In January the Illinois Supreme Court agreed to hear the condominium case, Spanish Court Two Condominium Association v. Lisa Carlson, No. 115342, that breaks with the commonly held legal doctrine that HOA members are not permitted to withhold paying assessments, even when the HOA has failed to make necessary structural repairs to the condominium. Courts have held that HOAs are subject to servitudes law foremost, and that the common good required for the survival of the HOA is paramount. Therefore, payments must not be withheld in spite of any outstanding controversy.
In Spanish Court the appellate court held that a HOA condominium owner could withhold paying assessments because the relationship between the owner and HOA was similar to that of a tenant and landlord. The contract in both situations involved mutual promises of making payments in return for HOA services to maintain and repair the property. The court held that under contract law the withholding of payments was permitted. This decision broke with precedent, bringing justice to homeowners against special laws for HOAs.
The courts in other cases and in other states have held that the declaration of Covenants, Conditions and Restrictions (CC&Rs) are a contract to be interpreted as a contract, but then apply servitude law over contract law, and even over constitutional law. (See the Restatement Servitudes, § 3.1, comment h and§ 6.13, comment a).
For example, this holding stands in contrast to the January 2013 Illinois Supreme Court ruling in Poris v. Lake Holiday POA (No. 113907) that allowed HOA security personnel to stop and detain drivers who are violating HOA rules, and not municipality ordinances. Here, servitude law prevailed over constitutional law. And, in 2007 the Twin Rivers HOA (NJ) free speech case (CBTW v. Twin Rivers, 929 A.2d 1060) held that the business judgment rule would protect homeowner rights, and that there may be some instances where constitutional concerns could come into play.
The Illinois appellate court admitted to the fact that its opinion stood alone in favor of the homeowner and contract law when HOAs are involved. If the preponderance of the cases is to control, then homeowners can expect an Illinois Supreme Court reversal of the appellate decision as it did in Poris. Homeowners and justice should not be too enthusiastic about the right to withhold assessments in HOAs.