Real Cases in Real Estate By Andrea Lee Negroni, Esq. – April 26th, 2013 Update

Real Cases in Real Estate By Andrea Lee Negroni, Esq. – April 26th, 2013 Update

Real Cases in Real Estate is a weekly update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

Followers of Real Cases in Real Estate will learn and be entertained by lawsuits involving nuisance, trespass, zoning violations, deed restrictions, title insurance, public utilities, mechanics liens, construction defects, adverse possession, foreclosure and eviction, divorce and marital property rights, tenants' rights, and more. Real Cases in Real Estate uncovers the unpredictable, amusing, and sometimes outrageous disputes between next-door neighbors, contractors and homeowners, condo boards and residents, real estate brokers and homebuyers, and zoning administrators and developers.

Each fully cited case summary highlights the essential law of the case and explains the principal legal theories and concepts relevant to the outcome. Plain language treatment makes Real Cases in Real Estate accessible to lawyers and laymen alike.

Whether you follow real estate law professionally or as a hobby, you'll find something new and useful every week in Real Cases in Real Estate.

Updates for the Week of April 26th, 2013

An Illinois Condo Association's Board of Directors Can Breach Its Fiduciary Duty to Unit Owners by Delaying Maintenance of Common Elements, but Is Not Liable for Infliction of Emotional Distress Without Extreme and Outrageous Conduct. Norma Duffy sued her condominium association, claiming the slab was settling which caused walls to fall. She notified the condo board that the foundation, slab, walls and ceiling of her unit were common elements, which the association had a duty to maintain. To accommodate repairs, she moved out of her unit. The association removed the carpeting, utilities, and cabinets but did not commence repairs. Duffy sued the board for breach of fiduciary duty and intentional or negligent infliction of emotional distress.

The Illinois Condominium Property Act requires a condominium board to provide for the operation, care, upkeep and maintenance of the condominium's common elements. In performing these duties, the board must exercise the care required of a fiduciary. The Orlan Brook Condo board acknowledged this duty, but denied failing to exercise it. Duffy complained of delays, such as delayed bidding for repair work, restriction of the bid specifications to merely cosmetic items, the board's refusal to authorize common element repairs, and refusal to compensate her for relocation expenses. In addition to the Condominium Property Act, the declaration and bylaws of the Orlan Brook condominium required the association to provide and pay for maintenance and repair of common elements. The condo directors invoked the business judgment rule, which restricts courts from interfering with the business judgment of corporate directors absent evidence of bad faith, fraud, illegality or gross overreaching. However the court noted that when directors fail to exercise due care, they may not hide behind the business judgment rule. In response to Duffy's claim that the board held her condo "ransom" by failing to make required repairs, the court found she sufficiently pled damages for breach of the board's fiduciary duty. Moreover, the court noted that "breach of fiduciary duty is a form of constructive fraud."

Duffy failed on her intentional/negligent infliction of emotional distress claims, however, because the board's conduct was not extreme and outrageous enough. "Extreme and outrageous behavior requires conduct that goes beyond all possible bounds of decency, such that a reasonable person would hear the facts and be compelled to feelings of resentment and outrage." Conduct that is merely inconvenient, aggravating or annoying to another person is not beyond all possible bounds of decency or intolerable. "The law intervenes only where the distress inflicted is so severe that no reasonable man could be expected to endure it." This issue might have been decided differently if Duffy had demonstrated that she was particularly susceptible to emotional distress because of physical or mental impairment.

Duffy V. Orlan Brook Condominium Owners' Association, Appellate Court Of Illinois, First District, Sixth Division, 2012 IL App (1st) 113577; 981 N.E.2d 1069; 2012 Ill. App. LEXIS 972; 367 Ill. Dec. 341 [enhanced version available to subscribers].

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