Recently, Illinois Courts have handed down opinions that provide valuable insight for condominium associations that seek to recover unpaid assessments when banks foreclose on mortgages. Below are brief synopses of each.
Pembrook Condominium Association-One v. North Shore Trust & Savings
In Pembrook Condominium Association-One v. North Shore Trust & Savings, the Illinois Second District Appellate Court held that (1) a condominium association may not recover from the foreclosure sale purchaser unpaid assessments that came due before the purchaser obtained title, and (2) payment of post-foreclosure sale assessments by the foreclosure sale purchaser confirms the extinguishment of the lien created by the failure of the previous unit owner to pay assessments that came due prior to the purchaser obtaining title.
The relevant fact in this case is that the foreclosure sale purchaser provided timely payment for the unit’s assessments from and after the first day of the month following the date of the judicial foreclosure sale, meaning that the purchaser paid the first assessment that came due after it obtained title to the property.
The full opinion can be read here.
1010 Lake Shore Association v. Deutsche Bank National Trust Company
On December 2, 2015, the Illinois Supreme Court affirmed the holding of the First District Appellate Court in 1010 Lake Shore Association v. Deutsche Bank National Trust Company, stating that an association’s lien for unpaid assessments prior to the judicial sale is not fully extinguished following a judicial foreclosure and sale until the foreclosure sale purchaser makes a payment for assessments due after the sale.
The Appellate Court in 1010 Lake Shore Association distinguished this case from Pembrook because the purchaser in this case never made any association payments after it purchased the unit. Therefore, the purchaser never extinguished the preexisting lien created pursuant to section 9(g)(1) if the Illinois Condominium Property Act.
The full opinion can be read here.
Based on the above two significant holdings, condominium associations should be aware of this court direction and potential opportunity to recover unpaid assessments from the purchaser at a foreclosure, that were due from the former owner, when the facts allow for it.
If we can be of assistance in determining of the above holdings are applicable to your association do not hesitate to contact KSN at 855-537-0550 or visit our website at www.ksnlaw.com.
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