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POST-FORECLOSURE EVICTIONS: Illinois

Posted By USFN, Wednesday, April 30, 2014
Updated: Monday, October 12, 2015

April 30, 2014

 

by Jill Rein
Pierce & Associates, P.C.
USFN Member (Illinois)

In Illinois evictions are handled differently depending on whether the party occupying the property is a prior mortgagor/owner, or a tenant or an occupant.

Prior Mortgagors or Owners — If the party to be evicted is a prior mortgagor or owner, the process is much simpler than when the party is not. Because a prior mortgagor or owner is a party to the judicial foreclosure action, a court order is entered in the foreclosure case ordering that the named mortgagors or owners be evicted. (The language to evict the named mortgagors or owners is contained in the order confirming sale.)

If a prior mortgagor or owner does not vacate the premises when required (30 days after the order confirming sale is entered by the court), the order confirming sale, containing the language allowing the eviction, is placed with the sheriff in the county where the property is located to have the party evicted. Once an order is placed with a sheriff, the time it takes to evict varies significantly depending on the county where the property is located.

Other Occupants — Evicting occupants who are not prior mortgagors/owners is much more complicated and time-consuming. These occupants and tenants of the property are not named in the judicial foreclosure action and cannot be evicted through the mortgage foreclosure action. Accordingly, no language is contained in the order confirming sale ordering their eviction. A separate lawsuit must be filed with the court to obtain an order to evict these occupants. This lawsuit is called a forcible entry and detainer action. Once this lawsuit is completed, and a court order is obtained allowing for the eviction of these occupants, this order must then be placed with the sheriff of the county where the property is located.

In addition to the need for a separate lawsuit to evict a tenant or an occupant who is not a prior mortgagor or owner, there are several laws and ordinances enacted to specifically protect these individuals from being evicted too quickly or without proper notice. These laws exist on the federal, state, and local levels in Illinois. When the laws conflict, compliance with the strictest applicable statute or ordinance is necessary.

Federal Law — Under the Protecting Tenants at Foreclosure Act (PTFA), a bona fide tenant cannot be evicted from a foreclosed property without at least 90 days’ notice. Furthermore, if there is a bona fide tenant in the property, and his lease was entered into prior to the execution of the deed in the foreclosure action, he is entitled to occupy the property until the end of the remaining term of that lease. (Exception: where the foreclosed property is sold to a purchaser who will occupy the property as a primary residence, then the lease can be terminated on the date of sale to this new purchaser, subject to the receipt of the above-mentioned 90-day notice.) If no lease exists, or the lease is terminable at will pursuant to state law, the occupant must still receive the 90-day notice before a forcible entry and detainer action can be filed.

A bona fide tenant under the PTFA is defined as follows:

  • The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
  • The lease or tenancy was the result of an arms-length transaction; and
  • The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state, or local subsidy.


Accordingly, under this federal statue a forcible entry and detainer action cannot be filed with the court until the 90-day notice has been given and the lease term has expired (if a bona fide tenant resides in the property).

Illinois Statutes — Illinois has several statutes dealing with the eviction of tenants and occupants in foreclosed properties who are not the former mortgagor or owner.

735 ILCS 5/15-1701 requires that a 90-day notice of intent to file a forcible entry and detainer action be served on the occupant before the action can be filed. (This is similar to, and concurrent with, the 90-day notice requirement in the federal PTFA).

735 ILCS 5/15-1508.5 states that if a purchaser at a foreclosure sale wants to collect rent due and owing from a known occupant, or terminate a known occupant’s tenancy for non-payment of rent, the purchaser at the sale must make a good faith effort to ascertain the identities of all occupants of the property and provide a particular notice to the occupants in a particular manner.

Following the judicial sale, but no later than 21 days after the confirmation of sale, the purchaser must make a good faith effort to ascertain the identities and addresses of all occupants of the property.

