Bogot v. Haverford Homeowners Ass'n
Key Takeaways
- 1 Assessment covenants touch and concern the land based on the right to use common areas, not actual use.
- 2 HOA qualifying as a master association under the Condominium Property Act is excluded from CICAA regardless of declaration language.
- 3 Relevant for real estate and HOA attorneys advising on assessment enforceability, standing, and statutory compliance in planned developments.
Summary
Scott Bogot and Nancy Dougan, condominium owners in a Glenview planned development, filed a class action against the Haverford Homeowners Association and its board members challenging the enforceability of assessments and the association's organizational structure. After a series of dismissals in the Circuit Court of Cook County, plaintiffs appealed four rulings: dismissal of their claims that assessments were unlawful (covenant does not run with the land), that assessments were unconscionable, that board members breached fiduciary duties, and that the association's structure violated the Common Interest Community Association Act (CICAA).
The First District affirmed all four rulings. On the covenant question, the court held that the touch-and-concern requirement is satisfied when a covenant affects the use, value, and enjoyment of the land — the relevant inquiry is the covenant's relationship to the land, not whether owners actually exercise their right to use common areas. On unconscionability, the court found that an equal-per-unit assessment formula is not substantively unconscionable where all owners share equal rights to use the community area, and plaintiffs failed to allege sufficient procedural unconscionability. On standing, the court held that misappropriation of association funds is an injury to the association itself, requiring a derivative action; plaintiffs' alleged harm as individual owners was merely indirect. On the CICAA claim, the court held that defendants qualify as a master association under the plain language of the Condominium Property Act and are therefore governed by that Act, not the CICAA — and the declaration's own contrary characterization cannot override the statute.
This decision provides important guidance for HOA and real estate attorneys on the enforceability of assessment covenants, the limits of unconscionability challenges to declaration terms, the derivative-versus-direct action distinction in association disputes, and the interplay between the Condominium Property Act and the CICAA in mixed planned developments.
Key Holdings
1. A covenant to pay assessments for maintenance of common areas touches and concerns the land because it affects the use, value, and enjoyment of the property; the analysis turns on the covenant's relationship to the land, not whether individual owners actually use the common areas.
2. An equal-per-unit assessment formula in a declaration is not unconscionable where all unit owners share equal rights to use and enjoy the community area, and a contract of adhesion alone is insufficient to establish procedural unconscionability.
3. Misappropriation of association funds constitutes an injury to the association itself; individual unit owners alleging harm only as a result of that primary wrong to the association lack standing to bring a direct breach of fiduciary duty claim and must proceed derivatively.
4. An HOA that assesses condominium owners for maintenance of a community area for the benefit of those owners qualifies as a master association under the Condominium Property Act and is therefore excluded from the CICAA, regardless of how the declaration characterizes the association's status.