April 25, 2017
by Brian Merfeld and Marcos Posada
McCalla Raymer Leibert Pierce, LLC – USFN Member (Connecticut, Florida, Georgia, Illinois)
In 5510 Sheridan Road Condominium Association v. U.S. Bank, 2017 IL App (1st) 160279 (Mar. 31, 2017), the Appellate Court of Illinois (First Judicial District) found that there is no deadline for a post-foreclosure sale purchaser to “confirm” extinguishment of the association’s lien for the prior unit owner’s pre-sale unpaid common expenses. Specifically, the court rejected the association’s argument that the payment to confirm extinguishment of the association’s lien must be paid on the first day of the first month following judicial sale.
The court held that the association’s interpretation could not be reconciled with Pembrook Condominium Association-One v. North Shore Trust and Savings, 2013 IL App (2d) 130288 (2013) (payment of full post-sale amount — two months of post-sale assessments — confirmed extinguishment). The court further found that in 1010 Lake Shore Association v. Deutsche Bank National Trust Co., 2015 IL 118372 (Dec. 3, 2015), the Illinois Supreme Court did not say when the payment to extinguish the lien had to be made. Rather, in 5510 Sheridan Road, the appellate court said that the language of the statute was designed to incentivize “prompt payment of those post[-]foreclosure sale assessments.”
With respect to when the post-foreclosure sale payment must be made, the appellate court found the absence of an express requirement in 765 ILCS 605/9(g)(3) telling. The court determined that if the General Assembly intended for section 9(g)(3) to contain a strict timing deadline, it would have included a deadline in the statute and that the absence of a deadline is strong evidence the legislature did not intend for section 9(g)(3) to have a deadline, as asserted by the association. Further, the court rejected the additional and alternative argument offered by the association asking the court to read section 9(f) into 9(g).
The appellate court found that the undisputed post-foreclosure sale payment (which included the nine months of regular assessments due after judicial sale) fully paid the amount owed for the unit’s post-sale common expenses and confirmed extinguishment of the lien.
The 5510 Sheridan Road ruling could provide relief to a mortgagee who brings current the post-judicial foreclosure sale account balance. Such payment would confirm that any prior balance is extinguished. Thus, this judicial decision may effectively negate an association’s ability to compel mortgagees to pay off unpaid common expenses, which include assessments and other charges.
© Copyright 2017 USFN and McCalla Raymer Leibert Pierce, LLC. All rights reserved.
Note for consideration of the USFN Award of Excellence: This article is not a "Feature."