How Illinois Associations Must Record a Lien to Prevent a Breach of Fiduciary Duties

When condominium associations record a lien against a unit owner, they must ensure that the lien is legally valid and properly calculated. In Du Bois v. Sherwood Commons Townhome Owners Ass’n, Inc., 2025 IL App (3d) 240122-U, the Illinois Appellate Court ruled associations cannot disregard court rulings, inflate amounts owed, or retroactively apply fee resolutions to justify improper liens. The court’s ruling in Du Bois highlights the critical importance of adhering to the Illinois Condominium Property Act (765 ILCS 605/1), enforcing governing documents in good faith, and understanding the limits of the business judgment rule. Otherwise, condominium associations put themselves at risk for a breach of fiduciary duties.

Background: Establishing a Breach of Fiduciary Duties

The dispute between Du Bois and Sherwood Commons Townhome Owners Association (the “Association”) has spanned several years and multiple lawsuits. In 2018, the Association sued Du Bois for unpaid assessments, relying in part on water and sewer charges billed through American Utility Management (AUM). However, in Sherwood Commons Townhome Owners Ass’n v. Du Bois, 2020 IL App (3d) 180561, the Illinois appellate court ruled that the Association failed to prove that the water charges constituted “assessments” under the Illinois Condominium Property Act (765 ILCS 605/1) or the Association’s governing documents. The court also found Du Bois owed no assessments as of December 9, 2017.

Undeterred, the Association recorded a lien in July 2020 for $10,250.35 against Du Bois’s unit based in large part on the same water charges, late fees, and legal expenses that had already been litigated. Notably, the Association did not amend its bylaws to treat water charges as “assessments” until December 2020, months after the lien had been recorded.

Du Bois responded by filing a new lawsuit against the Association in 2021. He alleged breach of fiduciary duties, asserting that the lien was knowingly improper, falsely included fees that had been denied in the earlier case, and clouded his title. He also sought to permanently remove the lien.

The Association counterclaimed for unpaid assessments, late charges, and attorney fees totaling $13,085.28. It argued that Du Bois remained delinquent and that its actions were protected by the business judgment rule.

Appellate Court’s Ruling: No Basis to Record a Lien

The Illinois appellate court affirmed the trial court’s decision to grant summary judgment (the resolution of a case without a trial) in favor of Du Bois on his claims for breach of fiduciary duty and for quiet title. However, the court reversed summary judgment in Du Bois’s favor on the Association’s counterclaims, finding that genuine issues of material fact remained as to whether any portion of the alleged debt was valid.

The Association attempted to argue that the Illinois Condominium Property Act (765 ILCS 605/1) did not apply to the Association. The Illinois appellate court rejected this argument, holding that the issue was already conclusively decided in the 2020 appellate ruling and that the Association’s own declaration and affidavits identified it as a condominium association.

The court held that the Association breached its fiduciary duty by placing a lien based on amounts that it knew were not lawfully owed. Specifically:

• The prior court ruling determined that the water bills were not “assessments,” and Du Bois owed no assessments or attorney fees.
• The Association recorded a lien that included those disallowed amounts.
• The amendment to the bylaws reclassifying water bills as assessments did not occur until after recording a lien and could not be applied retroactively.
• There was no evidence that the Association consulted legal counsel before filing the lien.

Given these facts, the court found that the Association acted in bad faith or with gross overreach, thereby violating its fiduciary obligations under 765 ILCS 605/18.4 of the Illinois Condominium Property Act.

The court rejected the Association’s argument that Du Bois’s request for an injunction (a court order to perform or stop performing a specific action) could not proceed because injunctive relief is a remedy, not a standalone claim. The court construed Du Bois’s allegations as a claim to quiet title, which seeks to remove an improper cloud on property. Because the lien was based on amounts not lawfully owed, the court found that Du Bois was entitled to have the lien extinguished.

While Du Bois prevailed on his claims, the appellate court reversed the trial court’s dismissal of the Association’s counterclaims. The Association alleged that Du Bois owed other assessments and late fees after the December 2017 cutoff date from the prior litigation. Du Bois disputed this, attesting that he had attempted to pay regular assessments, but the Association refused to accept payment, thereby triggering additional late fees and attorney fees.

The court concluded that there were genuine factual disputes, particularly over whether the charges claimed were proper and whether the condominium association’s refusal to accept payment excused any late fees, that prevented summary judgment. Accordingly, the case was remanded (returned to a lower court for reconsideration) for further proceedings on the counterclaims.

Why This Case Matters for Illinois Condominium Associations

1. Follow Court Rulings and Respect Final Judgements

Condominium Associations cannot revisit issues already decided by a court. The doctrine of collateral estoppel (issue preclusion) prevents relitigation of matters that were fully and fairly decided in a prior action. Here, the Association tried to recharacterize water charges as assessments after losing that argument in court. This approach backfired and led to a finding of bad faith.

2. Do Not Record a Lien Without a Legal Basis

Associations must ensure that when they record a lien, any amounts included in a lien are legally owed. Including disallowed attorney fees, disputed assessments, or retroactively reclassified charges invites legal challenges. Improperly recording a lien can lead not only to its removal, but also to liability for breach of fiduciary duties.

3. Amendments to Bylaws Are Not Retroactive

Condominium Associations cannot pass a resolution today and apply it to disputes from years prior. In this case, the Association’s 2020 amendment to treat water bills as assessments did not justify a lien recorded months earlier. Retroactive application of governing document amendments is fraught with legal risk.

4. The Business Judgment Rule Is Not Bulletproof

While the business judgment rule shields boards from liability for good-faith decisions, it does not protect directors who act without due care, in bad faith, or contrary to legal advice. Boards that rely on prior rulings or fail to consult legal counsel may lose the protections of the rule.

5. Condominium Associations Must Accept Undisputed Payments

If a unit owner attempts to pay regular assessments but the board refuses to accept payment, the association may forfeit the ability to charge late fees or pursue collection costs. Boards should maintain clear records, act reasonably, and seek legal guidance before escalating disputes.

Conclusion

Du Bois v. Sherwood Commons underscores the importance of diligence, honesty, and fidelity to legal procedures in condominium governance. Condominium associations must exercise their fiduciary responsibilities with care and cannot ignore prior court decisions or overreach in their enforcement powers.

At Hirzel Law, PLC, our attorneys represent condominium associations throughout Illinois in assessment collection, lien enforcement, litigation, and governance matters. We help associations navigate the complexities of the Illinois Condominium Property Act (765 ILCS 605/1) while avoiding costly missteps like those seen in Du Bois. If your board has questions about fiduciary duties, lien procedures, or collection policies, contact us today.