Jan 28, 2016

A new and powerful tool to compel prompt payment of assessments

On December 3, 2015, the Illinois Supreme Court entered its order in 1010 Lake Shore Association v. Deutsche Bank National Trust Co. In a unanimous decision written by Justice Kilbride, the Court held that a post-foreclosure mortgagee was liable for the full balance of unpaid assessments, even those which accrued prior to its foreclosure of the property under Section 9(g) of the Illinois Condominium Property Act 765 ILCS 605/9(g). 

Chuhak & Tecson, P.C. participated in this suit before the Illinois Supreme Court by filing an amicus curiae brief on behalf of the Community Association Institute (“CAI”) that was accepted by the Court. CAI is an international organization of Community Association managers, Board Members and Unit Owners dedicated to fostering vibrant, responsive and competent Community Associations by providing information and educational opportunities that give its members the knowledge to optimally manage their Associations. 

In 1010 Lakeshore Assoc. the plaintiff Condominium Association made a prompt demand upon the foreclosing bank for payment of $62,530.81, the full amount due for unpaid condominium assessments including past due pre-foreclosure assessments. The Defendant, rather than paying any amount, withheld all assessment payments and elected to defend the suit arguing that under Section 9(g)(3) of the Condominium Property Act and Section 15-1501 of the Foreclosure Act, any lien for unpaid assessments dating back before the foreclosure sale were extinguished by the foreclosure.

The Illinois Supreme Court unambiguously held that a foreclosure does not extinguish the Association’s lien for unpaid assessments until and unless the foreclosing owner makes the first payment of assessments from the month following the completion of the judicial foreclosure sale, delivery of the deed in lieu of foreclosure, entry of a judgment in common law strict foreclosure or by taking the possession pursuant to such other court order as provided in Section 9(g)(3) of the Illinois Condominium Act.

This holding by the Illinois Supreme Court should make it easier for Condominium Associations to collect unpaid assessments from foreclosing banks. This ruling gives Associations a new and powerful tool to compel prompt payment of assessments from the first day following the completion of a judicial sale, rather than waiting until the bank attempts to sell the property before collecting the past due assessments.

We encourage our clients to contact us for a PDF image of the Opinion and we stand ready to answer any questions you may have about the holding, in particular the important changes that should be made to your collection process for those units that are in foreclosure.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client Alert authored by: David J. Bloomberg,Principal and Adam K. Beattie, Associate