Kenneth Michaels, Jr., Bauch & Michaels, LLC, Chicago
312-588-5000 | Email Kenneth Michaels, Jr.
Appellate Court Resolves CICAA–Condominium Act Conflict, Holds Mixed-Use HOA Is a Master Association
The First District recently issued an opinion affirming dismissals of claims and judgment on the pleadings when a homeowners’ association (HOA) development included single-family homes and condominium units and the condominium unit owners paid assessments for maintenance of land surrounding all the homes as well as a separate assessment for maintaining the front lawn of the condominium property. Single-family homeowners paid nothing towards the condominium’s property. The last issue in the appeal highlights the interaction between the Common Interest Community Association Act (CICAA), 765 ILCS 160/1-1, et seq., and the Condominium Property Act, 765 ILCS 605/1, et seq. Bogot v. Haverford Homeowners Ass’n, 2026 IL App (1st) 250080. The appellate court’s ultimate holding that the community association was really a master association under the Condominium Property Act is likely a question of first impression since the adoption of CICAA in 2010.
Facts
Plaintiff condominium unit owners filed a class action lawsuit for direct damages and other relief against their HOA and its directors. 2026 IL App (1st) 250080 at ¶1. The defendant Haverford Homeowners Association was created by the recording of its “community declaration” in 2005, and it was incorporated as an Illinois not-for-profit corporation. 2026 IL App (1st) 250080 at ¶3. The declaration stated that it was intended that the association would not be a master association under §18.5 of the Condominium Property Act or a common interest community association as defined under §9-102(a)(8) of what would eventually be referred to as the Eviction Law, article IX of the Code of Civil Procedure, 735 ILCS 5/1-101, et seq. Id. CICAA became law in 2010. Id. CICAA was intended “to apply to all homeowners associations not already regulated by the Condominium Property Act, either as a condo or master association.” 2026 IL App (1st) 250080 at ¶34.
This basis of this lawsuit arose from the fact that the HOA collected assessments for maintenance and landscaping in equal amounts from all owners of the 50 single-family residences and from the owners of the 48 condominium units. 2026 IL App (1st) 250080 at ¶4. Additionally, the condominium unit owners paid separate assessments for maintaining and landscaping the front lawn of the condominium property. The net result was that the condo owners were paying 49 percent of the assessments for grounds maintenance while 87 percent of the grounds were essentially yards around the single-family residences. The homeowners paid nothing towards maintaining the front lawn of the condominium property. Id.
Throughout the litigation the defendants argued that anyone could access and use any of the community areas, namely, the lawns. 2026 IL App (1st) 250080 at ¶9. The plaintiffs countered that “one cannot use and enjoy another person’s yard” and no “reasonable person [would] feel comfortable ‘using and enjoying’ a stranger’s yard.” 2026 IL App (1st) 250080 at ¶13.
Three of the four claims made by the plaintiffs were resolved by dismissal under either Code of Civil Procedure §2-615 or Code of Civil Procedure §2-619 motions to dismiss. The claims will be discussed below as presented in the opinion. The fourth claim was answered by the defendants and cross-motions for judgment on the pleadings pursuant to §2-615(c) were filed which resulted in judgment for the defendants. 2026 IL App (1st) 250080 at ¶6.
Analysis
A de novostandard of review was applied to all the trial court’s judgments in this case. The First District of the Appellate Court affirmed all of the trial court’s judgments. 2026 IL App (1st) 250080 at ¶1.
The first issue presented was “whether the circuit court erred in dismissing plaintiffs’ claim that defendants’ assessments are unlawful because the covenant for assessments does not run with the land.” Id. The plaintiffs argued that the covenant in the community association declaration requiring the condo unit owners to pay assessments for maintenance did not touch and concern the land because the unit owners were unable to use and enjoy portions of the community area. 2026 IL App (1st) 250080 at ¶9. The defendants countered that the covenant touches and concerns the land because it provides for maintenance and landscaping of the land. Additionally, the “plaintiffs have the right to use and enjoy all the community area.” Id.
