Justice THEIS delivered the judgment of the court, with opinion.
¶ 1 This appeal arises out of a forcible entry and detainer action filed by a condominium association against one of its unit owners based on unpaid assessments. At issue is whether an association's purported failure to repair or maintain the common elements is germane to the proceeding, and thus may be raised by the unit owner in defense of the forcible action. We hold that it is not germane to the forcible proceeding, and thus reverse, in part, the judgment of the appellate court. 2012 IL App (2d) 110473, 366 Ill.Dec. 90, 979 N.E.2d 891.
¶ 3 In February 2010, in the circuit court of Lake County, plaintiff, Spanish Court Two Condominium Association (Spanish Court), filed a complaint under the Forcible Entry and Detainer Act (forcible statute) (735 ILCS 5/9-101 et seq. (West 2008)) against defendant, Lisa Carlson (Carlson), one of the association's unit owners. Spanish Court alleged that Carlson had failed to pay monthly assessments for the preceding six months, and sought a money judgment and an order of possession. In her answer to the complaint, Carlson admitted that she had not paid her assessments since August 2009. Carlson denied, however, that she owed those assessments, alleging that she incurred water damage to her unit because Spanish Court failed to properly maintain the roof directly above her unit. Carlson also alleged, without providing specifics, that Spanish Court "destroyed property within her unit without justification."
¶ 5 Spanish Court moved to strike Carlson's affirmative defenses and to sever her counterclaim, arguing that they were not "germane" to the proceeding, as required by the forcible statute. See 735 ILCS 5/9-106(a) (West 2008). The trial court granted Spanish Court's motion, striking Carlson's affirmative defenses and ordering that Carlson's counterclaim be reassigned to the proper division of the circuit court. Thereafter, the trial court entered an agreed order awarding possession of Carlson's unit to Spanish Court, and a money judgment for unpaid assessments through January 1, 2011. The matter then proceeded to a bench trial as to Spanish Court's claim for unpaid special assessments, accrued assessments not covered in the prior order, late charges, attorney fees, and costs. After disallowing a special assessment and certain attorney fees and costs, the trial court entered its final order again awarding Spanish Court possession, and a money judgment covering all sums due through April 2011.
¶ 6 Carlson appealed, challenging the trial court's order striking her affirmative defenses and severing her counterclaim, as well as the subsequent orders granting Spanish Court possession and a money judgment. Spanish Court cross-appealed, challenging the trial court's disallowance of one of its special assessments.
¶ 7 The appellate court vacated the judgment of the trial court, and remanded the case for partial reinstatement of Carlson's affirmative defenses. 2012 IL App (2d) 110473, ¶ 48, 366 Ill.Dec. 90, 979 N.E.2d 891. The appellate court held that a unit owner may claim, as a defense to a forcible action based on unpaid assessments, that her responsibility to pay assessments was diminished or nullified by the failure of the association to repair or maintain the common elements. Id. ¶¶ 16, 28, 46. The appellate court reasoned that if a tenant could raise, as an affirmative defense in a forcible proceeding, the landlord's failure to maintain the leased premises, a condominium unit owner should also be able to raise as an affirmative defense the association's failure to repair and maintain the common elements. Id. ¶¶ 26, 46. The appellate court viewed the obligation to pay assessments, and the obligation to repair and maintain the common elements, as mutually exchanged promises, and concluded that under principles of contract law, a material breach of the repair obligation could warrant nonpayment of assessments. Id. ¶¶ 27-28. The appellate court acknowledged that its holding placed Illinois in the small minority of jurisdictions that permit a unit owner to claim an offset to assessments based on a failure to repair and maintain the common elements. Id. ¶ 63.
¶ 9 As to Carlson's counterclaim, the appellate court held that it was not germane to the forcible proceeding because it sought nothing but monetary relief. The appellate court therefore affirmed the trial court's order severing the counterclaim. Id. ¶ 48.
¶ 10 We allowed Spanish Court's petition for leave to appeal (Ill.S.Ct. R. 315(a) (eff. Feb. 26, 2010)), and allowed the Community Associations Institute-Illinois Chapter to file an amicus curiae brief in support of Spanish Court (Ill. S.Ct. R. 345 (eff. Sept. 20, 2010)).