Following the judicial sale, but no later than 21 days after the confirmation of sale is entered by the court, the purchaser must serve a written notice on all known occupants (by delivering a copy to the occupant or by leaving the notice with some person of the age of 13 years or upwards who is residing on, or in possession of, the premises; or by sending a copy of the notice by first-class mail, addressed to the occupant), which includes the following information: (i) Identify the occupant being served by the name known to the holder or purchaser; (ii) Inform the occupant that the mortgaged real estate at which the dwelling unit is located is the subject of a foreclosure and that control of the mortgaged real estate has changed; (iii) Provide the name, address, and telephone number of an individual or entity whom the occupants may contact with concerns about the mortgaged real estate or to request repairs of that property; (iv) Include the following language, or language that is substantially similar: “This is NOT a notice to vacate the premises. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights that you may have.”; (v) Include the name of the case, the case number, and the court where the order confirming the sale has been entered; and (vi) Provide instructions on the method of payment of future rent if applicable.

If the identity and address of an occupant of a dwelling unit is identified more than 21 days after the confirmation of sale is entered, the purchaser shall provide the above notice within seven days of ascertaining the identity and address of the occupant.

Within 21 days of confirmation of sale, the purchaser must also post a notice on the primary entrance of each dwelling unit subject to the foreclosure action containing the following information: (i) Inform occupant that the dwelling unit is the subject of a foreclosure action and that control of the mortgaged real estate has changed; (ii) Include the following language: “This is NOT a notice to vacate the premises.”; (iii) Provide the name, address, and telephone number of an individual or entity whom the occupants may contact with concerns about the mortgaged real estate or to request repairs of that property; and (iv) Provide instructions on the method of payment of future rent if applicable.

735 ILCS 5/9-207.5 is the Illinois statute that is equivalent to the federal PTFA. It states that a purchaser may terminate a bona fide lease only (i) at the end of the term of the bona fide lease, by no less than 90 days’ written notice, or (ii) in the case of a bona fide lease that is for a month-to-month or week-to-week term, by no less than 90 days’ written notice. If the purchaser at a judicial sale plans to occupy the premises as his primary residence, any lease may be terminated subject to the 90-day notice requirement.

Under this statute, a bona fide lease is:

  • The mortgagor or the child, spouse or parent of the mortgagor is not the tenant; [Note: Notwithstanding the requirements of a bona fide lease, a child, spouse, or parent of the mortgagor may prove by a preponderance of evidence that a written or oral lease that otherwise meets the requirements of a bona fide lease is actually bona fide under this statute.];
  • The lease was the result of an arms-length transaction;
  • The lease requires the receipt of rent that is not substantially less than fair market rent for the property or the rent is reduced or subsidized pursuant to a federal, state, or local subsidy; and
  • Either the lease was entered into on or before the date of the filing of the lis pendens on the residential real estate in the foreclosure or the lease was entered into or renewed after the date of the filing of the lis pendens on the residential real estate in the foreclosure and before the date of the judicial sale of the residential real estate in foreclosure, and the term of the lease is for one year or less.


A written lease for a term exceeding one year that is entered into or renewed after the date of the filing of the lis pendens on the residential real estate in foreclosure and before the date of the judicial sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for the term of one year.

An oral lease entered into before the date of the judicial sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for a month-to-month term, unless the lessee proves by a preponderance of evidence that the oral lease is for a longer term. In no event shall an oral lease be deemed to be a bona fide lease for a term of more than one year.

A written or an oral lease entered into on or after the date of the judicial sale and before the date of the order confirming the sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for a month-to-month term.

City of Chicago Ordinance — Chapter 5-14 of the Municipal Code of Chicago, “Protecting Tenants in Foreclosed Rental Property Ordinance.” The ordinance has several sections, dealing with, among other things, eviction protection and relocation assistance, as well as addressing the registration of foreclosed rental property. For more on the ordinance, read on.

