Anyone who has ever owned property in Illinois understands that there exists a potentially never-ending cycle of property tax appeals and assessments because real estate is subject to being re-evaluated or re-assessed either on a 3-year or 4-year cycle depending on which county the property is located. Even further, if there are changes made to the use of, or any structure on, the property, the county may reassess the value of the property up or down based on any such changes. If there is any reason to appeal the decision regarding the valuation of the property for tax purposes, an attorney is usually retained who will file the necessary paperwork to obtain a reduction in the assessed value, and as a result of the tax appeal, a lowering of the taxes assessed to the property.
Many times, when units or properties within common interest communities and condo associations are re-assessed, the increased tax burden falls upon each unit owner within that common interest community or condo association community equally. As a result, tax appeals and objections are routinely filed by the board for the common interest community or condo association on behalf of all the units or property owners, and after the payment of the fee to the attorney hired by the common interest community or condo association, the benefits are passed onto the members of the common interest community or condo association. There are multiple benefits to having one tax appeal being filed by the board, including that it is easier for the local taxing body to process one tax appeal or objection than dozens, or even, hundreds, of separate tax appeals from similarly situated owners. This can also help expedite the process.
Conversely, there are also very few reasons why a board may choose not to appeal the taxes for the entire common interest community or condo association. The main detriment to the board filing a group appeal on behalf of the common interest community or condo association is that the entire process must be done by an HOA or condo attorney. In Illinois, corporations (including common interest communities and condo associations) cannot represent themselves in judicial proceedings, and, depending on the situation, attorneys who file tax appeals can take a sizeable percentage of the savings as a contingency fee. In the limited situations where a condo unit owner would potentially be able to represent itself when filing a tax appeal, this fee to the attorney would then be saved.
This practice of having the common interest community or condo association represent the unit owners has gone on for years without objection for all the reasons identified above. However, in the past few years, lower courts in Lake and McHenry County ruled that HOAs and condo associations lacked standing to prosecute tax appeals on behalf of the unit owners within those HOAs and condo associations.
Starting in 2021, decisions were handed down by the Second District Appellate Court which overturned those lower courts and held that “associational standing” existed for condo associations and HOAs. The two cases are Sunnyside Elgin Apartments, LLC v. Miller, 2021 IL App (2d) 200614, appeal den’d September 29, 2021 by 175 N.E.3d 120, and Deerpath Consolidated Neighborhood Ass’n v. Lake County Board of Review, 2021 IL App (2d) 190985. “Associational standing” is a legal concept that allows an HOA, common interest community, condo association, or organization to represent its members if three elements are met: (1) the HOA’s or condo association’s members would otherwise have standing to sue in their own right; (2) the interests the HOA or condo association seeks to protect are germane to the organization’s purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. These two cases held that all three elements are met by common interest community and condo associations with regards to tax appeals.
In the Miller case, the appellate court invited the legislature to clarify the concept of associational standing in relation to tax appeals in either or both the Illinois Condominium Property Act, 765 ILCS 605/1 et seq., or the Property Tax Code, 35 ILCS 200/ et seq., because the justices were given “less than clear guidance” from the Illinois Condominium Property Act, 765 ILCS 605/1 et seq., or the Property Tax Code, 35 ILCS 200/ et seq., in making their ultimate decision. Shortly thereafter, on January 11, 2022, Senator Laura Murphy presented a bill to the Illinois Senate to amend the Property Tax Code (SB3069) to pass a law that HOAs and condo associations may file tax appeals with the Property Tax Appeal Board on behalf of the owners within those HOAs or condo associations.
The bill presented by Senator Murphy was then signed into law on May 27, 2022. Section 16-160 of the Property Tax Code, 25 ILCS 200/ et seq., will now include the following additional provision (when it goes into effect on January 1, 2023):
An association may, on behalf of all or several of the owners that constitute the association, file an appeal to the Property Tax Appeal Board or intervene in an appeal to the Property Tax Appeal Board filed by a taxing body. For purposes of this Section, “association” means: (1) a common interest community association, as that term is defined in Section 1-5 of the Common Interest Community Association Act; (2) a unit owners’ association, as that term is defined in subsection (o) of Section 2 of the Condominium Property Act; or (3) a master association, as that term is defined in subsection (u) of Section 2 of the Condominium Property Act.
Although the standing issue is resolved in Illinois as of January 2023, a board of managers making a decision about whether to file a tax appeal on behalf of the HOA or condo association unit owners should discuss the pros and cons of doing so as outlined above. As identified above, if a decision is made to pursue a tax appeal by the board, an Illinois HOA or condo attorney should be immediately retained who can assist with the process and confirm that all deadlines are met.
Adam Toosley is a member at Hirzel Law, PLC and focuses his practice on real estate litigation, zoning and land use, construction, and financial services litigation. Over the course of his career, he has represented property owners, landlords, condominium associations, lenders, and all parties in the construction chain, handling all aspects of real estate-related disputes, including construction defect cases, payment, and landlord-tenant disputes as well as real estate foreclosures, mechanic’s lien cases and fraud and business tort claims in state and federal court as well as in mediations and arbitrations throughout the United States. He is licensed in both Michigan and Illinois. He can be reached at (312) 626-4535 or at email@example.com.
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