Wednesday, May 8th, 2013

Exercise of Home Rule Power Upheld: Palm v. 2800 Lake Shore Drive Condominium Association

The Illinois Supreme Court recently upheld the City of Chicago’s exercise of home rule power regarding the inspection of a condominium association’s financial books and records.  The Plaintiff in Palm v. 2800 Lake Shore Drive, a unit owner, had requested specific documents from the condominium association (regarding contracts awarded, Board members’ use of funds, etc.) which the Board denied.  Upon the denial, the Plaintiff filed a complaint challenging the denial of the request under Chicago’s condominium ordinance which allows unit owners to inspect an association’s financial books and records within three business days of delivery of a written request.

The trial court initially dismissed the lawsuit and found that Section 107.75 of the Illinois General Not for Profit Corporation Act of 1986 (governing inspection of records by members) preempted the City’s ordinance.  After the City intervened and the Plaintiff filed a motion to reconsider, the trial court ruled that the ordinance was in fact a valid exercise of Chicago’s home rule authority and that it was not preempted by the Not for Profit Corporation Act.

Before the Supreme Court, the Condominium Association argued that the City’s ordinance renders both the Not For Profit Act and the Condominium Property Act unenforceable because those Acts give a condominium association 30 days to gather and produce the records, and they limit the production to the last 10 years. Chicago’s ordinance allows only three days to produce records from any period of time.  The Association’s argument was that those conflicts exceeded Chicago’s home rule power.

The Plaintiff and Chicago argued that if the General Assembly intended to limit the City’s home rule authority in this field, it could have expressly reserved that power for the State or could have prohibited home rule units from exercising their home rule power in this field.

In analyzing Chicago’s home rule power, the Supreme Court noted that “[t]he home rule provisions of the 1970 Illinois Constitution were designed to alter drastically the relationship between our local and state governments.”  The Court further noted that “[t]he General Assembly may, however, preempt the exercise of a municipality’s home rule powers by expressly limiting that authority.”  Lastly, the Court noted that “[i]f the legislature intends to limit or deny the exercise of home rule powers, the statute must contain an express statement to that effect.”

In upholding the City’s ordinance, the Supreme Court found that the General Assembly (in enacting the Not For Profit Act and the Condominium Property Act) failed to expressly limit a city’s home rule authority in this field and therefore the ordinance was a valid exercise of the City’s home rule power.


Timothy J. Clifton

Author: Timothy J. Clifton