Court Opinion

ID: 4281505
Source: CourtListenerOpinion
Date Created: 2018-06-05 22:04:34.385649+00
Date Added: 2024-06-11T09:19:55.607092
License: Public Domain

2018 IL App (1st) 170520

                                                                               FIRST DIVISION
                                                                                   June 4, 2018

                                         No. 1-17-0520

SYLVA, LLC,                                         )       Appeal from the Circuit Court of
                                                    )       Cook County
       Plaintiff-Appellee,                          )
                                                    )
v.                                                  )
                                                    )       No. 15 M1 127817
BALDWIN COURT CONDOMINIUM                           )
ASSOCIATION, INC.,                                  )
                                                    )       Honorable Diana Rosario
       Defendant-Appellant.                         )       Judge Presiding

       JUSTICE GRIFFIN delivered the judgment of the court, with opinion.
       Presiding Justice Pierce and Justice Mikva concurred in the judgment and opinion.

                                           OPINION

¶1     Plaintiff, Sylva, LLC (Sylva), bought a condominium unit at a judicial foreclosure sale.

Defendant, Baldwin Court Condominium Association, Inc. (Baldwin Court), demanded that

Sylva pay assessments that accrued during the prior owner’s ownership of the condominium. The 

Condominium Property Act (765 ILCS 605/1 et seq. (West 2012)) imposes a duty on a

foreclosure buyer to pay up to six months of assessments unpaid by the prior owner. Id. 

§ 9(g)(4). In the trial court, Sylva argued that it was not required to pay the assessments that 

accrued during its predecessor’s ownership because the Condominium Property Act requires the

association to sue the predecessor owner for the assessments. The trial court agreed and held that

Sylva was not liable for the back assessments. We hold that the Condominium Property Act does

No. 1-17-0520

not require a condominium association to file suit against the prior owner in order to collect

unpaid assessments from the foreclosure buyer. Therefore, we reverse, and we remand for further

proceedings.

¶2                                   BACKGROUND

¶3     Plaintiff, Sylva, purchased a condominium unit at a foreclosure sale in August 2014.

Defendant, Baldwin Court, demanded that Sylva pay six months of the assessments incurred but

not paid by the previous owner. Sylva paid the requested assessments under protest so that it

could get a letter indicating that there were no liens on the property. Sylva filed this case to

recover the amount that it claims it was wrongfully required to pay.

¶4     The trial court granted summary judgment in favor of Sylva, finding that the statute at

issue required Baldwin Court to have filed suit against the previous owner in order to collect the

back assessments from Sylva. The Illinois Condominium Property Act has a provision that

allows condominium associations to collect up to six months of a prior owner’s unpaid

assessments from a foreclosure buyer.

       “The purchaser of a condominium unit at a judicial foreclosure sale, other than a

       mortgagee, who takes possession of a condominium unit pursuant to a court order

       or a purchaser who acquires title from a mortgagee shall have the duty to pay the

       proportionate share, if any, of the common expenses for the unit which would

       have become due in the absence of any assessment acceleration during the 6

       months immediately preceding institution of an action to enforce the collection of

       assessments, and which remain unpaid by the owner during whose possession the

       assessments accrued.” Id.

The trial court held that the “Association was not allowed to collect under 765 ILCS 605/9(g)(4)

because no action to collect was filed against the former owner.”
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¶5     On appeal, the only issue is whether Baldwin Court did what was necessary to entitle it to

up to six months of unpaid assessments from Sylva. In their briefs, the parties’ singular focus is

on the inclusion of the phrase, “institution of an action to enforce the collection of assessments.”

The parties dispute whether the statute requires that a lawsuit to collect the assessments be filed

against the prior owner as a prerequisite for recovering them from a foreclosure buyer.

¶6     Baldwin Court points out that it took the necessary action to recover under the statute. It

filed a lien against the property, and the lien was recorded. Sylva had notice of lien and of the

unpaid assessments and went forward with the purchase. As the main support for its argument,

Baldwin Court cites the dictionary definitions of “institution” and “action” to conclude that

instituting an action does not have to mean filing a lawsuit.

