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CBA RECORD
29
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
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.