Opinion ID: 4448635
Heading Depth: 2
Heading Rank: 1

Heading: Condominium Act Claim

Text: The Condominium Act claim rests on allegations that HomeWise’s fee for an electronic copy of the required disclosure documents exceeds the “reasonable fee” that condominium associations are permitted to charge under section 22.1(c). We note for starters that the associations are not defendants; this suit is against the property-management ﬁrm and its third-party online document vendor. Our ﬁrst question, however, is whether the plaintiﬀs have a right of action to enforce section 22.1. The statute doesn’t provide an express private remedy, so the plaintiﬀs advance an argument that a right of action exists by necessary implication. Illinois courts will recognize an implied right of action only if (1) the plaintiﬀ is within the class of members the statute was enacted to beneﬁt; (2) the plaintiﬀ’s injury is one the statute was designed to prevent; (3) a private right of action is consistent with the underlying purpose of the statute; and (4) inferring a private right of action is necessary to provide an adequate remedy for statutory violations. Fisher v. Lexington Health Care, Inc., 722 N.E.2d 1115, 1117 (Ill. 1999). All four factors must be met before a court will recognize an implied remedy. Marque Medicos Fullerton, LLC v. Zurich Am. Ins. Co., 83 N.E.3d 1027, 1042 (Ill. App. Ct. 2017). Not one of them is satisﬁed here. Two decisions of the Illinois Appellate Court largely control the outcome. In Nikolopulos v. Balourdos, the court concluded that section 22.1 “was clearly designed to protect prospective purchasers of condominium units.” 614 N.E.2d No. 18-2150 7 412, 416 (Ill. App. Ct. 1993) (emphasis added). More speciﬁcally, the court held that the statute’s purpose is “to prevent prospective purchasers from buying a unit without being fully informed and satisﬁed with the ﬁnancial stability of the condominium as well as the management, rules[,] and regulations which aﬀect the unit.” Id. The court also determined that implying a right of action for condominium purchasers “is consistent with assuring that a prospective purchaser is fully informed and satisﬁed before he buys a condominium unit.” Id. On this reasoning, the court recognized an implied right of action for prospective condominium purchasers to terminate a sales contract “within a reasonable time after being furnished information revealing previously undisclosed material expenses.” Id. That is, the court authorized a condominium purchaser who is injured by a seller’s violation of the section 22.1 disclosure duty to sue for return of his earnest money plus interest. Id. at 418. By its terms, the implied remedy recognized in Nikolopulos covered condominium purchasers who discover a seller’s section 22.1 violation before closing. In D’Attomo v. Baumbeck, the court extended that holding and recognized an implied right of action for purchasers who discover the violation after closing. 36 N.E.3d 892, 905–07 (Ill. App. Ct. 2015). The court reiterated the two foundational holdings from Nikolopulos: (1) the statute was designed to protect condominium purchasers; and (2) an implied remedy for purchasers aggrieved by a seller’s violation of the statute “is consistent with ensuring that a prospective purchaser is fully informed and satisﬁed with matters aﬀecting the condominium unit.” Id. at 907. The court also reasoned that “[t]he disclosure obligations in section 22.1 would be ineﬀective, as a practical matter, if an aggrieved purchaser has no remedy against a 8 No. 18-2150 seller who conceals a requested disclosure until after the closing.” Id. The court thus recognized an implied remedy for aggrieved buyers “where the seller is alleged to have concealed documents requested by the buyer pursuant to section 22.1, the concealment is not discovered until after the closing, and the nondisclosure materially aﬀects the buyer’s rights in the condominium unit.” Id. The unmistakable takeaway from these two decisions is that section 22.1 is designed to protect the interests of condominium purchasers, not condominium sellers. That’s enough to defeat the plaintiﬀs’ argument for an implied right of action. As owner/sellers they are not within the class of persons the statute was designed to protect, nor have they suﬀered an injury that the statute was designed to prevent. And implying a remedy for condominium sellers is neither consistent with nor necessary to eﬀectuate the statute’s purpose. The plaintiﬀs insist that the reasoning of Nikolopulos and D’Attamo is limited to section 22.1(a), which establishes the unit seller’s disclosure obligation to the buyer. The claim here, in contrast, rests on subsection (c), which allows condominium associations to charge a reasonable fee for providing copies of the disclosure documents to unit sellers. That the fee must be “reasonable” shows that unit sellers are within the class of persons the statute was designed to protect. Or so the argument goes. We’re not persuaded. First, neither Nikolopulos nor D’Attomo distinguishes between subsection (a) and subsection (c). Rather, they discuss only “[t]he disclosure requirements imposed by § 22.1.” D’Attomo, 36 N.E.3d at 905. Moreover, as a general rule of interpretation, Illinois courts No. 18-2150 9 read statutes as a whole rather than focusing on isolated subsections. See Metzger v. DaRosa, 805 N.E.2d 1165, 1169 (Ill. 2004). Reading section 22.1 in this holistic way, subsection (a) of the statute establishes the seller’s duty to disclose an array of important documents to the buyer; subsection (b) requires condominium associations to furnish the required documents to unit owners within 30 days of a written request; and subsection (c) allows associations to charge a reasonable fee for doing so. The statute works as an integrated whole for the beneﬁt of prospective condominium purchasers, not sellers. Given the manifest statutory purpose of transparency for prospective condominium buyers, we cannot conclude that the statute was designed to prevent injury to unit sellers. To the contrary, the statute is plainly designed to protect condominium purchasers against fraud (of the concealment variety) by condominium sellers. Together subsections (b) and (c) implement the disclosure duty in subsection (a) and thus work toward that end. They are not independent entitlements for the beneﬁt of condominium associations and unit sellers. We therefore hold that section 22.1 does not confer an implied right of action on condominium owners. The judge properly dismissed the Condominium Act claim.