¶7     On the other side, Sylva relies on a number of instances in case law where “instituting an

action” has been understood to mean filing a lawsuit. Sylva also relies heavily on the synopses of

section 9(g)(4) to support its position that filing a lawsuit against the predecessor owner is a

prerequisite to recovering back assessments under the statute.

¶8                                         ANALYSIS

¶9     The question on appeal is whether section 9(g)(4) of the Condominium Property Act

requires that a foreclosure purchaser pay up to six months of unpaid assessments incurred by the

previous owner if the condominium association does not file a lawsuit to collect the unpaid

assessments against the prior owner. The primary goal in construing a statute is to ascertain and

give effect to the intent of the legislature. Better Government Ass’n v. Illinois High School Ass’n,

2017 IL 121124, ¶ 22. We review a trial court’s interpretation of a statute de novo. J&J Ventures

Gaming, LLC v. Wild, Inc., 2016 IL 119870, ¶ 25.

¶ 10   To paraphrase, section 9(g)(4) states that the purchaser of a condominium unit at a

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judicial foreclosure sale has the duty to pay the unpaid common expenses for the unit during the

6 months immediately preceding the institution of an action to enforce the collection of

assessments. 765 ILCS 605/9(g)(4) (West 2012). Baldwin Court never filed suit to enforce the

collection of assessments against the previous owner. Baldwin Court nonetheless maintains that

it is still entitled to collect back assessments under the statute because it did take action to

collect—it filed a lien claim and sent notice to the prior unit owner.

¶ 11   In other cases, Illinois courts have discussed section 9(g)(4) but have never directly

interpreted the phrase “institution of an action.” The purpose of section 9(g)(4) is to allow

associations to recover a portion of the prior owner’s unpaid assessments from a new third-party

owner. 1010 Lake Shore Ass’n v. Deutsche Bank National Trust Co., 2015 IL 118372, ¶ 32.

Illinois is one of a growing number of states to grant condominium associations previously

unavailable remedies for collecting assessments that became due during the time a defaulting

owner held title. See Andrea J. Boyack, Community Collateral Damage: A Question of

Priorities, 43 Loy. U. Chi. L.J. 53, 100-01 (2011) (discussing the state statutes on association

lien priority for condominium foreclosures).

¶ 12   Although Baldwin Court does not cite any authority that addresses section 9(g)(4), we

have held that a condominium association can recover unpaid assessments for the six months

preceding the association’s action to “enforce its lien.” Wing Street of Arlington Heights

Condominium Ass’n v. Kiss The Chef Holdings, LLC, 2016 IL App (1st) 142563, ¶¶ 21, 23. In

Wing Street, however, it was clear that the condominium association “filed an action to collect

past due assessments” against the unit’s former owner and got a judgment and an order of

possession. Id. ¶ 4. So the question before us here goes beyond our analysis in Wing Street, but

the reasoning applied in that case supports our decision here—that the statute does not require a

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condominium association to file suit against the prior owner to be entitled to collect unpaid

assessments from the new owner under the statute.

¶ 13   In Wing Street, we stated that section 9(g)(4) creates an independent claim for the

association directly against the new owner and that the obligation arises at the time of the

foreclosure purchase. Id. ¶ 23. We held that the statute imposes an independent obligation on

third-party purchasers and, once that obligation is breached, a separate statutory lien under

section 9(g)(4) arises in favor of the association. Id. ¶ 24. That separate statutory lien, we

explained, is based not on the prior owner’s delinquency, but on the current owner’s failure to

make the payment required by the Act. Id. There is no reasoned basis for requiring the

association to file suit against the prior owner as a condition precedent to recovering under

section 9(g)(4), where the section 9(g)(4) obligation is between the association and the new

owner and only arises postforeclosure.

