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Illinois Appellate Court Grants Townhome Associations the Right to Pursue a Tax Appeal on Behalf of the Entire Association

In a judicial opinion issued on December 20, 2021, the Illinois Appellate Court, Second District was asked to make a determination on whether a “townhome association”, in contrast to a “condominium association” had standing to proceed with a property tax  appeal at the Lake County Board of Review. See Deerpath Consolidated Neighborhood Assoc. v. The Lake County Board of Review, 2021 IL App (2d) 190985 (December 20, 2021)  The Illinois Appellate Court vacated the dismissal of the tax appeal and the appeal was remanded to Lake County Board of Review for a hearing based on its merits.

In its decision, Appellate Court held that the Deerpath Consolidated Neighborhood Association which is a townhome association had associational standing and the Court did not concur with the Lake County Board of Review’s decision to dismiss the Association’s appeal because each of the townhome homeowners had not authorized the appeal individually.  The Lake County Board of Review based its dismissal on an unpublished rule which prohibits tax appeals by townhome associations on behalf of their members.  It should be noted that “condominium associations”, a similar type of association, have always been allowed to file one cumulative tax appeal on behalf of all of the unit owners within the association.

The Illinois Appellate Court rejected the Board of Review’s argument that there was a rational basis for treating homeowner’s associations differently from condominium associations for purposes of standing where condominium associations are allowed to file tax appeals on behalf of the entire association. Id. at 27.  The Illinois Appellate Court relied on the three elements of associational standing as set forth in the U.S. Supreme Court case Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333 (1977).  This three-part test which determines associational standing states as follows:

“[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.”

Hunt, U.S. at 343.

The first prong is satisfied because individual homeowners had standing to sue and the court cited the statute authorizing condominium associations to lodge tax objections (765 ILCS 605/10 (West 2018)).  The second prong is satisfied because “tax objections are germane to a condominium association’s purpose, provided that the association is duly authorized to act on behalf of its members.” Citing Sunnyside Elgin Apartments, LLC v. Miller, 2021 IL App. (2d) 200614  The court added that property tax appeal are within the ambit of civil functions concerning property administration. Property taxes are germane to the general welfare of the members of the association.  The third prong of the Hunt test is satisfied because the Association can base the appeal on publicly available comparable sales data which therefore limits the need for individual homeowner involvement.  Participation of individual homeowners is not indispensable to a case being decided on its merits based on the evidence presented. Deerpath Consolidated Neighborhood Association, 2021 IL App. 2d 190985 at p. 10.  The Appellate Court adds that a multi-parcel appeal by the Association will likely be more efficient and economical than a multitude of separate tax appeals brought by individual property owners.  The Appellate Court cited an Illinois Property Tax Appeal (PTAB) decision in Stonecreek Townhome Ass’n, Ill. Prop. Tax Appeal Bd. Op. No. 16-36976-001-R-1 (December 3, 2020) which allowed townhome associations to file under one tax appeal at PTAB to further substantiate its holding. 

Therefore, the Illinois Appellate Court confirms townhome association’s standing to file an appeal on behalf of the entire townhome association which is in accordance with the U.S. Supreme Court deciision in Hunt v. Washington State Apple Advertising Comm’n and with a recent PTAB decision which involved the same issue.