court decision in the case of Channon v. Westward Management, Inc. It gave every condominium seller the right to sue the property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed to a prospective buyer.

This case arose out of a very common fact pattern. Plaintiffs filed a class action lawsuit against the property management agent. Plaintiffs alleged that, when they sold their unit in 2016, the agent charged excessive and unreasonable fees totaling $245 to provide them with the documents and other information they were required to provide to the buyers of their unit.

The Appellate Court did not rule whether the $245 that plaintiffs paid to defendant was indeed excessive and unreasonable. Plaintiffs will still have to argue that issue back at the trial court.

The Appellate Court recognized a new cause of action in favor of condominium sellers. Previously, Illinois courts case extended such protection to buyers only. At first sight, this opinion may appear a mere extension of rights from current buyers to those same buyers who will one day become sellers. However, any newly recognized cause of action will excite prospective litigants to take their grievances to court. It should also be easier to certify a class of “sellers” (past and present) within a condominium association that it would be for a group of similarly situated “buyers”. In real life, it is seller who pays the bulk of disclosure fees. If buyer is asked to pay a disclosure fee which buyer deems excessive, a seller may be forced to pay it with the hope of not losing the deal.

Finally, this case spotlights the relationship between condominium associations, their boards of directors, and the property managers that they hire. It is not just the condominium owners who are impacted by this decision, but the board members as well. If a property manager is now exposed to liability for the fees that it charges in connection with producing disclosures with each sale, it will certainly try to shift that responsibility back to the association and the board of directors. The directors will have to revisit soon the issue of protecting themselves from property managers’ indemnification claims under management agreements.

From your link, "with the Supreme Court having spoken on the issue [of whether the plaintiffs have standing to sue under the the condo act's provisions], defense counsel [for management companies] in those cases [where other plaintiffs sue management companies] will likely seek dismissal based on this Opinion."

The plaintiffs also sued the MC under the Consumer Fraud and Deceptive Business Practices Act (Fraud Act) (815 ILCS 505/1 et seq.). This part of the lawsuit is still in play.

Thanks for the links to the lower court decisions, Tim. It appears the plaintiffs were billed in 2019 or 2018. You're right that the condo statute section being discussed here has changed. Back in 2018 or 2019, with regard to how much a condo association could charge, this is what the condo statute said:

"A reasonable fee covering the direct out-of-pocket cost of providing such information and copying may be charged by the association or its Board of Managers to the unit seller for providing such information." https://law.justia.com/codes/illinois/2019/chapter-765/act-765-ilcs-605/

Ellen you wrote:
The price was set not so much by the Management Company here but by negotiation between the board and the MC, or possibly by lack of oversight by the board. Owners not liking this can replace the board.

I'd bet it was lack of oversight by the board. The few MC I've talked to do not even discuss what the closing doc fees are. No monetray amount is even mentioned in the contract. My MC's own agreement on this issue is a one sentenance that says the upon reqest and fee they will get the docs. Vague as heck.

Owners can't replace the board over a policy they do not know about.
And what percentage of owners even read the 30 page long mortgage document stack during closing
What percentage if they caught unfair fees would take the effort to rally a community they moved out of to do something?

MC most likely caused this and it's sad the court didn't hold them accountable.

Wendy,

You must use that site a lot.
I didn't have to sign up to read the article.

If you went to your bank and they charged $245 to look up your account balance you'd be crying a storm. But since you overcharge sellers you have blinders on and think your actions are justified. Never underestimate how powerful the law of self interest is. I've calculated our current mc has racked up over $10k for emailing our hoas docs. They are freaking free to get off our website and haven't changed for 25 years. You call that an honest 3 minutes of work but everyone else calls it blatantly tKing advantage of people

Shouldn't the fees the MC charges be approved or negotiated by the HOA. It does seem kind of odd that the MC would charge so much for documents that
the cost is a burden on buyers and the like. Most states have sunset laws that prohibit charging exuberant fees to procure documents.

Every contract is written to benefit those who wrote it.
Every contract can be negotiated prior to signing.
Some negotiations will be successful and some will not.
Too much negotiations may have an offer removed.

The filling out of form for closing is simple. We didn't charge for that.

We did charge for the Disclosure package, see VA § 55.1-1809 if interested in the contents.
Our governing docs were printed and bound.

Wendy

You should get copies of your residents (you know the ones that no longer live there and pay dues), and get copies of their HUD-! Settlement Statements and look at all the charges on those resale transactions, start a crusade against all those companies charging all those garbabe fees. For example, title insurance, $3000.00. I rented a 1200 sq ft offce, not own a 12 story office with my name on the top floor.

I agree it's not all that big a deal in NC. I was just wondering if you yourself had stepped up and offered to do the work for free. You have.

I'm aware you use alliance and ready Resale. You've mentioned it before

I don't use Ready

If we could prove that living within an HOA added 20% in resale value to your home, shouldn't the HOA be entitled to a share of your profit?

You love to put your own spin to suit your narrative. Have at it. But, I correctly said HOA, NOT MC!