¶ 14   One of the reasons that the statute works as a matter of policy is because a foreclosure

buyer is given notice of the unpaid assessments and that it will have the duty to pay them before

making the decision to buy the condominium. See 765 ILCS 605/9(g)(5) (West 2012). The

General Assembly made a policy decision that rather than requiring that the condominium

association (or, really, the other unit owners who are current in paying their assessments) bear

the full burden of a nonpaying owner, the foreclosure buyer, who may be buying at a premium

and has advance notice of the unpaid assessments, would take on that burden. See, e.g., 94th Ill.

Gen. Assem., House Proceedings, April 11, 2006, at 30-39; see also Country Club Estates

Condominium Ass’n v. Bayview Loan Servicing LLC, 2017 IL App (1st) 162459, ¶ 15. Here,

Sylva was forewarned of the outstanding assessments and the statutory obligation to pay up to

six months of the prior owner’s unpaid assessments and nonetheless chose to move forward with

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its purchase of the property.

¶ 15   Section 9(g)(4) states that a foreclosure buyer has a duty to pay common expenses that

would have come due during the six months preceding the institution of an action to enforce

collection. It is the foreclosure buyer’s obligation to pay the assessments by operation of statute.

Wing Street, 2016 IL App (1st) 142563, ¶ 24. Section 9(g)(4) says nothing of instituting that

action against the previous owner. Condominium associations are entitled to six months of back

assessments from the time they institute an action to collect against the foreclosure buyer. That

obligation is enforced by a direct suit against the foreclosure buyer. Id. ¶ 23. No suit against the

previous owner is contemplated in the statute or in any case law interpreting it. Once the

association files an action to collect directly against the foreclosure buyer, it is entitled to the

assessments that would have become due in the preceding six months.

¶ 16   The parties do not put a strong emphasis on whether section 9(g)(4) might be ambiguous.

If the language used in a statute is susceptible to more than one equally reasonable interpretation,

it is ambiguous, making construction of the language necessary and permitting resort to other

aids of construction to determine legislative intent. Board of Education of Springfield School

District No. 186 v. Attorney General, 2017 IL 120343, ¶ 25. A fair argument can be made that

there is ambiguity in the statute, and there is significant extrinsic support for Baldwin Court’s

position.

¶ 17   One commentator anticipated that there would be confusion in this area and presciently

observed that there was room for interpretive disagreement over what it means to “institute an

action.” See Joseph R. Fortunato, Unpaid Condominium Assessments—Who’s on the Hook?

Under What Circumstances and to What Extent Are Purchasers of a Condominium Unit at a

Foreclosure Sale or from a Mortgagee Liable to an Association for Unpaid Assessments? The

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Condominium Property Act Is a Model of Ambiguity, 99 Ill. B.J. 208 (2011). Referring to this

statute as “a model of ambiguity,” the commentator goes on to set up the exact issue presented in

this case with regard to what it means to “institute an action.” “Buyers’ counsel have argued that

nothing short of a legal proceeding—e.g., a collection suit or a suit in Forcible Entry and

Detainer—constitutes the ‘institution of an action’ that entitles the association to collect.

Associations contend that a demand letter to the defaulting prior owner is sufficient.” Id.

¶ 18   Were we to resort to extrinsic interpretive aids, we would see strong indications that the

purpose for and the goals to be attained by the statute support Baldwin Court’s position. Sylva

provides no reasoned argument why the association’s statutory right to back assessments should

be conditioned on suing the prior owner. Such a requirement would create needless litigation and

would not be helpful in solving the issue that section 9(g)(4) was enacted to address. Where

Sylva had record notice of the lien and this statute was in effect, it is difficult to see what

justification there would be for requiring Baldwin Court to file suit against the prior owner as a

condition precedent to recovering from Sylva. A commonsense approach to effectuating the

goals of the statute causes us to find that a condominium association need not file a lawsuit

against a prior owner to collect unpaid assessments from a foreclosure purchaser.

