## Facts

- A condominium association’s declaration/bylaws granted the association a right of first refusal over unit sales and required a two-thirds ownership vote to exercise that right.
- Debra Rae Wolinsky, a unit owner, contracted to purchase another unit in the same building (Unit 21F).
- The board notified Wolinsky that it was exercising the association’s right of first refusal, which terminated the seller’s contract with Wolinsky.
- Wolinsky alleged the board acted because she was an unmarried woman with children, not for any legitimate property-management reason.
- Wolinsky sued the association and individual board members, alleging: (1) unreasonable restraint on alienation, (2) breach of fiduciary duty (including failure to follow the governing documents), and (3) violation of a Chicago ordinance barring denial of the right to purchase a unit based on sex or marital status.
- The trial court dismissed the complaint for failure to state a cause of action, and Wolinsky appealed.

## Issues

1. Whether a condominium association’s contractual right of first refusal is enforceable only if exercised reasonably, rather than arbitrarily as a restraint on alienation.
2. Whether condominium association officers and directors owe fiduciary duties to unit owners, and whether allegations of unreasonable, discriminatory, or bylaw-violating conduct state a claim for breach.
3. Whether allegations that the board blocked a purchase because the buyer was an unmarried woman with children state a claim under the Chicago ordinance prohibiting discrimination based on sex or marital status.

## Decision

- The appellate court reversed the dismissal and remanded.
- The complaint adequately alleged that the right of first refusal was exercised unreasonably and discriminatorily, sufficient to proceed past dismissal.
- The complaint adequately alleged breach of fiduciary duty by the association and individual directors based on discriminatory and bylaw-noncompliant conduct.
- The complaint adequately alleged a violation of the Chicago anti-discrimination ordinance by denying the right to purchase because of sex and/or marital status.

## Legal Principles

- A condominium association’s right of first refusal, though permitted by contract, is subject to an implied requirement of reasonableness and cannot be exercised arbitrarily.
- Reasonableness requires both: (1) a rational relationship to protection, preservation, or proper operation of the property, and (2) fair, nondiscriminatory exercise.
- Condominium association officers and directors are fiduciaries to unit owners; they must act in good faith and in a manner reasonably related to their duties.
- Fiduciaries must comply with the condominium declaration and bylaws; alleged noncompliance and discriminatory motives can support liability for the association and individual directors.
- A local ordinance prohibiting denial of the right to purchase based on sex or marital status can provide an enforceable standard; alleging such prohibited reasons for denying a purchase states a claim at the pleading stage.

## Conclusion

The court held that a condominium board’s right of first refusal is constrained by reasonableness, fairness, and nondiscrimination, and that allegations of discriminatory motives and failure to follow required procedures stated claims for breach of fiduciary duty and for violation of the city’s anti-discrimination ordinance, requiring reversal of the dismissal and remand for further proceedings.


Wolinsky v. Kadison, 449 N.E.2d 151 (Ill. App. Ct. 1983)