¶ 12 The only issue before this court is whether an association's purported failure to repair or maintain the common elements is germane to a forcible entry and detainer proceeding against a unit owner based on unpaid assessments, and thus may be raised by the unit owner in defense of the forcible action.
¶ 13 Our review of the parties' arguments and resolution of the legal issue before us require consideration of various provisions of the forcible statute, codified in article IX of our Code of Civil Procedure (735 ILCS 5/9-101 et seq. (West 2008)), as well as various provisions of the Condominium Property Act (Condominium Act) (765 ILCS 605/1 et seq. (West 2008)). Accordingly, our review proceeds de novo. Knolls Condominium Ass'n v. Harms, 202 Ill.2d 450, 454, 269 Ill.Dec. 464, 781 N.E.2d 261 (2002).
¶ 14 Section 9-102 of the forcible statute expressly provides that a forcible entry and detainer action may be maintained against a unit owner who "fails or refuses to pay when due his or her proportionate share of the common expenses * * *, or of any other expenses lawfully agreed upon,"
¶ 15 Notably, the forcible statute limits the matters which may be raised in a forcible action to "germane" matters. Section 9-106 states: "no matters not germane to the distinctive purpose of the proceeding shall be introduced by joinder, counterclaim or otherwise." 735 ILCS 5/9-106 (West 2008). Historically, the "distinctive purpose" of a forcible proceeding was to gain possession of property unlawfully withheld. Jack Spring, Inc. v. Little, 50 Ill.2d 351, 357-58, 280 N.E.2d 208 (1972). With respect to leaseholds, the legislature expanded the purpose of the proceeding by providing that "a claim for rent may be joined in the complaint, and judgment may be entered for the amount of rent found due." 735 ILCS 5/9-106 (West 2008); Jack Spring, 50 Ill.2d at 358, 280 N.E.2d 208. When the legislature added condominium property to the reach of the forcible statute, the legislature likewise provided that when the action is based upon the failure of a unit owner to pay his or her share of the common expenses, or of any other expenses lawfully agreed upon, the association may obtain a judgment for both possession and the unpaid expenses found due by the court. 735 ILCS 5/9-111(a) (West 2008).
¶ 16 Although the distinctive purpose of a forcible proceeding has changed to the extent that, in some circumstances, an order of possession may be coupled with a money judgment, whether a matter is "germane" is yet closely tied to the plaintiff's claim for possession. For example, in Rosewood Corp. v. Fisher, 46 Ill.2d 249, 257, 263 N.E.2d 833 (1970), where the plaintiffs' forcible action was based upon the defendants' failure to make payments pursuant to a residential installment contract, we held that "it must necessarily follow that matters which go to the validity and enforcibility of that contract are germane, or relevant, to a determination of the right to possession." Similarly, in Jack Spring, we held that where a forcible action is based on unpaid rent, whether the tenant, in fact, owes rent is germane to that proceeding. Jack Spring, 50 Ill.2d at 358-59, 280 N.E.2d 208. Indeed, we observed that:
Accord Peoria Housing Authority v. Sanders, 54 Ill.2d 478, 483, 298 N.E.2d 173 (1973).
¶ 17 In Clore v. Fredman, 59 Ill.2d 20, 26-27, 319 N.E.2d 18 (1974), we examined our holdings in Rosewood Corp., Jack Spring, and Peoria Housing Authority, and held that the landlord's motive for the attempted eviction was germane to the forcible proceeding where a state statute and local ordinance prohibited retaliatory evictions. We explained that, "[i]f in fact, the landlord's action is retaliatory, the landlord is not entitled to possession of the property and the action cannot be maintained." Clore, 59 Ill.2d at 27, 319 N.E.2d 18.
¶ 19 Spanish Court maintains that the appellate court's recognition of a nullification defense rests on an ill-fitting analogy, namely, that the association-unit owner relationship is, for purposes of the forcible statute, analogous to the landlord-tenant relationship. See 2012 IL App (2d) 110473, ¶¶ 16, 26, 46, 366 Ill.Dec. 90, 979 N.E.2d 891. We agree with Spanish Court.
