In recent years, more and more property managers have delegated to third-party vendors the responsibility of producing condominium documents and disclosures needed for real estate transactions under the Illinois Condominium Property Act. Although it is actually the seller’s attorney that completes the basic data entry in order to obtain the necessary condominium documents, it is the third-party vendor and property manager who then charges upwards of several hundreds of dollars for this “service”. Sellers are often troubled by these hefty fees, but are too preoccupied with packing their boxes and scheduling their movers to attend a board meeting to lobby their association board to challenge the practice. However, a recent opinion by the First District Appellate Court should give management companies and condominium associations alike, pause when it comes to the fees they charge for condominium documents.
In Channon v. Westward Management, Inc., 2021 IL App (1st) 210176-U, a seller of a condominium unit sued a management company, as agent for the condominium association, arguing that the excessive fees were a violation of Section 22.1 of the Act. The seller argued that the fees did not reflect the management company’s direct out-of-pocket costs for providing the documents. Ultimately, the appellate court held that the seller (former unit owner) could sue the management company for excessive fees, and in reaching that holding, the court determined that there is an implied cause of action under section 22.1 for buyers and sellers, and management companies can be sued as agents for condominium associations.
Moving forward, this decision is likely to create traction in the real estate community in two ways. First, management companies need to be careful how much they charge to obtain certain documents knowing now that a cause of action may be brought against the company. Second, and perhaps equally as important, the appellate court recognized that an implied cause of action exists under section 22.1 for sellers and buyers alike. Where previous cases alluded to this concept, this court directly addressed the issue and held in the affirmative.
It is important to note that this is the law right now, but we expect that the Defendants will appeal. In any event, this development is a long time coming and could be the beginning of a new and welcomed change for condominium real estate transactions.