The test for determining whether a covenant runs with the land and is therefore enforceable against subsequent owners requires that three criteria be satisfied: (1) the grantor and grantee intended the covenant to run with the land; (2) the covenant must touch and concern the land; and (3) there must be privity of estate between the party claiming a benefit from the covenant and the party burdened by the covenant. 2026 IL App (1st) 250080 at ¶10, citing St. Paul Federal Bank for Savings v. Wesby, 149 Ill.App.3d 1059, 501 N.E.2d 707, 709, 103 Ill.Dec. 390 (1st Dist. 1986), citing Streams Sports Club, Ltd. v. Richmond, 99 Ill.2d 182, 457 N.E.2d 1226, 1266 – 1267, 75 Ill.Dec. 667 (1983). The only issue here was whether the covenant pertaining to assessments touched and concerned the land. 2026 IL App (1st) 250080 at ¶9.
“A covenant touches and concerns the land if it ‘affects the use, value, and enjoyment . . . of the property.’ ” 2026 IL App (1st) 250080 at ¶11, quoting In re County Treasurer, 373 Ill.App.3d 679, 869 N.E.2d 1065, 1078, 312 Ill.Dec. 74 (2d Dist. 2007). Generally, covenants for repair of common areas further the use and enjoyment of property. 2026 IL App (1st) 250080 at ¶11, citing St. Paul Federal Bank, supra, 501 N.E.2d at 710. The appellate court found that the plaintiffs’ own allegations were that the assessments were for maintaining, repairing, and landscaping the land; therefore, taking the plaintiffs’ allegations as true, then the covenants pertaining to assessments touched and concerned the land. 2026 IL App (1st) 250080 at ¶12.
The second issue presented was “whether the circuit court erred in dismissing plaintiffs’ claim that the assessments are unconscionable because they are one-sided against condominium owners and plaintiffs are unfairly surprised by how defendants allocated assessments.” 2026 IL App (1st) 250080 at ¶1. The plaintiffs argued that the unit owners paid 49 percent of the assessments for maintenance of the community land (in addition to paying more for the maintenance of the land in front of the condominium building) while 87 percent of the community land constituted yards surrounding the single-family homes. 2026 IL App (1st) 250080 at ¶16. When unit owners purchased their condominium units they did not have the knowledge to recognize that the equal allocation of assessments amongst all property owners was not typical of other associations when such assessments are allocated based on square footage. The defendants countered that all owners have equal rights to enjoy and use the units, and the assessments are reasonable because they are equal to all owners.
Generally, courts may find an agreement unenforceable if it is procedurally or substantively unconscionable. 2026 IL App (1st) 250080 at ¶17, citing Phoenix Insurance Co. v. Rosen, 242 Ill.2d 48, 949 N.E.2d 639, 647 – 648, 350 Ill.Dec. 847 (2011). Procedural unconscionability arises when a court finds that impropriety in the process of forming the contract deprived a party of a meaningful choice. Examples include disparity of bargaining power, the way the parties entered the contract, whether the parties had a reasonable opportunity to understand the contract terms, and whether important terms were buried in fine print. Here the plaintiffs did not allege any such circumstances that supported procedural unconscionability. Id.
Courts may find substantive unconscionability when contract terms are so one-sided as to oppress or surprise an innocent party, an overall imbalance exists between obligations and rights, and significant cost-price disparity exists. 2026 IL App (1st) 250080 at ¶18. Courts may consider factors supporting procedural unconscionability in examining whether substantive unconscionability exists. 2026 IL App (1st) 250080 at ¶19.
Here the plaintiffs argued that they could not negotiate the community association declaration’s terms and conditions when they purchased their units. 2026 IL App (1st) 250080 at ¶20. However, the appellate court declined to accept this argument as substantive unconscionability. Adhesion contracts “ ‘are a fact of modern life’ and are not, on their own, procedurally unconscionable.” Id., quoting Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 857 N.E.2d 250, 266, 306 Ill.Dec. 157 (2006), and Phoenix Insurance, supra, Co., 949 N.E.2d at 654. The plaintiffs also argued that the plaintiffs did not have the sophistication to recognize when buying their units that the declaration’s assessment provisions were inequitable or unusual. The appellate court did not accept this argument because the assessment provisions in the declaration were clear on their face and the plaintiffs did not show that anything prevented them from learning that these provisions were unusual. 2026 IL App (1st) 250080 at ¶20.
