On October 21, 2019 the United States Court of Appeals for the Seventh Circuit affirmed the district court’s ruling in Horist v. Sudler & Co., Homewisedocs.com finding in favor of Sudler Property Management and Homewise.com, both are members of Community Associations Institute (CAI). On January 29, 2019, CAI – Illinois Chapter filed an amicus curiae brief drafted by Gabriella Comstock, Esq., fellow in the College of Community Association Lawyers and Phillip Calabrese, Esq., in support of Sudler Property Management and Homewise.com, requesting the Seventh Circuit affirm the judgment of the district court.
Plaintiff’s, condominium owners, alleged that the property management company, Sudler, and the document services company, Homewise.com, were in violation of violation of section 22.1 of the Illinois Condominium Property Act, 765 ILCS 605/1 et seq. (the “Condo Act") by charging an excessive fee for disclosure documents that was in excessive of what the Condominium Act allows. The plaintiff’s raises five separate claims in their complaint, including (1) a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act; (2) a violation of the Condominium Act; (3) aiding and abetting a breach of fiduciary duty; (4) civil conspiracy; and (5) unjust enrichment. HomeWise.com removed the case to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332(d). Sudler and HomeWise.com filed separate motions to dismiss.
The Seventh Circuit affirmed the lower court’s decision stating the relevant provision of the Condominium Act do not provide a private right of action, and there is no basis in Illinois law to imply one for the condominium owners in this case, each of the plaintiff’s claims were dismissed.
Amicus Brief: https://www.caionline.org/sudler
The state of Illinois is the fourth largest state in the country for community associations. Today, more than 3.8 million residents live in a planned community (e.g. homeowners association, condominium community, and housing cooperative), according to the 2019 National and State Statistical Review for Community Association Data, published by the Foundation for Community Association Research.
“Disclosure documents contain very important information for purchasers—including amount of assessments, financial statements, rules, and other specific information about the community and the individual home/unit being purchased, says Dawn M. Bauman, CAE, CAI’s senior vice president, government and public affairs. Bauman adds, “This incredibly important detail that provides consumer protections must be accurate, current, and complete, which carries a degree of liability for the document provider.”
Gabriella Comstock, Esq., says she’s pleased with the ruling by the Seventh Circuit Court, “When an association, through its managing agent and third-party vendor, delivers the required disclosures on behalf of a selling condominium unit owner to a prospective purchaser, it performs a service to the selling owner. This service ensures not only compliance with the Illinois Condominium Property Act, but it also provides accuracy in the delivery of the information conveyed to a prospective buyer. Each party to the transaction reaps a great benefit- the seller is able to fulfill his/her obligations and the buyer is given all relevant information regarding the community for which he/she will now be a member. Of course there is a cost for this service, but the Court’s ruling acknowledges the benefit conferred by this service to the buyer and seller.”
About Community Associations Institute
Since 1973, Community Associations Institute (CAI) has been the leading provider of resources and information for homeowners, volunteer board leaders, professional managers, and business professionals in 350,000 homeowners associations, condominiums, and co-ops in the United States and millions of communities worldwide. With more than 43,000 members, CAI works in partnership with 36 legislative action committees and 64 affiliated chapters within the U.S., Canada, United Arab Emirates, and South Africa, as well as with housing leaders in several other countries, including Australia, Spain, Saudi Arabia, and the United Kingdom. A global nonprofit 501(c)(6) organization, CAI is the foremost authority in community association management, governance, education, and advocacy. Our mission is to inspire professionalism, effective leadership, and responsible citizenship—ideals reflected in community associations that are preferred places to call home. Visit us at www.caionline.org and follow us on Twitter and Facebook @caisocial.