June 4, 2014

by Robert Wichowski
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

With its decision in U.S. Bank, N.A., Trustee v. Ugrin, AC 35266, the Connecticut Appellate Court has further discounted the defense bar’s argument that a foreclosing plaintiff is required to be the owner of the underlying debt and, instead, has again held that a foreclosing plaintiff’s establishment of its right to enforce an instrument under the Uniform Commercial Code is sufficient to establish standing in Connecticut.

Prior to the institution of the action, the defendant requested validation of the debt, which the plaintiff provided. Along with the debt validation, the plaintiff also provided a copy of the note, which was endorsed in blank. After a judgment of foreclosure by sale had entered, the defendant filed a motion to dismiss attacking the plaintiff’s standing. The trial court conducted a hearing in which the original note was presented to the court for inspection. The defendant argued that the note was not endorsed in blank but was specially endorsed to the plaintiff, which amounted to an unauthorized alteration of the document. The defendant claimed the inconsistency between the document presented in response to the validation of debt request and the note being specially endorsed to the plaintiff as presented to the trial court as his basis to assert an “illegal” alteration of the note, thereby implicating the plaintiff’s standing.

In opposition to the defendant’s motion, the plaintiff presented an affidavit of the loan servicer averring that the note was specially endorsed to the plaintiff and that the plaintiff was the holder of the note prior to the commencement of the action. After supplemental briefing, the trial court denied the defendant’s motion, finding that the plaintiff demonstrated it was the holder of the note and, further, holding that the defendant failed to present evidence to contradict this finding. The defendant appealed, contending that the trial court erred in not holding a full evidentiary hearing and further failed to hold a second hearing to address the defendant’s claim that there was a material factual dispute regarding the plaintiff’s standing.

The appellate court held that “[t]he plaintiff’s possession of a note endorsed in blank is prima facie evidence that it is a holder and is entitled to enforce the note, thereby conferring standing to commence a foreclosure action.” The defendant claimed that the appearance of a special endorsement on the note to the plaintiff alone required that the trial court hold a second hearing. The appellate court interpreted a recent Connecticut Supreme Court decision (Equity One v. Shivers, 310 Conn. 127 (2013)) to stand for the proposition that a court is not required to order a full evidentiary hearing to determine standing if, after being presented with the original note, the court finds there is evidence that the plaintiff possessed the note at the time the action was commenced and the defendant has not offered any evidence to the contrary.

The appellate court determined that the trial court did not err when it concluded that the plaintiff possessed the note endorsed in blank prior to the commencement of the action and that the defendant’s claim that the note was altered when it was specifically endorsed to the plaintiff does not refute the plaintiff’s prima facie evidence. The appellate court further held that the addition of a special endorsement is not, on its own, an unauthorized alternation of the document purporting to modify an obligation of a party.

The defense bar has repeatedly attempted to advance the argument that a foreclosing plaintiff needs to be the owner of the debt, citing ambiguous language in several recent appellate court cases in Connecticut. This case clarifies again that so long as the plaintiff can establish that it was the holder of the note, or otherwise entitled to enforce the instrument pursuant to the UCC, there is no ownership requirement for a foreclosing plaintiff in a mortgage foreclosure action in Connecticut and illustrates the importance of being able to prove possession of the original note prior to the commencement of the action.

© Copyright 2014 USFN. All rights reserved.
June e-Update

May 6, 2014

by Bill L. Purtell
Lerner, Sampson & Rothfuss – USFN Member (Kentucky, Ohio)

The Kentucky Legislature wrapped up its legislative session on March 15, 2014. Topics that affect the mortgage industry include redemption rights, the statute of limitations, service of process, and loan modifications.

The Bills that Became Law
Senate Bill 36 amends KRS 426.530 to reduce to six months the time period for the right of redemption at foreclosure sale. The amendment allows the purchaser at sale to recoup expenses for taxes, insurance, and necessary repairs to bring the property up to code that were incurred during the redemption period. Signed by the governor on April 10, 2014. http://www.lrc.ky.gov/record/14RS/SB36.htm

House Bill 369 amends KRS 413.160 to reset the statute of limitations for actions on a written contract to ten years instead of the current 15-year period; amends KRS 413.090 to conform. Only affects contracts executed after the effective date of this act. Signed by the governor on April 25, 2014. http://www.lrc.ky.gov/record/14RS/HB369.htm

Senate Bill 138 amends KRS 454.210 to allow a court clerk to electronically transmit court process to the secretary of state when that office is responsible for service of process. This affects out of state corporations and defendants under Kentucky’s long-arm jurisdiction. Signed by the governor on April 9, 2014. http://www.lrc.ky.gov/record/14RS/SB138.htm

House Bill 206 amends the mortgage modification statute, KRS 382.520, to allow interest rate reduction agreements to be secured by the original mortgage without the need to record an amended mortgage or modification agreement. Signed by the governor on April 7, 2014. http://www.lrc.ky.gov/record/14RS/HB206.htm

Effect on the Mortgage Industry
The biggest change is the shortening of Kentucky’s foreclosure redemption statute to six months. The amendments also put to rest a debate over whether taxes and maintenance during the redemption period could be added to the redemption price. Redemptions were already rare in Kentucky, since a sale bid of at least two-thirds of the appraised value will cancel the redemption, but now the amendments allow for more predictability in this area.

