1010 Lake Shore Ass'n v. Deutsche Bank Nat. Trust Co. (IL)

Summary: Mortgagee-purchaser of a foreclosed condominium failed to extinguish the association's lien under 765 ILCS 605/9(g)(3), because it did not make a payment for assessments incurred after the sale. Therefore, mortgagee-purchaser was required to pay the prior owner's unpaid assessment fees as well as those incurred after the sale.

1010 Lake Shore Ass'n v. Deutsche Bank Nat. Trust Co., 2015 IL 118372.

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Facts: Defendant, Deutsche Bank National Trust Company (Deutsche), purchased a condominium unit at a judicial foreclosure sale. Months after the sale, plaintiff 1010 Lake Shore Association (1010 Lake Shore) mailed Deutsche a demand for payment of the unit's assessments for common expenses. When Deutsche failed to pay, 1010 Lake Shore filed a complaint seeking possession of the property, an award of all unpaid assessments, attorney fees, and costs. Additionally, 1010 Lake Shore alleged that Deutsche owed $62,530.81 in assessments.

After Deutsche filed its answer, 1010 Lake Shore moved for summary judgment arguing there were no questions of material fact on the amount owed or Deutsche's failure to pay the assessments. Based on section 9(g)(3) of the Act (765 ILCS 605/9(g)(3) (West 2008)), 1010 Lake Shore asserted that the lien against the property for the prior owner's unpaid assessments had not been extinguished because Deutsche failed to pay the assessments accruing after it purchased the unit. Consequently, 1010 Lake Shore alleged Deutsche was required to pay the prior owner’s assessment fees as well as those that accrued after the sale.

Deutsche responded that it could not be held liable under section 9(g)(3) of the Act for unpaid assessments that accrued before it purchased the unit at the judicial foreclosure sale. Deutsche also contended that any lien relating to the preforeclosure assessments was extinguished in the foreclosure action and there was a genuine issue of material fact on the amount of assessments incurred after it purchased the unit. Following a hearing, the trial court granted summary judgment for 1010 Lake Shore in. Deutsche appealed.

On appeal, Deutsche contended that the trial court misconstrued section 9(g)(3) of the Act. Deutsche argued that under section 9(g)(3) a purchaser of a condominium unit at a foreclosure sale is only required to pay the common expenses that accrue following the sale. The appellate court agreed that the first sentence of section 9(g)(3) only requires the purchaser to pay assessments from the first day of the month following the sale. The second sentence, however, provided that making those assessment payments “confirms the extinguishment” of the lien created when the prior owner failed to pay assessments. The appellate court determined that “under the plain language of section 9(g)(3), a lien created under section 9(g)(1) for unpaid assessments by a previous owner [was] not fully extinguished following a judicial foreclosure and sale until the purchaser makes a payment for assessments incurred after the sale.” Therefore, because Deutsche failed to pay the assessments owed after the sale, the trial court’s holding was affirmed.

Holding: Affirmed. Deutsche raised two issues on appeal, but only the first received any consideration given Deutsche’s failure to raise the second at any point before the immediate appeal. Concerning the first issue, Deutsche argued that the construction of section 9(g)(3) of the Act, “has been the crux of this case since [1010 Lake Shore ] filed its motion for summary judgment.”

The court held, even if the record clearly established that Deutsche joined 1010 Lake Shore as a party to the foreclosure and purchase of the subject property, Deutsche failed to confirm the extinguishment of 1010 Lake Shore 's lien under section 9(g)(3) of the Act. The record showed that Deutsche purchased the unit at a foreclosure sale. The affidavit of 1010 Lake Shore 's property manager established that Deutsche did not make any assessment payments after purchasing the property at the foreclosure sale. While Section 9(g)(3) did not require a foreclosure sale purchaser to pay the prior owner's unpaid assessments if the purchaser paid the assessments following the sale, mortgagees were only exempted from liability for the prior owner's unpaid assessments, if the mortgagee paid the assessments coming due following its purchase. Based on the evidence of record, the court concluded that Deutsche failed to confirm the extinguishment of 1010 Lake Shore 's lien for the prior owner's unpaid assessments under section 9(g)(3) of the Act. Therefore, the appellate court’s judgment was affirmed.

Opinion Year: 
2015
Jurisdiction: 
Illinois
By: ATG Underwriting Department | Posted on: Thu, 04/21/2016 - 10:55am