January-February Vol. 5, No. 1

Casenotes

Illinois

Tax Deeds

In re Application of the Cy Treasurer, 2011 IL App (1st) 101, 966, 955 NE2d 669, 353 Ill Dec 202 (1st D, 2011).

Facts: Graciela Garcia purchased an apartment in June 2005. To pay for the property, Garcia executed two promissory notes and two mortgages. The mortgage documents identified MILA, Inc. as the lender and Mortgage Electronic Registration Systems (MERS) as the nominee. MILA later assigned the promissory notes to IndyMac Bank, which was acquired by OneWest.

In June 2006, Ridge TP purchased Garcia's apartment at a public auction because Garcia failed to pay a year's real estate taxes on the mortgaged property. Ridge then assigned the apartment to Glohry, LLC. In the purchase agreement, the parties agreed that the apartment was redeemable by Garcia or other interested parties two years and six months from the date of sale pursuant to Property Tax Code Section 21-350(b). Two years and six months from the date of sale was December 21, 2008, which was a Sunday. Because the redemption period cannot fall on a Sunday, the actual redemption date was Monday, December 22, 2008.

In October 2006, Ridge/Glohry extended the redemption period to February 9, 2009. Notice was sent pursuant to Section 22-5, which requires the expiration date to be included in three places on the notice form. All three dates listed December 21, 2008. Garcia never received notice. Then in September 2008, Glohry extended the redemption period to March 23, 2009, and filed a petition for a tax deed. Glohry hired an experienced lawyer to serve notice pursuant to Section 22-10.

In April 2009, Glohry filed a petition for a tax deed. OneWest and Garcia objected to the petition, claiming that Glohry had not complied with Section 22-5 and notice was incomplete pursuant to Section 22-10. The trial court found that Glohry had made a diligent inquiry under Section 22-10. However, Glohry had not complied with Section 22-5 because the redemption deadline of December 21, 2008, was wrong. Prejudice was presumed even though Garcia never received notice. Therefore, the trial court denied Glohry's petition for a tax deed. Glohry appealed.

Holding: Affirmed. First, in regards to Section 22-5, the appellate court found that legislative history supports strict compliance, rather than substantial compliance. The purpose of Section 22-5 is "intended to assist property owners in redeeming their property…[and] recognition that a tax assessee should be given earlier notice and thus, additional time to make arrangements to preserve property right." The court held that in the case where the redemption date had been changed prior to submitting the Section 22-5 notice, then the redemption date must be accurate in the form. That is, the notice form should reflect the current expiration date. Additionally, even if the original expiration date was sufficient to satisfy Section 22-5, the date provided in the notice was wrong because the redemption date cannot fall on a Sunday. The court did not find it would be too burdensome on a tax deed purchaser to check the calendar before sending notice. Because strict compliance is required, Garcia did not need to demonstrate prejudice because prejudice is presumed.

Under Section 22-10, the petitioner for a tax deed has the burden of demonstrating that he or she had exercised due diligence in serving notice. A diligent inquiry is one made by a diligent person who is intent on discovering a fact. Only a party with an interest in the property is entitled to notice. At issue was whether Glohry's lawyer had exercised due diligence in finding and serving notice to all of the interested parties. The court found that due diligence was not satisfied in this case, because "an experience attorney, who was familiar with MERS mortgages, conducted the inquiry on [Glohry's] behalf and had reason to infer from both recorded documents as well as experience that MILA's interest was reasonably likely to have been conveyed to a successor with an interest in the property but did not utilize the contract information provided in the recorded documents to obtain further information." Therefore, the appellate court upheld the trial court's denial of Glohry's petition for a tax deed.

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