Posted By USFN, Tuesday, September 12, 2017
Updated: Monday, August 28, 2017
September 12, 2017
by Douglas Oliver
McCalla Raymer Leibert Pierce, LLC – USFN Member (Connecticut, Florida, Georgia, Illinois)
There are effective, practical steps that mortgage loan servicers can take to prevent problems regarding condominium/homeowners associations (COA/HOA). For two years now, confusion has prevailed in Illinois over whether (and when) COA/HOA pre-foreclosure assessment liens are extinguished following completion of a foreclosure. In May of this year, a panel of the Illinois Appellate Court for the First District (which covers Chicago and Cook County) appeared to resolve the confusion with a bright-line rule. On August 8, 2017, however, a separate panel of the same appellate court issued a ruling that largely restored the previous uncertainty. The issue will now have to be resolved by the Illinois Supreme Court or the Illinois Legislature. Nonetheless, observation of best practices should prevent the issue from arising at REO closing tables.
Background
Almost two years ago, the Illinois Supreme Court held that a COA assessment lien against foreclosed property survives the foreclosure unless, and until, the winning sale bidder pays the ongoing, regular assessments that accrue following the sale. The case was 1010 Lake Shore Drive Ass’n v. Deutsche Bank National Trust Co., 43 N.E.3d 1005 (Ill. 2015). Ever since then, litigants have wrestled over exactly when such post-sale assessments must be paid in order to extinguish the lien for pre-foreclosure, unpaid assessments. Is there a “due date;” and, if so, what is it?