Illinois Appellate Court case – 1010 Lake Shore Drive v. Deutshe Bank
In a recent Illinois Appellate Court case, 1010 Lake Shore Drive v. Deutshe Bank, the Court held that a lender, who acquired a unit as a result of a foreclosure auction, and who subsequently failed to pay post-auction assessments, was liable for both the amount due in post-auction assessments and the amounts left unpaid by the former owner/mortgagor prior to the foreclosure auction. The reason for that is found in Section 9(g)(3) of the Illinois Condominium Property Act.
Section 9(g)(3) obligates the subsequent purchaser of a condominium unit to pay assessments from the first day of the first month following the foreclosure auction or sale. Routinely, however, a lender or subsequent purchaser will delay paying those assessments until the foreclosure sale is either confirmed by the Court and/or the lender or subsequent purchaser actually obtains possession of the unit. Because Deutsche Bank delayed in paying the post-auction assessments required by Section 9(g)(3), it did not receive the benefit conferred by that payment – namely, the extinguishment of the unpaid, pre-auction assessments. Although Section 9(g)(3) has long held, 1010 Lake Shore Drive v. Deutsche Bank is the first case to hold an auction purchaser liable for pre-auction debt as a result of its failure to pay the post-auction assessments in a timely fashion.
The likely impact of this case will be that subsequent owners of foreclosed units will begin paying the post-auction assessments immediately to avoid the risk of becoming liable for amounts that normally would have been extinguished by the completion of the foreclosure action. If your association wants to pursue a lender or subsequent purchaser because it failed to timely pay post-auction assessments, we will review the ledgers and attempt to collect all unpaid amounts, including any amounts left unpaid by the prior mortgagor/owner.
As always, if you would like to discuss the impact of this information on your association and board of directors, please contact KSN.
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.