Are Your Restrictive Covenants Clear?
Preventing Commercial Use in Residential Condos
When condominium unit owners purchase their homes, they often assume they have broad discretion over how they use their units. However, condominium living is subject to numerous restrictions, set forth in a condominium association’s declarations, bylaws, rules, and regulations (altogether known as restrictive covenants) and the Illinois Condominium Property Act (765 ILCS 605/1). The Illinois Appellate Court’s decision in 400 Condominium Association v. Gedo, 183 Ill. App. 3d 582, 539 N.E.2d 256 (1st Dist. 1989) illustrates how courts interpret and enforce use restrictions in condominium declarations, even when the restrictions are not explicitly set forth in the declaration. This case demonstrates that Illinois courts will look to both the language used in an association’s governing documents and the developer’s intent when analyzing governing documents. The key takeaways from this case will provide meaningful insight to condominium associations looking to ensure their restrictive covenants are clear and effective, and ultimately prevent owner disputes and litigation.
Background
The dispute in question arose out of a high-rise building located in Chicago, IL. The building contained both residential and non-residential units. Dr. John Gedo and other physicians purchased units on floors 8 through 39 of the building and operated their medical practices out of those units. The condominium association, 400 Condominium Association (the “Association”), objected. It argued that Section 21 of the condominium declaration restricted floors 8 through 39 to residential use only. Section 21 of the condominium declaration stated:
“Units located on Levels one through seven and Level forty may be used for purposes other than housing and related common purposes.”
Although the declaration did not explicitly state that floors 8 through 39 must be used for residential purposes, the Association maintained that was the only reasonable interpretation.
The Association filed suit against the doctors, seeking a declaratory judgment (a court order that spells out legal rights/obligations of those in a legal dispute, but not awarding damages) and injunctive relief (a court order to perform or stop performing a specific action immediately). The trial court agreed with the Association and entered judgment restricting the use of units on floors 8 through 39 to residential purposes. The doctors appealed.
The Appellate Court’s Majority Opinion: Honoring the Restrictive Covenants
On appeal, the Illinois Appellate Court affirmed the trial court’s ruling. The court emphasized several principles:
- Restrictive covenants are disfavored, but enforceable if clear. Illinois law requires that restrictive covenants be strictly construed, but courts will enforce them when the intent to restrict is clearly manifested.
- The condominium declaration and articles must be read together. The Articles of Incorporation for the Association stated that the building was organized as a “residential” condominium. Section 21 of the declaration carved out exceptions for certain floors, permitting non-residential use on levels 1 through 7 and level 40.
- Silence as restriction. While Section 21 did not expressly state that floors 8 through 39 were “residential only,” the court found that reading all documents in the restrictive covenants together left no reasonable alternative interpretation. Accepting the doctors’ argument would render Section 21 meaningless since it would serve no purpose unless intended to restrict the remaining floors to residential use.
The majority concluded that the drafters’ intent was clear: the building was to be primarily residential, with limited commercial uses confined to designated levels. The doctors’ medical offices on floors 8 through 39 violated this use restriction.
Why This Case Matters for Illinois Condominium Associations
1. Condominium Declarations Can Impose Restrictions Without Explicit Prohibitory Language
The most significant takeaway from 400 Condominium Ass’n v. Gedo is that Illinois courts will look to the overall intent of the condominium declaration and related documents, not just the presence of prohibitory words. Even if a restriction is not phrased with “only” or “shall not,” it may still be enforceable if the intent to limit use is evident. This case underscores the importance of drafting clear and comprehensive declarations for condominium associations.
2. Courts Will Read Documents Together
The court read the Articles of Incorporation and the Declaration in tandem. Because the Articles described the building as a “residential” condominium, the court interpreted Section 21 as consistent with that intent. Associations should ensure the articles of incorporation aligns with the declaration and bylaws to avoid ambiguity.
3. Judicial Deference to the Purpose of the Restriction
The majority stressed that strict construction should not be used to defeat the apparent intention of the drafters. Courts will not rewrite restrictive covenants but will enforce them when the broader purpose is evident. This reinforces the principle that condominium declarations are not read in isolation but in light of the building’s intended character and function.
4. The Dissent Highlights Risk of Ambiguity
Although the Association prevailed, Judge McMorrow’s dissent highlights a critical risk: ambiguity in drafting can lead to costly litigation. Had the declaration used the word “only” to describe floors 1 through 7 and 40, the case may never have reached the appellate court. Associations should proactively review their governing documents to ensure that restrictions are drafted in clear, enforceable terms.
Conclusion
The 400 Condominium Ass’n v. Gedo case demonstrates that Illinois courts will enforce condominium use restrictions within their restrictive covenants when the overall intent is clear, even if the declaration does not use explicitly prohibitory language. Illinois condominium associations should have their governing documents reviewed by an attorney to confirm that there are no ambiguities and that the documents are precisely drafted to avoid costly litigation.
At Hirzel Law, PLC, we assist condominium associations in drafting, interpreting, and enforcing their governing documents. Our attorneys have extensive experience guiding boards through disputes involving use restrictions, amendments, and compliance with the Illinois Condominium Property Act. If your association is facing questions about unit use or other governance issues, our team is here to help.