¶ 19   The legislative debates also provide support for the position that filing a lawsuit against

the prior owner was not intended to be a precondition for recovery under the statute. For

example, during the April 11, 2006, House of Representative debates, the sponsor of the bill,

Representative Nekritz, was questioned about the state of the condominium law before the

statute was amended and section 9(g)(4) was added. She indicated that, in contrast with the then-

current law, Public Act 94-1049 (eff. Jan. 1, 2007), would allow condominium associations to

collect six months of back assessments “even if they had not filed that lien against the property.”

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94th Ill. Gen. Assem., House Proceedings, April 11, 2006, at 33 (statements of Representative

Nekritz). That position is in accord with the other states that have this type of statute on the

books. See, e.g., Boyack, supra, at 100-01 (discussing the state statutes on association lien

priority for condominium foreclosures).

¶ 20   Representative Nekritz continued by stating that the then-current law provided that, “[i]f

the condominium association had gone to the expense and the trouble to hire lawyers and file a

claim for unpaid assessments, they…they might possibly be in a position to collect those, but

there’d be no guarantee of that.” 94th Ill. Gen. Assem., House Proceedings, April 11, 2006, at

34. Representative Nekritz reiterated that without this bill, the condominium associations could

not collect unpaid assessments following a foreclosure “unless they’ve perfected that lien, which

in most instances is way too expensive and way too cumbersome for them.” This discussion

supports an interpretation that the bill was intended to “guarantee” collection from a new owner,

even where the association had not previously filed a lawsuit for unpaid assessments.

¶ 21   We hold that Baldwin Court was not required to file suit against Sylva’s predecessor

owner in order to be entitled to up to six months of unpaid assessments from Sylva that accrued

during its predecessor’s ownership. We reverse the order granting summary judgment in Sylva’s

favor. Consistent with our prior statements, Baldwin Court is entitled to up to six months of

unpaid assessments dating from the time Baldwin Court took the requisite action to enforce the

obligation. See Wing Street, 2016 IL App (1st) 142563, ¶ 23.

¶ 22   The particular circumstances of this case present another issue that was not addressed by

the parties. Baldwin Court did not in fact file suit against Sylva so as to “institute an action” to

enforce collection. Here, Baldwin Court did not file suit to collect the unpaid assessments

because it had already been paid by Sylva. Even though the payment was made under protest, it

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is clear that Baldwin Court always sought to enforce its right to collect the back assessments

from Sylva. “It is one of the oldest and perhaps the wisest maxims of equity that the law will not

require a person to do a useless act.” Rock Island Y.W.C.A. v. Bestor, 48 Ill. App. 3d 761, 765

(1977); see also PNC Bank, National Ass’n v. Wilson, 2017 IL App (2d) 151189, ¶ 25 (futile acts

are usually excused). The fact that Sylva is the plaintiff in this case is of no consequence.

Baldwin Court had no reason to file suit. The unavoidable result is that Baldwin Court is entitled

to six months of back assessments from the foreclosure purchaser pursuant to section 9(g)(4).

¶ 23   One final matter, however, is that there remains a genuine issue of material fact regarding

the amount Sylva owes Baldwin Court for the unpaid assessments. Monthly assessments for the

unit were $258 at the relevant time. Baldwin Court required Sylva to pay $3485 for the “six

months back assessments per statute” or $580.83 per month ($3485/6 months) without

explanation. Baldwin Court did not move for summary judgment in its favor on this claim below,

and its requested relief on appeal is that we “remand[ ] this case for further proceedings in

accordance with a proper construction of [the statute].” There is not undisputed evidence from

which we can order that judgment in an amount certain be entered in Baldwin Court’s favor, and

thus, we must remand the case for Baldwin Court to prove its damages.

¶ 24                                    CONCLUSION

¶ 25   Accordingly, we reverse and remand for further proceedings consistent with this opinion.

¶ 26   Reversed and remanded.

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