Regarding the plaintiffs’ arguments that the assessment provisions were oppressive and one-sided thereby creating a cost-price disparity, the appellate court found that the provisions were not so one-sided as to be unconscionable, “rather than just a bad deal.” 2026 IL App (1st) 250080 at ¶21. Each unit owner could access all the community land, and equal payment from each unit is not unconscionable. Id., citing Carl Sandburg Village Condominium Association No. 1 v. Carl Sandburg Village Condominium Homeowners’ Ass’n, 175 Ill.App.3d 1, 530 N.E.2d 40, 43, 125 Ill.Dec. 122 (1st Dist. 1987) (holding that because all residents had right to use all facilities, residents should reasonably have responsibility to maintain facilities). “[T]he fact that a better deal exists, or may be common, does not make this arrangement so unconscionable as to be unenforceable.” 2026 IL App (1st) 250080 at ¶21, citing Kinkel, supra, 857 N.E.2d at 267.
The third issue presented was “whether the circuit court erred in dismissing plaintiffs’ breach of fiduciary duty claim because plaintiffs had standing to bring a direct claim as individuals.” 2026 IL App (1st) 250080 at ¶1. The trial court dismissed the plaintiffs’ breach of fiduciary duty claims because the plaintiffs sued arguing direct injury rather than asserting derivative claims. 2026 IL App (1st) 250080 at ¶24. The defendants moved to dismiss because the plaintiffs did not have standing to assert direct claims.
The appellate court affirmed that the plaintiffs did not have standing because all of their claims were ultimately based on an argument that the HOA misappropriated money through the assessment process. 2026 IL App (1st) 250080 at ¶26. Misappropriation claims need to be pursued as derivative claims, even if the condominium unit owners had a unique injury because ultimately the claims are based on the association’s funds being misappropriated. The appellate court found that none of the case authority the plaintiffs relied on supported their argument that these were direct injuries on which they could sue, so their claims lacked standing. Id.
The fourth and final issue presented was “whether the circuit court erred in entering judgment on the pleadings for defendants because defendants’ structure does not comply with the statutory regime for homeowners associations.” 2026 IL App (1st) 250080 at ¶1. The plaintiffs argued that upon CICAA being adopted, the community association was no longer in compliance with the law because CICAA prohibits associations that include both condominiums and detached homes unless they are master associations under the Condominium Property Act. 2026 IL App (1st) 250080 at ¶29. According to the plaintiffs, under equitable principles the condos should be severed from the community association. The defendants argue that they are not governed by CICAA and CICAA does not prohibit the defendant community association from be organized solely under the General Not-For-Profit Corporation Act of 1986, 805 ILCS 105/101.01, et seq., and CICAA does not require condominiums to be separated from housing associations. Id. Without expressly saying they are both wrong, the appellate court, in what appears to be a question of first impression, found that both sides of the litigation were wrong on this question.
In Illinois, the Condominium Property Act was adopted in 1963 to regulate condominium property. 2026 IL App (1st) 250080 at ¶31. Section 18.5 of the Condominium Property Act is a lengthy slice of legislation that reiterates many of the provisions from other sections of the Act and applies them to what are called “master associations.” Section 18.5 clearly states that any not-for-profit corporation or unincorporated association that exercises powers of governance over unit owner associations pursuant to recorded covenants is a master association. Id.
CICAA was adopted in Illinois in 2010 to provide similar protections afforded to condominium property owners to owners of single-family, townhome, villa, or other properties. 2026 IL App (1st) 250080 at ¶32. CICAA applies to all common interest community associations in Illinois (except some small associations that do not elect to come within the purview of the Act). Id., 765 ILCS 160/1-10. However, “[a] ‘common interest community’ does not include a master association.” 765 ILCS 160/1-5.
The trial court invited the parties to submit three questions under a Supreme Court Rule 308 certification of questions for statutory interpretation, however the parties declined. 2026 IL App (1st) 250080 at ¶33. Therefore, the trial court ruled that CICAA did not require the condos to be separated from the defendant community association and entered judgment on the pleadings as to the fourth issue.
The appellate court agreed with the trial court’s result. 2026 IL App (1st) 250080 at ¶34. CICAA applies to all homeowners’ associations not already regulated under the Condominium Property Act as condominium associations or master associations. CICAA and Condominium Property Act create a comprehensive regulatory scheme. 2026 IL App (1st) 250080 at ¶35. The appellate court took the analysis a step further to conclude that the defendant community association was a master association bound by §18.5 of the Condominium Property Act. 2026 IL App (1st) 250080 at ¶¶ 36 – 37. The trial court’s judgments were affirmed.
For more information about condominium law, see CONDOMINIUM LAW: GOVERNANCE, AUTHORITY, AND CONTROLLING DOCUMENTS (IICLE®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.