The statute of limitations for enforcement of mortgages has been shortened to ten years, which is still longer than the six-year statute of limitations to enforce a note under Kentucky’s UCC. This limitation comes due in April 2024, since the ten years only applies to new mortgages executed after April 25, 2014.

The other two bills involved minor changes. Service of process upon the secretary of state has been expedited by the use of electronic summons, but this only affects service upon out-of-state corporations and defendants with no local agent in Kentucky. This may save a week of delay during the foreclosure. The loan modification amendment was technical in nature, as a reduction in interest rate does not change the secured balance of the loan. This prevents any challenges by other lienholders to the priority of a modified mortgage.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Christina M. Snow & Eric D. Cook
Wilford Geske & Cook, P.A. – USFN Member (Minnesota)

The Minnesota Supreme Court continues providing the mortgage industry with a mixed bag of rulings, based in part on failing to fully understand mortgage servicing. Since 2009, this state’s Supreme Court has ruled favorably on MERS standing issues, favorably on GSE exemptions from taxation, but has imposed a “strict compliance” standard for some foreclosure procedures. Lower appellate courts in Minnesota have misconstrued the scope of the “strict compliance” standard and are expected to continue their trend of unpredictable rulings for the default servicing industry. In view of that, it is important to consider removing actions to Minnesota’s federal courts whenever possible on the basis of diversity or federal question. A consistent pattern of predictable, industry-friendly rulings has emerged from these federal courts.

Recently, the Minnesota Supreme Court ruled that a borrower may assert a private cause of action for damages against a mortgage servicer for failing to follow HAMP directives. Even though HAMP regulations, themselves, do not provide a borrower with standing to sue for damages, Chapter 58 of the Minnesota statutes, governing residential mortgage servicers, now provides a borrower with standing to sue a mortgage servicer for an alleged breach of “written agreements with borrowers, investors, licensees, or exempt persons.” Gretsch v. Vantium Capital, Inc., 2014 WL 1304990 (Minn. Apr. 2, 2014). The Supreme Court also held that HAMP did not impliedly preempt Minn. Stat. § 58.18, subd. 1, or violate other constitutional provisions. The court reasoned that the lack of a federal cause of action to enforce HAMP directives did not prohibit a state from providing a private cause of action.

The loan at issue in Gretsch was a non-GSE loan under a Servicer Participation Agreement (SPA) between the servicer and Fannie Mae. The U.S. Department of Treasury created HAMP and appointed Fannie Mae to administer the program for non-GSE loans. Erroneously, the Supreme Court reasoned that Fannie Mae is an “agency” of the federal government, which is at odds with Fannie Mae’s legal position and its status as a publicly traded corporation in conservatorship. The court’s mistaken belief about Fannie Mae led to its ruling that, “we cannot conclude, as a matter of law, that Fannie Mae is not an exempt person.” The appeal was before the court on a motion to dismiss, which also means that there has been no ruling on the merits finding that Fannie Mae is an agency of the federal government. In future cases, servicers must immediately seek competent legal advice to accurately portray Fannie Mae’s role and correctly identify the programs, guidelines, or contracts that are at issue to avoid the risk of bad case law or increasing litigation costs due to confusion or misinformation.

The Gretsch decision may lead to an increase in lawsuits against servicers for alleged breaches of pooling and servicing agreements and the servicing contracts and guides with the GSEs. The decision, however, was not a ruling on the merits, and should not mean that loan servicers automatically lose these challenges. The decision, however, may lead to more expensive and protracted litigation arising out of alleged breaches of a servicer’s contract with “borrowers, investors, other licensees, or exempt persons.” Minnesota courts have occasionally allowed challenges under HAMP based on state common law theories such as equitable estoppel, so the full impact of this ruling remains to be seen. At a minimum, a servicer’s litigation risk will be greater after Gretsch due to the statutory basis for a borrower to recover attorneys’ fees, court costs, statutory damages and even punitive damages, if appropriate, in a successful action.