¶ 20 The relationship between a landlord and tenant is contractual. See generally 24 Ill. L. and Prac. Landlord and Tenant § 1, at 157 (2009). Although aspects of that relationship may be governed by state and local landlord-tenant laws, the relationship is created through the agreement of the parties. When a landlord breaches the terms of the agreement (the lease) by failing, for example, to comply with the implied warranty of habitability, cases have traditionally applied contract remedies, including damages, rescission, reformation, or abatement of rent. Glasoe v. Trinkle, 107 Ill.2d 1, 15-17, 88 Ill.Dec. 895, 479 N.E.2d 915 (1985). Cf. Mohanty v. St. John Heart Clinic, S.C., 225 Ill.2d 52, 70, 310 Ill.Dec. 274, 866 N.E.2d 85 (2006) ("Under general contract principles, a material breach of a contract provision by one party may be grounds for releasing the other party from his contractual obligations.").
¶ 21 Although contract principles have sometimes been applied to the relationship between a condominium association and its unit owners based on the condominium's declaration, bylaws, and rules and regulations (1 Gary A. Poliakoff, The Law of Condominium Operations § 1:23 (1988 and Supp. 2012-13)), the relationship is largely a creature of statute, defined by the provisions of the Condominium Act (765 ILCS 605/1 et seq. (West 2008)). Under that act, the board of managers, through whom the association of unit owners acts (765 ILCS 605/2(o) (West 2008)), has the duty "[t]o provide for the operation, care, upkeep, maintenance, replacement and improvement of the common elements." 765 ILCS 605/18.4(a) (West 2008). The Condominium Act also addresses the "[s]haring of expenses" among unit owners, and establishes that: "It shall be the duty of each unit owner * * * to pay his proportionate share of the common expenses." 765 ILCS 605/9(a) (West 2008).
¶ 22 The forcible statute itself distinguishes between the landlord-tenant relationship and the association-unit owner relationship. Section 9-209, applicable to leaseholds, states that a landlord may, after rent is due, "notify the tenant, in writing, that unless payment is made within a time mentioned in such notice, * * * the lease will be terminated," and the landlord may sue for possession and unpaid rent. (Emphasis added.) 735 ILCS 5/9-209 (West 2008). Thus, when a landlord successfully litigates its forcible action, the landlord-tenant relationship ceases and, except for any money judgment for past due rent, the tenant's rental obligation terminates.
¶ 23 With respect to condominium property, however, the forcible statute nowhere indicates that the association-unit owner relationship, or the condominium declaration, "will be terminated." A unit owner does not cease to be a unit owner even if dispossessed of his or her unit, and the obligations of condominium ownership, including the obligation to pay assessments, continue unabated. As set forth in section 9-111 of the forcible statute, a unit owner may only file a motion to vacate a judgment in favor of the association if, inter alia, the unit owner "is not in arrears on his or her share of the common expenses for the period subsequent to that covered by the judgment." (Emphasis added.) 735 ILCS 5/9-111(a) (West 2008). Section 9-111.1 also provides that the obligation to pay assessments continues, stating that where the board of managers rents the unit to satisfy the judgment, rental income may be applied, following satisfaction of the judgment, to "assessments accrued thereafter until assessments are current." 735 ILCS 5/9-111.1 (West 2008). These statutory sections also reveal that, unlike an order of possession in favor of a landlord, an order of possession in favor of an association is intended to be temporary, not permanent, "with possession eventually returning to the unit owner." Knolls Condominium Ass'n, 202 Ill.2d at 457, 269 Ill.Dec. 464, 781 N.E.2d 261. See also Ill.Ann.Stat., ch. 30, ¶ 309.2, Historical and Practice Notes, at 198 (Smith-Hurd Supp. 1992) ("The relationship between a landlord and tenant is purely contractual and terminates upon a breach of that contract. By contrast the relationship between the condominium unit owner and the board of managers is statutory and ongoing.").
¶ 24 The different treatment that the forcible statute accords to leased property, on the one hand, and condominium property, on the other hand, underscores that the landlord-tenant relationship and the association-unit owner relationship are not analogous, and that the defenses available to a tenant are not necessarily available to a unit owner. Whether a unit owner may, nonetheless, assert a nullification defense requires a closer examination of the Condominium Act and the nature of a unit owner's obligation to pay assessments.
