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Illinois — The 1010 Lake Shore Ass’n Case and the Need to Pay Post-Judicial Sale Condominium Assessments on Time (Part II)

Posted By USFN, Friday, January 29, 2016
Updated: Friday, February 19, 2016

January 29, 2016

 

by Michael Anselmo
Anselmo Lindberg Oliver, LLC
USFN Member (Illinois)

This article picks up where the Illinois HOA Talk column published in the Autumn 2015 USFN Report left off … awaiting a decision by the Illinois Supreme Court.

On December 3, 2015 in a unanimous decision, the Illinois Supreme Court affirmed the appellate court’s ruling in the case of 1010 Lake Shore Association v. Deutsche Bank National Trust Co., holding that a condominium assessment lien against foreclosed property survives the foreclosure where post-sale assessments go unpaid.

As discussed in the Autumn 2015 USFN Report, in August 2014 the Illinois Appellate Court held that the purchaser of a condominium unit at a foreclosure sale must pay the monthly assessments that come due beginning with the first month after the sale occurs. Otherwise, the lien for pre-foreclosure assessments (regular or special) survives the foreclosure. Specifically, the appellate court held that payment of regular post-foreclosure-sale assessments after the sale serves to “confirm the extinguishment” of any pre-foreclosure assessment lien held by the association.

In affirming the appellate court, the Illinois Supreme Court held that “The plain language of Section 9(g)(3) ... provides an additional step to confirm or formally approve the extinguishment [of pre-existing association assessment liens] by paying the post-foreclosure sale assessments.” The opinion further reasoned that, “mortgagees may be exempted from liability for the prior owner’s unpaid assessments, but only if the mortgagee pays the assessments coming due following its purchase of the unit at the foreclosure sale.”

Lenders should take notice of a few issues with this statute. First, while the Supreme Court opinion requires payment of regular monthly assessments that come due in the month following the foreclosure sale, the above-referenced statute does not require the association board of managers to supply any specific information. Condominium associations can be expected to take advantage of this and refuse to advise of the amount due for regular, ongoing monthly assessments and, instead, present a demand for all unpaid assessments. Second, the opinion says nothing about when dues must be paid in order to confirm extinguishment of pre-foreclosure association liens.

This judicial decision is sure to embolden condominium associations. They can be expected to rebuff requests to provide the information needed to make timely payment for post-sale assessments as those come due. Rather, they will present demands for all past-due assessments, or they will provide information late, and then claim that the buyer failed to make payment. The only certainty from the 1010 Lakeshore opinion is that there are many questions left open — such that its practical applications are far from certain.

Editor’s Note: The author’s prior article on this case, which was published in the Autumn 2015 USFN Report, may be viewed in USFN’s online Article Library.

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Winter 2016 USFN Report

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