Judge: Illinois condo law not meant to control 'reasonable' fees for electronic condo sale documents

By Dan Churney | Jul 20, 2018

A Chicago federal judge has tossed a putative class action lawsuit by a trio of onetime suburban condominium owners, who alleged they paid excessive fees for state-required documents when they sold their units, saying Illinois condo laws are not meant to control fees.

The July 16 ruling was laid down by U.S. District Judge Manish Shah, dismissing a suit by plaintiffs John Murphy and husband and wife Cecil and Nirupa Mathew, against Foster Premier and HomeWise.

Foster Premier is a property management company in suburban Buffalo Grove, which oversees 20,000 condominium units around Chicago, including units in La Grange for Villa Venice Condominium Association and units in Wheeling for Timberleaf Homeowners Association. 

Foster contracted with HomeWise, of Fairfield, Calif., a service that provides electronic documents to condo owners when condos are to be sold, as required by the Illinois Condominium Property Act. Such documents include records that list condo association assessment payments.

 When Murphy put his La Grange unit up for sale in December 2015, he had to pay $335 to HomeWise for disclosure documents he needed to give a prospective buyer. The Mathew couple sold their Wheeling condo in May 2017 and paid $350 for similar documents. 

Murphy and the Mathews sued Foster and HomeWise, alleging the fees were excessive and violated the Illinois Consumer Fraud Act, as well as the Condominium Property Act and the Common Interest Community Association Act. The condo laws allow for “reasonable” fees.

The suit sought to include all other condo owners who paid such fees, amounting to more than $1.5 million, in the view of plaintiffs.

Foster and HomeWise argued the case should be dismissed. Judge Shah agreed.

Shah noted the aim of the condominium laws is not to prevent excessive fees. 

“Limiting costs may be consistent with the purpose of the (Condominium Property) Act, but it is not what motivated the legislature. The policy behind these statutes was to encourage disclosure to prospective purchasers. Excessive fees is not the injury the Act was designed to prevent,” Shah wrote.

Shan went on to say “reasonableness is a range, not a point, and whether specific fees and costs borne by the seller fall in or out of that range is not the public-policy interest the legislature had in mind.”

According to the judge, plaintiffs could have complained to, if not sued, their condo association boards about the boards using Foster and in turn HomeWise. If nothing else, plaintiffs could have passed on part of the document fees to the buyers, who benefited from plaintiffs having promptly furnished the documents.

Shah is permitting plaintiffs to replead their case, but said they could wait on the outcome of appeals in Horist v. Sudler & Co. and Friedman v. Lieberman, both Chicago area condo cases involving document fees.

Plaintiffs have been represented by the Fish Law Firm and the Law Office of Thomas J. Homer, both of Naperville; and Guin, Stokes & Evans, and Barrett Wylie LLC, both of Chicago.

Defendants have been represented by Schmidt & Barbrow, of Wheaton and Squire, Patton & Boggs, of Cleveland.

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Organizations in this Story

Barrett Wylie, LLC The Fish Law Firm P.C. Thomas Homer U.S. District Court for the Northern District of Illinois

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