2021 IL App (1st) 200687
Ill. App. Ct.2021Background
- Plaintiff Domini Wood (trust beneficiary) owns a condo unit and listed it for short-term stays via Airbnb; the building is a 12-unit condominium governed by a Declaration and an Association board.
- In Nov. 2019 the Association issued a notice of violation; the Board removed Wood as Association president and placed the property on Chicago’s “Prohibited Buildings List,” citing the Declaration.
- Wood sued for declaratory relief (that the Declaration and bylaws do not bar short-term rentals) and for breach of fiduciary duty; defendants moved to dismiss under section 2-615.
- Defendants relied on Declaration §7 (no lease/sublease/assignment for less than 30 days) and §11(b) (no business, trade, occupation or profession shall be conducted on any part of the Property).
- The trial court dismissed, concluding §7 did not reach licenses but §11(b) barred Wood’s short-term Airbnb activity; the Appellate Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §7’s ban on leases <30 days prohibits short-term Airbnb bookings characterized as licenses | Wood: §7 forbids leases only; Airbnb bookings are limited, revocable licenses under Airbnb’s terms | Association: Substance matters; short-term occupancy is the same disfavored activity whether called a lease or license | Court: On a 2-615 record, assume bookings are licenses; §7’s plain text bars only leases, not licenses (§7 does not prohibit licensing) |
| Whether §11(b)’s ban on “business” conducted “on any part of the Property” bars paid short-term rentals | Wood: Short-term hosting is residential, not a “business” on the Property; online bookings/payments occur offsite; reading §11(b) broadly yields absurd results | Association: Short-term paid rentals are economic transactions—services and accommodations for pay—and therefore constitute a business conducted on the Property | Court: “Business” in §11(b) has its ordinary commercial meaning; short-term paid rentals are business activity occurring on the Property and are prohibited by §11(b) |
| How §7 and §11 interact — whether §7 is a self-contained rule or a specific carve-out within the broader §11 prohibition | Wood: §7 should be read alone; §11 should not be used to nullify §7’s scope | Association: §11 is the broad general prohibition; §7 is the specific carve-out authorizing long-term leasing only | Court: Read together: general §11(b) bars business activity; §7 is a specific, narrow exception authorizing leases (and related procedures) for 30+ days; because §7 contains no carve-out for short-term rentals/licenses, §11(b) controls for short-term activity |
| Whether the Association would lack enforcement remedies if the bookings are licenses rather than leases | Wood: If they are licenses, the Association lacks eviction/remedy mechanisms in §7 | Association: The owner retains control and remains liable; Association can enforce Declaration against the owner | Court: Even assuming license status, the unit remains subject to owner control and the Association can pursue enforcement against the owner for violations |
Key Cases Cited
- Apple II Condominium Ass’n v. Worth Bank & Trust Co., 277 Ill. App. 3d 345 (1995) (condominium declaration may validly restrict leasing and such restrictions enjoy strong presumption of validity)
- North Avenue Properties, L.L.C. v. Zoning Board of Appeals of the City of Chicago, 312 Ill. App. 3d 182 (2000) (distinguishes lease from license; exclusive possession is key)
- Fick v. Weedon, 244 Ill. App. 3d 413 (1993) (restrictive covenants are construed to give effect to the drafter’s intent; clear language controls)
- Grevas v. United States Fidelity & Guaranty Co., 152 Ill. 2d 407 (1992) (when both general and specific contract provisions address the same subject, the specific clause controls)
- McHenry Savings Bank v. Autoworks of Wauconda, Inc., 399 Ill. App. 3d 104 (2010) (contracts must be interpreted to give effect to all provisions where possible)
- Lease Management Equipment Corp. v. DFO Partnership, 392 Ill. App. 3d 678 (2009) (construction of condominium declarations is a matter of law)
- Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351 (2009) (standard of review for a section 2-615 motion is de novo)
- Mullin v. Silvercreek Condominium Owners Ass’n, 195 S.W.3d 484 (Mo. Ct. App. 2006) (contrasting out-of-state authority where a declaration expressly carved out rental rights from a business prohibition)