• Illinois Public Act 096-0111 Expands Tenants' Rights in Foreclosure Actions
  • April 16, 2010 | Author: Myles A. Cochran
  • Law Firm: Much Shelist Denenberg Ament & Rubenstein, P.C. - Chicago Office
  • Although it has not been widely publicized, the recently passed Public Act 096-0111 amends the Illinois Code of Civil Procedure to require that statutory notice be sent to tenants of certain residential properties that are the subject of a foreclosure proceeding. Specifically, this change in law applies to the following classifications of parties where the party is a "successor in interest" to a landlord that has defaulted on its mortgage:

    1. A mortgagee in possession in a foreclosure action
    2. A court-appointed receiver in a foreclosure action
    3. A purchaser of property at a judicial sale following the conclusion of a foreclosure action

    After taking control of the mortgaged real estate through either a court order or a judicial sale, a successor in interest must notify the tenants of the change in legal control, and when doing so, must comply with various time-sensitive requirements. The first time-sensitive requirement mandates that a successor in interest make, within a specified number of days, a good faith effort to ascertain the identities and addresses of all occupants of dwelling units of the mortgaged real estate.

    The successor in interest must next, again within a specified number of days, notify all known occupants that it has taken possession of, has been appointed receiver of or has acquired title to the mortgaged real estate.

    The third of the time-sensitive requirements relates to instances where a successor in interest has ascertained the identity and address of a tenant after the deadline set forth in the first time period has passed. When such circumstances arise, the successor in interest is given an additional period of time during which it must notify the tenants that it has acquired control of the mortgaged real estate.

    Lastly, the fourth time period requires a successor in interest to, within a specified number of days and in addition to the notice required above, post written notice on the primary entrance of each dwelling unit subject to the foreclosure action stating that the successor in interest is now operating and managing the mortgaged real estate.

    Although the notice requirements are similar across the board, the complexities lie in the specific details associated with each type of successor in interest. Failure to comply with even the most seemingly minor of these requirements may result in a penalty (including prohibition from collecting rent from and/or evicting a tenant) until each of the notice obligations has been satisfied in full.

    Public Act 096-0111 does not specify what should be done when a lender is taking title to a property by way of a deed in lieu of foreclosure. However, due to the similarities between such transactions and those addressed by the act, it would be prudent to comply with the aforementioned requirements in order to avoid any potential difficulties in dealing with problem tenants.