¶ 25 Section 9 of the Condominium Act, which establishes a unit owner's duty to pay assessments, does not provide, expressly or impliedly, that such duty is contingent
This section further states that "[t]he association shall have no authority to forbear the payment of assessments by any unit owner." 765 ILCS 605/18(o) (West 2008).
¶ 26 These provisions, when read together, demonstrate that a unit owner's liability for unpaid assessments is not contingent on the association's performance. The unit owner cannot "avoid" the duty to pay assessments, i.e., the duty cannot be annulled, vacated, defeated, or invalidated (see Webster's Third New International Dictionary 151 (1986)), and the association cannot refrain from enforcing that obligation. Accordingly, a unit owner's claim that its obligation to pay assessments was nullified by the association's failure to repair and maintain the common elements is contrary to the Condominium Act and is not a viable defense.
¶ 27 We recognize that Spanish Court based its right to possession on Carlson's unfulfilled obligation to pay assessments under the condominium declaration, and not under the Condominium Act. Nothing in the declaration or bylaws, however, may conflict with the provisions of the act. 765 ILCS 605/18, 4(i) (West 2008).
¶ 28 A nullification defense is not only inconsistent with the express provisions of the Condominium Act governing the payment of assessments, such a defense is inconsistent with the legislature's purpose in adopting section 9.2, authorizing the maintenance of a forcible action against a defaulting unit owner. 765 ILCS 605/9.2 (West 2008). "`This section was adopted to provide a constitutionally permissible, quick method for collection of assessment arrearages * * *.'" Knolls Condominium Ass'n, 202 Ill.2d at 457-58, 269 Ill.Dec. 464, 781 N.E.2d 261 (quoting Ill.Ann.Stat., ch. 30, ¶ 309.2, Historical and Practice Notes, at 179-80 (Smith-Hurd Supp. 1991)). A nullification defense would inject a myriad of fact-based inquiries into the forcible action, unduly prolonging what was intended to be an expeditious proceeding. Not only would the forcible court need to determine whether the association breached its duty to repair or maintain a common element, the forcible court would need to determine whether that breach was "material," and whether that material breach constituted a partial or complete defense to the forcible action.
¶ 29 The necessity of a "quick method" for collection of past due assessments, unencumbered by extraneous matters, is manifest when we consider the manner in which condominium associations operate
¶ 30 The association, which is comprised of all the unit owners (765 ILCS 605/2(o) (West 2008)), "is responsible for the overall administration of the property through its duly elected board of managers." 765 ILCS 605/18.3 (West 2008). The officers and members of the board must "exercise the care required of a fiduciary of the unit owners." 765 ILCS 605/18.4 (West 2008). The business of the board, which includes, inter alia, the care and upkeep of the common elements, the employment of necessary personnel, the acquisition of appropriate insurance, and the payment of real property taxes (765 ILCS 605/18.4(a), (e), (f), (k) (West 2008)), is funded through the unit owners' assessments. The assessments are derived from the annual budget prepared by the board. See 765 ILCS 605/18(a)(6) to (8) (West 2008) (discussing procedure for adoption of the "proposed annual budget and regular assessments pursuant thereto"). The association's ability to administer the property is dependent upon the timely payment of assessments, and "any delinquency in unit owners' payments of their proportionate share of common expenses may result in the default of the association on its obligations or the curtailment of association directed services," impacting not only the delinquent unit owner, but all association members. 1 Gary A. Poliakoff, The Law of Condominium Operations § 5:03 (1988 and Supp. 2012-13). Because of the interdependence that exists among unit owners, the condominium form of property ownership only works if each unit owner faithfully pays his or her share of the common expenses. When a unit owner defaults in the payment of his or her assessments, the resulting forcible entry and detainer action is thus brought "for the benefit of all the other unit owners." 765 ILCS 605/9.2(a) (West 2008). See also 765 ILCS 605/9(h) (West 2008) (statutory lien for common expenses "shall be for the benefit of all other unit owners").
