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12/15/95 APPLE II CONDOMINIUM ASSOCIATION v. WORTH

December 15, 1995

APPLE II CONDOMINIUM ASSOCIATION, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, PLAINTIFF-APPELLANT,
v.
WORTH BANK AND TRUST CO., ET. AL., DEFENDANTS-APPELLEES.



In the Circuit Court of Cook County. Honorable James Stack, Judge Presiding.

The Honorable Justice Zwick delivered the opinion of the court: Egan, J., and Rakowski, J., concur.

The opinion of the court was delivered by: Zwick

The Honorable Justice ZWICK delivered the opinion of the court:

Apple II Condominium Association (the Association or Apple II) brought this action to enforce an Amendment to its Declaration of Condominium Ownership and to recover certain fines it imposed against one of its members. We are asked to decide whether an Illinois condominium association may amend its declaration to prohibit the leasing of member-owned units.

The Association is an Illinois not-for-profit corporation located in Crestwood, Illinois. In 1994, defendant Worth Bank & Trust Co. was the legal title owner of certain property at Apple II known as Unit 308. Defendants, John and Eunici Harmon were the beneficial owners of that property and defendants, Patti Denooy, Beth Kingma and Lynrae Woltjer were tenants residing in Unit 308. Ownership of Unit 308 is governed by a Declaration of Condominium Ownership (Declaration) originally recorded as Document No. 87416544 in the Office of the Recorder of Deeds of Cook County, Illinois.

The Harmons leased Unit 308 to Denooy, Kingma and Woltjer on August 15, 1992. The lease expired by its own terms just over a year later, on August 31, 1993. During the term of the lease, on November 5, 1992, more than two-thirds of the Apple II unit owners passed an amendment (the Amendment) to the Declaration limiting occupancy of Association units to unit owners and their immediate families. The Amendment included a provision which stated:

"Notwithstanding any provisions herein to the contrary, a Unit Owner's right to lease his Unit or cause it to be occupied by a person other than the Unit Owner or his immediate family in accordance with the provision of this Section shall be exercised only once during his ownership of said Unit and any subsequent lease to, or occupancy of, said Unit by a person other than the Unit Owner or his immediate family is prohibited."

The Amendment provided that unit owners could make written application to the Board of Managers of the Association for a special six-month extension upon termination of existing leases. When the Harmons requested a special one-year extension on May 3, 1993, the Board denied their request. Nonetheless, Denooy, Kingma and Woltjer renewed their lease with the Harmons for an additional eight-month term on or about September 1, 1993.

On January 20, 1994, Apple II conducted a hearing and assessed fines against the Harmons. On April 22, 1994, the Association filed a Complaint for Forcible Entry and Detainer in the circuit court. The Harmons responded on May 20, 1994, by filing a motion to dismiss the Association's complaint pursuant to section 2-619(9) of the Code of Civil Procedure. (735 ILCS 5/2-619(9) (West 1994).) The Harmons argued principally that the Board of managers lacked legal authority to restrict the rental of units to those who acquired title to the property prior to the Amendment; that the Amendment constituted an ex post facto modification of the Harmons' contractual rights made without consideration; that the Board acted without authority; and that the Board had failed to set forth a reasonable basis for its decision denying the one-year extension. The Harmons also argued that the terms of the Amendment permitted them to renew their lease with Denooy, Kingma and Woltjer for one additional year following the expiration of their first lease without Board approval and that the fines imposed by the Association were excessive. These later claims were not, however, considered by the trial court in rendering its decision.

The trial court granted the motion on June 16, 1994. In doing so, the court noted that the Harmons had purchased their property for investment purposes at a time when there were no restrictions on leasing the unit; that there had been no showing that the Harmons' tenants had presented any threat to the health or safety of the Association; that the Amendment was unreasonable; and that the Declaration was unclear as to whether amendments were to be given "retroactive application" to members who purchased their units before the enactment of amendments.

In ruling on a section 2-619 motion to dismiss, the trial court may consider pleadings, depositions, and affidavits. (See 735 ILCS 5/2-619(a), (c) (West 1992); 134 Ill. 2d R. 191(a); Torcasso v. Standard Outdoor Sales, Inc. (1993), 157 Ill. 2d 484, 486, 626 N.E.2d 225, 193 Ill. Dec. 192.) The proper standard of review is de novo and is "whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law." ( Kedzie & 103rd Currency Exchange, Inc. v. Hodge (1993), 156 Ill. 2d 112, 116, 619 N.E.2d 732, 189 Ill. Dec. 31.) We proceed with the proper legal standard in mind.

The affairs of a condominium association are controlled by the Condominium Property Act. (765 ILCS 605/1 et seq. (West 1994).) The Condominium Property Act comprehensively regulates the creation and operation of Illinois condominium associations. ( Adams v. Meyers (1993), 250 Ill. App. 3d 477, 488, 620 N.E.2d 1298, 190 Ill. Dec. 37.) Sections 22 and 22.1 of the Condominium Act require that every purchaser of a condominium property either receive or have made available for his or her inspection the Association's Declaration and bylaws. 735 ILCS 605/22, 22.1 (West 1994).

The Harmons do not contest having received timely notice of the contents of either the original Declaration or the Amendment. They do not dispute that the Amendment was passed in a way that was procedurally proper under both the Condominium Property Act and the original Declaration. The trial court found it significant, however, that the Harmons had relied upon the fact that the Association did not amend its Declaration until after they had purchased their property. The court noted that the Amendment did not indicate whether it was meant to apply to current owners. The court also noted that the Harmons had purchased their unit for investment purposes and that they had relied upon the fact that there were no leasing restrictions in making their decision to purchase the property.

The Condominium Property Act specifically states that amendments to the Declaration "shall be deemed effective upon recordation unless the amendment sets forth a different effective date." (765 ILCS 605/17 (West 1994).) In our view, neither the fact that there were no restrictions on the property when the Harmons purchased their unit nor the fact that the Harmons purchased the property for investment purposes is relevant to the proper resolution of the issues presented in this case. As purchasers of the condominium property, the Harmons are charged with knowledge of the Condominium Property Act and that the Declaration governing their unit was subject to amendment. Section 18.4(h) of the Act specifically recognizes that the Board may implement rules governing the "use of the property," so long as the restrictions do not impair those rights guaranteed by the First Amendment to the United States Constitution or the Free Speech provisions of the Illinois Constitution. (See 765 ILCS 605/18.4(h) (West 1994).) In the absence of a provision either in the Amendment or in the original Declaration, condominium owners do not have vested rights in the status quo ante. See Crest Builders, Inc. v. Willow Falls Improvement Association (1979), 74 Ill. App. 3d 420, 393 N.E.2d 107, 30 Ill. Dec. 452 (party challenging ...


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