Illinois Appellate Court holds condominium association not required to file lawsuit against prior owner before collecting six months of unpaid assessments from the foreclosure buyer

In Sylva, LLC v. Baldwin Court Condominium Association, Inc., 2018 IL App (1st) 170520, a purchaser bought a condominium unit at a foreclosure sale. At the time of sale, the purchaser paid six months’ of the prior owner’s unpaid assessments to clear the title of the unpaid assessment lien. After receiving clear title to the condominium unit, the purchaser sued for recovery of those assessments, contending the Condominium Property Act, 765 ILCS 605/9(g)(4), requires the association to first sue the prior owner.

The trial court sided with the purchaser, finding that the Illinois Condominium Property Act required the association to file an action to collect the unpaid assessments against the prior owner. The association appealed, contending that it had satisfied its statutory requirements by filing and recording a lien against the property for the unpaid assessments and did not need to sue the prior owner before recovering from the purchaser.

The first district Court of Appeals reversed, finding that the statutory language in the Condominium Property Act contemplating “institution of an action to enforce the collection of assessments” does not require the association to file suit against the prior owner as a condition precedent to recovering from the foreclosure purchaser. In Wing Street of Arlington Heights Condominium Ass’n v. Kiss the Chef Holdings, LLC, 2016 IL App (1st) 142563, the first district previously held that an association could recover six months of assessments proceeding the action to “enforce its lien”. The facts of that case differed slightly in that the association had filed an action and obtained judgment against the prior owner. Nevertheless, Wing Street also held that Section 9(g)(4) imposes a separate statutory lien that is based not on the prior owner’s delinquency but on the current owner’s failure to make the payment required by the Act. Because of its prior holding in Wing Street, the first district in Sylva held there is no reasoned basis to require the association to file suit against the prior owner as a condition precedent to recovery against the new owner under Section 9(g)(4). Because the new owner is provided notices of the unpaid assessments and its duty to pay them (per 765 ILCS 605/9(g)(5)), the statute is not against public policy.

The purchaser knew of the outstanding unpaid assessments and its statutory obligation to pay up to six months of the prior owner’s unpaid assessments and nevertheless bought the property. The appellate court found no support as to why the association’s right to the back-paid assessments should be conditioned on suing the prior owner. Once the association files an action to collect directly against the foreclosure buyer, it is entitled to the assessments that would have been due in the proceeding six months. While the association had not sued the purchaser to collect the assessments, it did not need to do so because it had already been paid. And, under equity maxims, the law will not require a person to do a useless act. Accordingly, the first district held the association was entitled to the six months of back assessments from the purchaser pursuant to Section 9(g)(4).

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