¶ 31 Permitting a unit owner's duty to pay assessments to be nullified would thus threaten the financial stability of condominium associations throughout this state. As explained by the Massachusetts high court:
The Massachusetts high court thus held that "there is no right to set-off against a lawfully imposed condominium charge." Id. Although the Massachusetts court's holding was entered in the context of a
¶ 32 Recognition that a unit owner's duty to pay assessments cannot be nullified does not mean that a unit owner cannot challenge whether assessments are due, nor does it mean that an aggrieved unit owner has no recourse. A unit owner could, for example, challenge whether assessments are due by challenging the association's recordkeeping, or the manner in which the assessment was adopted. See 765 ILCS 605/2(m) (West 2008) (defining "`[c]ommon [e]xpenses'" as those "lawfully assessed" by the board). In addition, a unit owner who believes he or she has been aggrieved by some act or omission of the board of managers may take steps to remove the offending board members; become involved in the management of the association by seeking election to the board; or seek recourse through the courts.
¶ 33 In this case, when the forcible action proceeded to trial, Carlson challenged the manner in which Spanish Court adopted one of its special assessments, for which Spanish Court sought payment. After hearing the evidence, the trial court disallowed that special assessment. Additionally, as noted earlier, Carlson elected to file a counterclaim for damages to her unit, which was severed by the trial court and transferred to another courtroom for disposition. Thus, Carlson will have an opportunity for a full and fair hearing on her claim that Spanish Court failed to repair and maintain the roof and brickwork, causing damage to her unit.
¶ 35 Carlson's claim that her duty to pay assessments was nullified by Spanish Court's failure to repair and maintain the common elements is not a viable defense to Spanish Court's forcible action as a matter of law, and is thus not germane to that proceeding. We, therefore, reverse that portion of the appellate court judgment vacating the trial court's judgment and remanding for partial reinstatement of Carlson's affirmative defenses, and affirm the judgment of the trial court.
¶ 36 Appellate court judgment reversed in part.
¶ 37 Circuit court judgment affirmed.
Chief Justice GARMAN and Justices THOMAS and KARMEIER concurred in the judgment and opinion.
Justice FREEMAN dissented, with opinion, joined by Justices KILBRIDE and BURKE.
Justices FREEMAN, KILBRIDE and BURKE dissented upon denial of rehearing, without opinion.
¶ 38 Justice FREEMAN, dissenting:
¶ 39 The majority holds that in a forcible entry and detainer proceeding for unpaid assessments, a unit owner cannot raise as a defense an association's failure to repair or maintain the common elements. I disagree and respectfully dissent. I would hold that such a defense can be raised and is germane to the forcible proceeding.
¶ 40 I begin with the premise that Illinois is unique in allowing a condominium association to utilize the forcible statute to evict a unit owner for failure to pay assessments. Knolls Condominium Ass'n, 202 Ill.2d at 458, 269 Ill.Dec. 464, 781 N.E.2d 261
¶ 41 The forcible statute permits a defendant to offer into evidence any matter in defense of the action that is germane to the distinctive purpose of the proceeding. 735 ILCS 5/9-106 (West 2008). Neither the forcible statute nor the Condominium Act defines germane. Yet, sections 9-106 and 9-111 of the statute permit a claim for rent (735 ILCS 5/9-106 (West 2008)) as well as a claim for unpaid assessments (735 ILCS 5/9-111 (West 2008)) to be included in the action. This court has already determined that since a landlord can include a claim for unpaid rent in a forcible proceeding, a tenant may raise as a defense that no rent was due. Jack Spring, 50 Ill.2d at 359, 280 N.E.2d 208. Specifically in Jack Spring, we held that the tenant could assert as a defense that the landlord breached the implied warranty of habitability and as a result, the tenant's duty to pay rent was excused or nullified by the landlord's breach. Jack Spring, 50 Ill.2d at 359, 280 N.E.2d 208. We reasoned that to hold that a landlord could, at his discretion, expand the issues (i.e., assert a claim for rent) in a forcible proceeding, but the tenant could not (i.e., assert a defense for breach of the lease terms, express or implied), violated "common sense and accepted rules of statutory interpretation." Id. at 358, 280 N.E.2d 208.
