Recent Court Decision Brings Transparency ...and Potential Liability

A recent decision in Illinois Appellate Court will bring relief to condominium owners involved in lawsuits with real estate developers over construction defects not disclosed in the engineering reports provided during the purchasing process. It may also bring improved transparency to the often-opaque world of real estate development, and increased liability to the professionals who provide those engineering reports to developers.

The case, known as 21 Kristin Condominium Association vs. Pioneer Engineering and Environmental, involves a 357-unit condominium complex located in Schaumburg, Illinois that was completed in 1972.

A Legal About-Face

Sima Kirsch, an attorney based in Chicago who specializes in condominium related issues, says this decision is very significant because it changes the position of contractors who provide expert information to purchasers through developers.  

“It’s a case that has turned longstanding contract principles on their end,” Kirsch says. In short, Kirsch says, the Illinois Appellate Court 1st District reversed a lower court’s decision that rejected a condo association’s $1.5 million claim against the engineering company that prepared the condo developer’s property report. The court found that the condo association failed “to state facts to support their claim that the engineering company breached its duty and negligently misrepresented the condition of the building,” Kirsch says. “The decision is a reversal of a well-established proclivity in Illinois courts to overlook the needs of the prospective purchasers, elevate the rights of the developer and related professionals with specialized knowledge, and support their exclusions and waivers of warranties - even though by doing so they deny basic contract protections for the purchasers of new, gut rehab or conversion properties.”

 

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