HOAleader.com - Tip of the Week - June 21, 2019
Published: Fri, 06/21/19
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Experts Agree with an Illinois Court: No Need to Record HOA Rules
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In this week's tip, several of our experts explain why they think an Illinois appellate court got it right in Fritz v. Lake Carroll HOA. In that case, an appellate court rejected a homeowner's argument that his HOA had no authority to require him to have his septic tank pumped and inspected because that rule wasn't recorded.
The Lake Carroll Property Owners Association—which includes what the court describes as the largest privately owned, human-created lake in Illinois—had a rule that its owners must have an inspection and pumping of their septic systems within the association's boundaries every four years. There's an initial $250 fine for non-compliance, followed by a $25 per day fine until compliance is achieved.
The HOA notified the owner, Rodney Fritz, that his tank was due for its work. He responded by asserting the HOA had "no power over septic systems." After Fritz failed to comply, the HOA fined him. He responded with a claim alleging the HOA had exceeded its authority and breached its fiduciary duty. During trial, one of the arguments Fritz's lawyer made was that because the rule governing septic tanks hadn't been recorded, it wasn't enforceable.
The court didn't buy Fritz's arguments. It held that Illinois law doesn't require that rules be recorded; they need only be maintained and made available to prospective buyers.
If you're in Illinois, be careful before you rely on Fritz, advises Scott E. Pointner, an attorney at Rathje & Woodward in Wheaton, Ill., who's been representing HOAs and condos—ranging from 4-unit condos to 1,800-plus unit lake associations—for nearly 20 years.
"Make absolutely sure you know which rules or state laws apply," Pointner advises, whether you're in Illinois or elsewhere. "Fritz deals with the Illinois Common Interest Community Association Act, or CICAA, and the court spent that time on that act. There are a tremendously high number of associations in Illinois for which the CICAA doesn't apply because they're too small. So if yours is a smaller association in Illinois that the act doesn't cover, you shouldn't spend too much time on Fritz. This case may attract tremendous amount of attention, but it may not even apply to some Illinois readers."
Another caveat is that Fritz isn't really binding, based on Illinois court rules. "I assume most states have the equivalent of Illinois Supreme Court Rule 23," explains Pointner. "It provides for a high number of cases pushed out by the appellate courts not to be cited for any level of precedent. Fritz received a Rule 23 order, and I believe that's still in effect. But it's still worth reading."
Pointner says Fritz's argument isn't such a bad one. "Fritz tried to take a poorly drafted statute and have it applied strictly without reference to the rest of the statute," he says. "The allure of the upfront argument causes you to pause because you can't believe the legislature would draft the statute like that. But the law requires courts to read statutes in a way that doesn't make other provisions in the statute superfluous, so Fritz's argument failed."
Should Illinois associations record their rules and regulations? "I'd say, in general, no, at least in Illinois," says Pointner. "In other states, boards should find out for sure the degree to which their state or case law requires it, and I suspect that's not often at all.
"It potentially sets a troublesome precedent," explains Pointner. Find out why in our new article: https://www.hoaleader.com/members/3934.cfm
Best regards,
Matt Humphrey
President
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