¶ 42 We should employ a similar analysis here. Spanish Court brought its complaint pursuant to the forcible statute and asserted counts for possession and breach of contract (the condominium declaration) as well as a claim for unpaid assessments. Similar to the tenant in Jack Spring, Carlson should be permitted to raise as a defense that the association's breach of its duty to repair or maintain the common elements excused or nullified her duty to pay assessments. Though the majority acknowledges Spanish Court based its right to possession on Carlson's failure to pay assessments under the condominium declaration and not the Condominium Act, it nevertheless maintains that the relationship between an association and unit owner is controlled by statute rather than contract. Thus, the majority concludes, for purposes of the forcible statute, analogies between the landlord-tenant relationship and unit owner-association relationship are "ill-fitting" and the defenses available to a tenant are not necessarily available to a unit owner. My view is more moderate. The unit owner-association relationship is governed both by statute (the Condominium Act) and contract (the condominium's declaration, bylaws and rules and regulations). Therefore, I believe that such a comparison is not "ill-fitting" and that a nullification defense should likewise be available to a unit owner.
¶ 43 Although the majority cites to Rosewood Corp. for support, I believe it supports my position. In Rosewood Corp., we considered whether the defendants, who had entered into installment contracts for the purchase of residential properties,
¶ 44 Similarly here, whether a unit owner owes condominium assessments is "closely allied," "related," "connected," "relevant" and "pertinent" to the condominium association's forcible action for possession and unpaid assessments. When Spanish Court's right to possession is based on Carlson's failure to pay assessments pursuant to the condominium declaration, it must necessarily follow that the question of whether Carlson owes those assessments is germane or relevant to a determination of the right to possession.
¶ 45 Additionally, a nullification defense is not contrary to the provisions in the Condominium Act that govern the payment of assessments, as the majority asserts. The Condominium Act imposes a duty on unit owners to pay their proportionate share of the common expenses as well as a duty on associations to repair and maintain the common elements. Yet, it does not address a situation such as here where a unit owner stops paying assessments because the association failed to repair and maintain the roof, a common element. Since the Condominium Act is silent in this regard, permitting a unit owner to raise a nullification defense is not contrary to the Condominium Act's provisions.
¶ 46 The majority also references in a footnote that "the argument that the right to collect assessments is dependent upon the association's duty to maintain the common elements has `not been generally accepted by the courts,'" Supra ¶ 26 n. 3 (citing 1 Gary A. Poliakoff, The Law of Condominium Operations § 5:19 (1988 and Supp. 2012-13)). However, this assertion ignores the fact that Illinois is unique in that it permits condominium associations to utilize the forcible statute to evict a unit owner for failure to pay assessments. Therefore, a comparison to other courts' decisions is not persuasive.
¶ 47 Moreover, a nullification defense is not contrary to the express purpose of forcible proceedings to provide a "quick method" to collect assessment arrearages unencumbered by "extraneous matters." If a tenant can raise the defense in a forcible proceeding, I fail to see much difference
¶ 48 Further, we noted back in 1972, in Jack Spring, the "salutary trend" toward determining the rights and liabilities of litigants in one, rather than multiple, proceedings. Jack Spring, 50 Ill.2d at 359, 280 N.E.2d 208. Interpreting the forcible statute as permitting a unit owner to raise such a defense is consistent with this pronouncement.
¶ 49 Lastly, the majority's decision rests upon an unfounded fear that permitting a unit owner to raise a nullification defense would threaten the financial stability of condominium associations throughout the state. As the appellate court noted, the association's breach must be material and cannot be based on a general disagreement with the association. The threat of eviction also serves as a very powerful tool to encourage compliance by unit owners and a unit owner who ceases paying assessments does so with the utmost peril. It is true that the form of condominium ownership only works if each unit owner faithfully pays his or her share of the common expenses. It is equally true that condominium ownership only works if the association likewise fulfills its obligations. Not permitting a unit owner to raise a nullification defense in a forcible action denies a voice to an ever growing segment of the population who purchase condominium property. True, unit owners can continue to pay assessments and bring a lawsuit against the association for its failure to repair or maintain; however, that puts an expensive and time-consuming burden on the unit owner rather than litigating the matter in the forcible proceeding that is already before the court, as is done in a landlord-tenant situation.
¶ 50 In the end, I believe this is a matter best left to the legislature. The legislature included condominium property within the province of the forcible statute and further provided that a claim for unpaid assessments may be included in the forcible action for possession. Yet, it provided no further guidance as to what defenses may be germane to the proceeding. If the legislature had wanted to foreclose a unit owner from raising a nullification defense in a forcible action, it could have so provided. It did not.
¶ 51 Justices KILBRIDE and BURKE join in this dissent.