Condominiums; Contracts

Hidden Grove Condominium Assoc v Crooks, 318 Ill App 3d 945 744 NE2d 305, 253 Ill Dec 23 (3d D 2001).

Facts: Members of a condominium association were to pay a monthly fee of $88.23 and an additional $25 for late payments. A unit owner was late paying fourteen months in assessment fees. She paid $1,176 in October 1997 to cover the payments for December 1996 to January 1998. The association charged $25 for the first month and $25 for every subsequent month that the payment was past due. Therefore a payment due in January 1997 that was paid in October 1997 was assessed $225 in late charges. The association filed a complaint for payment of monthly fees and late charges. The trial court ruled in favor of the association and ordered the unit owner to pay $1,696.21.

Holding: Reversed and remanded. The Condominium Property Act allows an association to assess late charges for past due member fees. 765 ILCS 605/18.4. The court will enforce a contract with a predetermined amount for damages only when that amount is a reasonable forecast of adequate compensation in case of a breach and when it is difficult to estimate the harm caused. It is reasonable to charge a late fee that equals the administrative cost of collecting late assessment and the lost interest on the income from the late payment; therefore, it is reasonable to charge a one-time $25 late fee. Adding on $25 for every subsequent month the assessment fee remains unpaid is unreasonable and is intended to be a penalty. The court cannot enforce the charge agreed to in the association's bylaws because it is a penalty. Remand to determine the appropriate late charge.

© ATG atgc0112vol25

 

Print this page