Once an Association receives an order for possession and judgment for a unit owner’s failure to pay assessments, the next step is to wait out the stay date and see if the unit owner pays what is owed. If the unit owner does not pay, then the Association receives possession of the unit once the eviction occurs. In order to recoup what is owed by the unit owner, the Association will have to repair the unit (which gets charged back to the unit owner) and spend valuable time finding a tenant.
Associations often do not want to spend the time and money to find a tenant. One way to avoid this situation is if there is already a tenant in the unit, the Association can have an assignment of rent order entered on the day it receives the order for possession and judgment.
Under 735 ILCS 5/9-104.2(b) – If a judgment for possession is granted to the Board of Managers under Section 9-111, any interest of the unit owner to receive rents under any lease arrangement shall be deemed assigned to the Board of Managers until such time as the judgment is vacated.
This rule allows for the Association to obtain an assignment of the lease between the unit owner and the current tenant residing in the unit. Essentially, the rent which the tenant would have been paying to the unit owner gets assigned to the Association. Therefore, if the unit owner fails to pay within the stay date, the Association can apply the tenant’s rent to the judgment amount. Furthermore, the Association does not have to wait until the stay date to receive the rent; it can start the day the possession order and judgment is entered. Some tenants get worried that their unit owner/landlord may sue them if they turn their rent over to the Association but the rule protects tenants in this type of situation.
The rule specifically states under 735 ILCS 5/9-104.2(c), If the tenant pays his rent to the association pursuant to the entry of such a judgment for possession, the unit owner may not sue said tenant for any such amounts the tenant pays the association. This means that the unit owner cannot sue the tenant for the rent which it turned over to the Association pursuant to the assignment. Therefore, the tenant has no reason not to pay his or her rent to the Association after an order for possession and judgment has been entered against the unit owner.
Once the Association starts to receive the rent, it is clearly stated as to how the rent should be applied. The rule states under 735 ILCS 5/9-111.1, The board of managers shall first apply all rental income to assessments and other charges sued upon in the action for possession, plus statutory interest on a monetary judgment, if any, attorneys’ fees, and court cost incurred; and then to other expenses lawfully agreed upon (including late charges), any fines and reasonable expenses necessary to make the unit rentable, and lastly to assessments accrued thereafter until assessments are current. Any surplus shall be remitted to the unit owner.
There are several benefits to receiving an assignment of rent order. It saves the Association the time and expense of finding a tenant. There’s no need for an eviction because the Association can keep the current tenant in the unit and receive his or her rent. The rent will go to the Association and not the unit owner. Finally, the rent which the Association receives is applied to the judgment amount which starts to bring the Association whole again.
Typically, tenants are willing to turn over the rent to the Association because they do not want to be dispossessed of the property just because their landlord/unit owner failed to pay their assessments. They will often work with the Association because the tenant does not want to bear the cost and expense of finding another place to live especially when they have a lease in place. If for some reason the tenant refuses to pay the rent to the Association after an assignment order has been entered, you should contact us.
Therefore, if you know that a tenant is residing in the unit, let us know and we will also ask the court for an assignment of lease at the time we obtain the order for possession and judgment.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We have four office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin. Our attorneys are also licensed in Arizona, Florida, and Missouri.
If our law firm can be of assistance, please call 855-537-0500 or visit www.ksnlaw.com.