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Illinois Supreme Court Confirms Right of Illinois Condominium Association to Collect Past Due Assessments of a Foreclosed Condominium Unit

Written by Kreisler-Law-PC on . Posted in assessment lien, condominium asociations, condominium attorney, condominium law, foreclosing lender, foreclosure suit, Illinois condominium asociation, Illinois Condominium Property Act, Illinois Supreme Court, mortgage lenders, pre-foreclosure asesments, pre-foreclosure assessments

The Illinois Supreme Court has affirmed the Appellate Court’s 2014 decision in 1010 Lake Shore Drive Condominium Association v Deutsche Bank, which had held that an Illinois Condominium Association’s right to collect pre-foreclosure assessments is not necessarily wiped out by the confirmation of the foreclosure sale. The Supreme Court held that the assessment lien for pre-foreclosure assessments is only extinguished if two things occur, (i) the foreclosing lender names the condominium association as a party to the foreclosure suit and (ii) the purchaser at the foreclosure sale pays the assessments as they accrue beginning the month following the foreclosure sale.

The Supreme Court held that the payment of assessments after the foreclosure sale is essential “to confirm the extinguishment of the lien created by the prior owner’s failure to pay assessments.” The Supreme Court emphasized that the Illinois Condominium Act protects mortgage lenders by allowing the lender “from time to time (to) request in writing a written statement *** setting forth the unpaid common expenses with respect to the unit covered …” by the loan. Associations are cautioned to respond promptly to any such request to avoid giving a lender a possible defense to an action for pre-foreclosure assessments.

Associations with units delinquent in assessments which are being foreclosed are advised to consult legal counsel in order to make sure they recover the maximum amount of delinquent assessments available in this change area of the law. Feel free to contact a Kreisler Law condominium attorney, if you have any questions regarding collection of delinquent condominium assessments or if you need assistance or advice regarding other areas of condominium law.

The Use of Evictions in Condominium Assessment Collection

Written by Kreisler-Law-PC on . Posted in 30 day notice, certified mail, collection assessments, condominium asociations, condominium attorney, condominium eviction, condominium eviction process, condominium law, Cook County Sheriff, delinquent condominium unit owners, delinquent unit owner, demand for possession, eviction order, evictions, Illinois condominium asociation, mortgage foreclosure, pat due assessments, personal judgment

Illinois condominium associations have an extremely effective tool for collecting assessments from delinquent condominium unit owners. In Illinois, a condominium association can actually evict a unit owner from his or her unit and then lease the unit out and collect the rents from the unit to pay for past due assessments, the legal expenses of pursuing the eviction as well as currently accruing assessments. The association does not have to pay the mortgage payments or real estate taxes which accrue while the rents are being applied against assessments and expenses of collection.

The condominium eviction process takes four months or more, so associations need to be diligent in asserting their rights. This is especially true in that unit owners who are delinquent in paying their assessments often are also delinquent in making their mortgage payments, eventually resulting in mortgage foreclosure.

To move forward with a condominium eviction, the association must first prepare and serve a 30 day notice and demand for possession. This notice must be mailed to the unit owner by certified mail. When thirty days have passed without the assessments having been paid, the eviction suit may then be filed. The suit is filed as what is called a “joint action”, which seeks a personal judgment against the unit owner as well as an order of possession (eviction order). When the matter reaches trial, the eviction statute requires the court to stay the enforcement of the eviction order for at least sixty days. Only then may the association employ the Sheriff to secure possession of the unit.

Feel free to contact a Kreisler Law condominium attorney, if you have any questions regarding the rights and responsibilities of delinquent Illinois condominium association unit owners, regarding collection of delinquent condominium assessments or if you need assistance or advice regarding other areas of condominium law.

2014 Illinois Appellate Court Decision Improves Rights of Illinois Condominium Association to Collect Past Due Assessments of a Foreclosed Condominium Unit

Written by Kreisler-Law-PC on . Posted in collecting back assessments, condominium association, condominium law, delinquency assessments, Real Estate

The 2014 decision of the Illinois Appellate Court in 1010 Lake Shore Drive v Deutsche Bank National Trust Company pointed a way to a significant exception to the ordinary rule that an Illinois Condominium Association’s lien for pre-foreclosure assessments is wiped out by a condominium mortgage foreclosure.  Until that decision, the only way for a an Illinois Condominium Association to collect any pre-foreclosure assessment arrearage was for it to have initiated an action against the foreclosed unit owner, in which it could collect up to six months’ back assessments plus attorney fees and costs incurred in collection not from the foreclosing lender, but from the first purchaser of the unit other than the foreclosing lender.

 

The new decision appears to have created a potentially significant opportunity for Illinois condominium associations with units being foreclosed.  The lender in that case completed its foreclosure but did not begin to pay assessments which accrued after the completion of the foreclosure.  The association eventually sued the lender and sued not just for the two + years assessments which had accrued after the foreclosure was complete but also for all pre-foreclosure assessments due with regard to the unit.  The pre-foreclosure assessments totaled approximately 2/3 of what the association claimed.

 

The Illinois Appellate Court held that since the lender had failed to make any payments after the foreclosure was completed, the pre-foreclosure assessments were not extinguished by the foreclosure and thus the suing association was entitled to a judgment for both the pre- and post-foreclosure assessments regarding the foreclosed unit.

 

It should be noted that the decision did not make it clear how much a foreclosing lender must be delinquent in post foreclosure assessments for the rule to apply.  In the Deutsche Bank case, the post foreclosure arrearage was for more than two years.  The question arises as to whether a one month arrearage is sufficient, or six months or a year.

 

One thing to be learned from the decision is that it is important for an Illinois condominium association, large or small, to make sure that the lender does not have the opportunity to later argue that it didn’t know where to pay assessments or how much was owed, in a belated attempt to create a defense.  Thus, it is important the association send regular billings to the lender beginning immediately upon the completion of the foreclosure.  It may also be desirable to begin collection proceedings against the foreclosing lender sooner rather than later.

 

Associations with units delinquent in assessments which are being foreclosed are advised to consult legal counsel in order to make sure they recover the maximum amount of delinquent assessments available in this change area of the law.  Feel free to contact a Kreisler Law condominium attorney, if you have any questions regarding collection of delinquent condominium assessments or if you need assistance or advice regarding other areas of condominium law.

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