Eviction Protection and Tenant Relocation Assistance (5-14-050) — The owner (the purchaser of a foreclosed rental property after the sale has been confirmed by the court and any special right to redeem has expired, or a mortgagee who has accepted a deed-in-lieu of foreclosure or consent foreclosure on a foreclosed rental property) of a foreclosed rental property (defined below) shall pay a one-time relocation assistance fee of $10,600 (per unit, not per occupant) to a qualified tenant (defined below) unless the owner offers such tenant the option to renew or extend the tenant’s current rental agreement with an annual rental rate that: (1) for the first twelve months of the renewed or extended lease, does not exceed 102 percent of the qualified tenant’s current annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102 percent of the immediate prior year’s annual rental rate. This provision does not apply to an owner who became an owner prior to the effective date of this act (9/24/13), a bona fide third-party purchaser, or an owner who will occupy the rental unit as the person’s principal residence.

“Foreclosed Rental Property” means: (a) A building containing one or more dwelling units that are used as rental units, including a single-family house; or a dwelling unit that is subject to either the Condominium Property Act or the Common Interest Community Association Act that is used as a rental unit; (b) For which legal and equitable interests in the building or dwelling unit were terminated by a foreclosure action pursuant to the Illinois Mortgage Foreclosure Law; and (c) One or more of the units are occupied on the date a person becomes the owner.

“Qualified Tenant” means a person who: (a) is a tenant in a foreclosed rental property on the day that a person becomes the owner of that property; and (b) has a bona fide rental agreement to occupy the rental unit as the tenant’s principal residence. For the purposes of the definition, a lease shall be considered bona fide only if:

  • The mortgagor or the child, spouse, or parent of the mortgagor is not the tenant;
  • The lease was a result of an arms-length transaction; and
  • The lease requires the receipt of rent that is not substantially less than fair market rent for the property, or the rental unit’s rent is reduced or subsidized due to the government subsidy.


Any relocation fee must be paid no later than seven days after the day of complete vacation of the rental unit by the qualified tenant by certified or cashier’s check. The owner may deduct from the relocation fee all rent due and payable for the rental unit occupied by the qualified tenant prior to the date on which the rental unit is vacated, unless such rent has been validly withheld or deducted pursuant to state, federal, or local law.

An owner is not liable to pay the relocation fee to any qualified tenant who (1) does not enter into a rental agreement after being offered a renewal or an extension of the tenant’s rental agreement with a rent in an amount that complies with this ordinance, or (2) against whom the owner has obtained a judgment for possession of the rental unit. If an owner fails to comply with this section, the qualified tenant shall be awarded damages in an amount equal to two times the relocation assistance fee and other damages to which they may be otherwise entitled. The owner shall comply with this section of the ordinance until the property is sold or transferred to a bona fide third-party purchaser. If a qualified tenant is evicted for cause, the owner is not liable for any relocation assistance provided under this section.

Written Notice to Tenants (5-14-040) — No later than 21 days after a person becomes the owner (the date of sale confirmation or acceptance of a deed-in-lieu or consent judgment of foreclosure) of a foreclosed rental property, the owner shall make a good faith effort to ascertain the identities and addresses of all tenants of the rental units in the foreclosed rental property and notify, in writing, all known tenants of such rental units that, under certain circumstances, the tenant may be eligible for relocation assistance. The notice shall be given in English, Spanish, Polish, and Chinese and be as follows:


“THIS IS NOT A NOTICE TO VACATE THE PREMISES. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any right that you may have.
Pursuant to the City of Chicago’s Protecting Tenants in Foreclosed Rental Property Ordinance, if you are a qualified tenant you may be eligible for relocation assistance in the amount of $10,600 unless the owner offers you the option to renew or extend your current written or oral rental agreement with an annual rent that: (1) for the first twelve months, does not exceed 102% of the immediate prior year’s annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102% of the immediate prior twelve-month period’s annual rent. The option to renew or extend your lease shall continue until the property is sold to a bona fide third-party purchaser.
If you are eligible as a qualified tenant and the owner fails to pay you the relocation assistance that is due, you may bring a private cause of action in a court of competent jurisdiction seeking compliance with the Protecting Tenants in Foreclosure Rental Property Ordinance, Chapter 5-14 of the Municipal Code of Chicago, and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.”

