The Illinois Supreme Court unanimously ruled in 1010 Lake Shore Association v. Deutsche Bank National Trust Company, 2015 IL 118372 (Dec. 3 2015), that a foreclosure purchaser’s failure to pay assessments that come due after the foreclosure sale could result in liability for all previously unpaid assessments, even those that accrued prior to sale.
What Changed?
According to Illinois mortgage foreclosure law, a successful bidder at the judicial sale does not obtain legal title to the property until the foreclosure sale is confirmed. The confirmation of the sale does not occur until weeks later and even though foreclosure sales are routinely confirmed, there are instances in which they are not confirmed. The importance of this ruling is that now after the foreclosure sale occurs (and before confirmation of sale); the winning bidder of a foreclosure sale for a townhome or condominium unit should promptly pay association assessments that accrue “after the first day of the month after the date of the judicial sale.” 765 ILCS 605/9(g)(3).
Possible Issues
Since foreclosure purchasers are now obligated to pay assessments before they obtain legal title to the property, the Supreme Court’s decision in 1010 Lake Shore Assoc., will likely result in future cases that expand upon the Court’s opinion in order to address certain issues. These possible issues include but are not limited to:
- What happens to payments made by the foreclosure purchaser prior to confirmation and the sale is not confirmed?
- When, if at all, during an association’s efforts to collect from a foreclosure sale buyer, can that buyer make a payment of the pre-sale assessments that will cut off the Association’s right to recover the so-called “1010 amounts?”, or
- What happens if the foreclosure purchaser sends a payment before the sale is confirmed, but the association rejects that payment because it does not recognize the foreclosure purchaser as the unit’s owner?
In The Meantime
For now, a successful bidder at the judicial sale should send should promptly pay association assessments that accrue “after the first day of the month after the date of the judicial sale” or risk the possibility of being obligated to pay all previously unpaid assessments, even those that accrued prior to sale.
This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
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