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Illinois court calls deconversion bid-suppression predatory and holds the association cannot sue over it

Illinois court calls deconversion bid-suppression predatory and holds the association cannot sue over it
Illinois · Courts

Illinois court calls deconversion bid-suppression predatory and holds the association cannot sue over it

What happened. On March 18, 2025 the Illinois Appellate Court, First District, Second Division, issued 540 North Lake Shore Drive Condominium Ass'n v. MCZ Development Corp., 2025 IL App (1st) 230733 — a published, precedential opinion and now the governing Illinois authority on deconversion vote-suppression tactics.1

The association alleged that developers and brokers bought a blocking stake in the 149-unit building and spread disinformation to suppress competing bids, forcing a below-market bulk sale. Dismissal of the third amended complaint was affirmed in all respects.

The court's own description of the conduct

This is not a case where the court doubted the allegations. Justice Ellis wrote that the alleged conduct was “capitalism at its most Darwinian — conduct that, if true, could best be described as predatory and even cruel” — while holding that “plaintiff is unable to identify any actionable tort or statutory violation.”

Why each claim failed

Tortious interference with prospective economic advantage failed on the first element. With a building that had never reached the point of a bid, the expectancy of a sale was not “sufficiently concrete.” The court expressly declined to adopt a bright-line rule that a real-estate sale can never support the tort.

Defamation and slander of title failed for want of pleadable special damages. Civil conspiracy fell with the predicate torts.

The standing holding is the important one

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Two separate rulings, and the second is the one that will decide future cases.

The Real Estate License Act private right of action at Section 15-5(c) runs to “sellers, buyers, landlords, tenants, managing brokers, and brokers” — not to associations.

And Section 9.1(b) of the Condominium Property Act, 765 ILCS 605/9.1(b), does not give the board standing to represent former unit owners who have already sold. In the court's words: “The Association has no more a right to 'represent' a former unit owner under section 9.1(b) than it does to represent someone who never owned a unit in the first place.”

What this means operationally

The practical consequence is sharp, and it is easier seen before a bulk buyer appears than after.

The association is the wrong plaintiff. In a deconversion the injury — a below-market price — is suffered by owners as sellers, individually. The association has no claim of its own, and it cannot borrow theirs.

And the claim expires on closing. Section 9.1(b) representative standing has a hard boundary at current ownership. Once owners sell, the association can no longer represent them. So a board that waits until the sale closes and then sues on the membership's behalf has waited too long, by operation of the standing rule rather than any limitations period.

If individual owners are going to pursue anything, they must do it as sellers, and they must start before they sell.

How this fits with the rest of Illinois deconversion law

Illinois deconversion runs on the 75% threshold at 765 ILCS 605/15 — except in Chicago, where Municipal Code § 13-72-085 has required 85% since October 16, 2019, and in Skokie, which adopted its own 85% rule. The last serious attempt to raise the statewide bar, HB 2401 in the 100th General Assembly, passed the House and the Senate as amended and then died on House concurrence.

We found no 2025-2026 Illinois bill that would raise the statewide threshold. CAI's session reports, which between them track more than 59 association bills, list none. The only deconversion vehicle in the 104th General Assembly was SB 2125, a procedural bill on voting and legislator notification, whose status we could not verify and therefore do not characterise.

The other side of the transaction produced a decision too: in Kai v. Spring Hill Building 6, objecting owners who believed board members were self-interested lost on causation because they had not perfected their Section 15 objection and appraisal rights.

What a board facing a bulk offer should actually do

Recognise that the association's role is procedural, not adversarial. It runs the vote correctly, gives the notice the declaration and statute require, and documents what it did. The protection for owners is the Section 15 objection and appraisal machinery — and, in Chicago, the 85% threshold plus § 13-72-085's entitlement to the greater of fair-appraisal value or the outstanding acquisition or refinancing debt, plus relocation costs determined as under the federal Uniform Relocation Assistance Act.

Telling owners about those rights early is worth more than any suit the association could bring afterward, because the association cannot bring one.

What to watch next

No petition for leave to appeal appears in the Supreme Court's dispositions through September 9, 2026. Whether a suburb outside Chicago adopts its own 85% ordinance is the live question — Skokie has shown the home-rule route works, and Springfield has now failed to move the threshold across at least three General Assemblies.

Related Illinois HOA Topics

← All Illinois HOA Topics

  1. 540 North Lake Shore Drive Condominium Ass'n v. MCZ Development Corp., 2025 IL App (1st) 230733 (published opinion, March 18, 2025)
  2. CAI Illinois Legislative Action Committee, deconversion threshold history (HB 2401; Chicago § 13-72-085)
  3. Chicago Municipal Code Chapter 13-72, Condominiums, including § 13-72-085

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