 

The notice shall also include the name, address and telephone number of the owner, property manager or owner’s agent who is responsible for the foreclosed rental property.

If the owner ascertains the identity of a tenant more than 21 days after becoming the owner, the owner shall provide the notice within seven days of ascertaining the identity of the tenant.

The notice must be served by: (a) Delivering a copy of the notice to the known tenant; (b) Leaving a copy of the notice with some person of the age of 13 years or older who is residing in the tenant’s rental unit; or (c) Sending a copy of the notice by first-class or certified mail, return receipt requested, to each known tenant, addressed to the tenant.

The notice must also be posted on the primary entrance of each foreclosed rental property no later than 21 days after a person becomes the owner (the date of sale confirmation or execution of a deed-in-lieu or entry of consent judgment of foreclosure). An owner may not collect rent from any tenant until the written notice is served and posted.

Registration of Foreclosed Rental Property (5-14-060) — No later than 10 days after becoming the owner of a foreclosed rental property, the owner shall register such property with the commissioner. The registration shall be in a form and manner prescribed by the commissioner and shall contain the following information:

  • Name, address, and telephone number of owner;
  • Address of foreclosed rental property;
  • If more than one unit is located in the property, the number of rental units in the property and whether each rental unit was occupied by a known tenant at the time the person became the owner. If occupied, the name and address of each known tenant;
  • If the foreclosed rental property consists of only one rental unit, the name of the known tenant at the time the person became the owner;
  • Name, address, and telephone number of the owner’s agent for the purpose of managing, controlling, or collecting rents and any other person not an owner who is controlling such property, if any;
  • Name, address, and telephone number of a natural person 21 years of age or older, designated by the owner as the authorized agent for receiving notices of code violations and for receiving process, in any court proceeding or administrative enforcement proceeding, on behalf of such owner in connection with the enforcement of this code. This person must maintain an office, or actually reside, in Cook County, Illinois. An owner who is a natural person and who meets the requirements of this subsection as to location of residence or office may designate himself as agent;
  • An affidavit signed by the owner that lists, by rental unit, all of the qualified tenants at the time the person became the owner; and
  • Any other pertinent information reasonably required by the commissioner.

 

Any owner who fails to register under this section shall be deemed to consent to receive, by posting at the foreclosed rental property, any and all notices of code violations and all process in an administrative proceeding brought to enforce code provisions concerning the property.

The owner shall pay a $250 fee at the time of registration.

If any of the pertinent information changes, the owner shall file a statement indicating the nature and effective date of the change within 10 days after the change takes effect.

If the property is sold to a bona fide third-party purchaser the owner shall, within 10 days of such sale or transfer, notify the commissioner in writing in a form and manner prescribed by the commissioner.

If the property becomes vacant after registration pursuant to this section, the owner shall comply with the vacant building registration requirement of chapter 13-12, if applicable.

Remedies (5-14-070) — A tenant may bring a private cause of action seeking compliance with sections 040 and 050, and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.

Waiver of Right Not Allowed (5-14-080) — No rental agreement offered or entered into by an owner after the effective date of this chapter may provide that a tenant agrees to waive or forego the rights and remedies provided under this chapter and any such provision in a rental agreement is unenforceable.

Violation-Penalties-Liability (5-14-100) — Any person found guilty of violating this Chapter, or any rule or regulation promulgated hereunder, shall be fined not less than $500 nor more than $1,000. Each failure to comply with respect to each person shall be considered a separate offense and each day that a violation exists shall constitute a separate and distinct offense.

Conclusion — As this article tries to make clear, when an eviction of a tenant or an occupant who is not the prior mortgagor or owner of the property is required in Illinois, there are many statutes and ordinances that must be considered. This makes the process a complicated and time-consuming one. Although the various statutes and ordinances do, at times, contradict one another, the most restrictive one applicable for the specific property must be followed.

© Copyright 2014 USFN. All rights reserved.
Spring 2014 USFN Report

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