On the bright side, Minnesota’s federal courts continue to rule favorably in the area of failed loan modifications, and recently relied on Minnesota’s Credit Agreement Statute to dismiss an action alleging an oral promise to postpone a foreclosure sale after the servicer proceeded with the sale. The Eighth Circuit Court of Appeals agreed with the Minnesota federal district court’s decision, and reaffirmed the longstanding principle that claims based upon oral promises are barred under Minnesota’s Credit Agreement Statute unless reduced to writing and signed by the creditor. Bracewell v. U.S. Bank National Association, No. 13-1164, WL 1356850 (8th Cir. Apr. 4, 2014). This issue has been litigated and won in dozens of cases in Minnesota courts. The Eighth Circuit’s holding, just two days after the Gretsch decision, provides another layer of protection for the industry in the context of assisting borrowers with loss mitigation.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Edward D. Russell
Wilson & Associates, PLLC – USFN Member (Arkansas, Tennessee)

Earlier this year, the Tennessee Court of Appeals confirmed that a borrower, in attempting to avoid liability for a post-foreclosure deficiency owed under the foreclosed deed of trust, has a high evidentiary threshold to overcome the rebuttable prima facie presumption that the sale price obtained through foreclosure is equal to the fair market value of the property at the time of the sale. [FirstBank v. Horizon Capital Partners, LLC, No. E2013-00686-COA-R3-CV (Tenn. Ct. App. Feb. 3, 2014)].

T.C.A. § 35-5-118, entitled “Deficiency judgment sufficient to fully satisfy indebtedness on real property after trustee’s or foreclosure sale,” is part of Tennessee’s nonjudicial foreclosure statutory scheme. Section 35-5-118(a) provides that, in an action brought by a creditor to recover a balance still owing on an indebtedness after a trustee’s or foreclosure sale of real property secured by a deed of trust or mortgage, the creditor shall be entitled to a deficiency judgment in an amount sufficient to satisfy fully the indebtedness.

Absent a showing of fraud, collusion, misconduct, or irregularity in the sale process, the deficiency judgment shall be for the total amount of indebtedness prior to the sale plus the costs of the foreclosure and sale, less the fair market value of the property at the time of the sale. The creditor shall be entitled to a rebuttable prima facie presumption that the sale price of the property is equal to the fair market value of the property at the time of the sale. See Section 35-5-118(b). To overcome the prima facie presumption, the debtor must prove by a preponderance of the evidence that the property sold for an amount materially less than the fair market value of property at the time of the foreclosure sale. See Section 35-5-118(c).

In the FirstBank case, FirstBank held a foreclosure sale on three separate notes, secured by three separate parcels of property. One of the parcels was developed with a home, and the other two parcels were undeveloped. Following the foreclosure sale, and the subsequent sale of each of the three lots, a deficiency remained owing to FirstBank. FirstBank filed a complaint seeking a deficiency judgment. In opposition, the defendants contended that the amount sought in deficiency should be reduced, asserting that the sale price obtained was materially less than the fair market value of the properties at the time of the foreclosure sale.

Following FirstBank’s motion for summary judgment and argument by the parties, the trial court found that the defendants failed to establish that the sale price of the property was materially less than the fair market value at the time of the foreclosure sale. The value of the property sold at a foreclosure sale is not looked to in a deficiency case unless there is a charge of fraud in the manner of sale or a charge that the sale price was grossly inadequate.

The appellate court upheld the trial court’s ruling, determining that the issue in deficiency actions is the fair market value of the property at the time it is sold. The court refused to presume that an appraisal price equaled the fair market value of the property at the time of the foreclosure sale. Further, it held that the defendants, not FirstBank, were tasked with establishing that the property sold for materially less than the fair market value at the time of the foreclosure sale, citing Duke v. Daniels, 660 S.W.2d 793, 794 (Tenn. Ct. App. 1983) (where foreclosure sale is properly held, the sale price is conclusively presumed to be the value of the property sold; unless, the sale price is so grossly inadequate to shock the conscience of the court). Gross inadequacy is merely a method by which one attempts to prove fraud. Without there being at least a charge of fraud in the pleadings it would be inadmissible because the required claim or defense (as the case may be) of fraud must be pleaded and must be pleaded with specificity, not generally. Duke, supra, at 795.

The appellate court’s opinion in FirstBank continues the high burden placed on defendants in opposing deficiency judgment cases. The court reaffirmed that there is no bright-line percentage, above or below which the statutory presumption is rebutted. Instead, a court determining a deficiency judgment dispute considers the percentage difference, the condition of the property, and any other factors that may provide information concerning the marketability of the property.

A foreclosure sale price will only be deemed materially less when the difference in price is significant. See GreenBank v. Sterling Ventures, LLC, No. M2012-01312-COA-R3-CV (Tenn. Ct. App. Dec. 7, 2012), cited with approval by the appellate court in FirstBank. “The term ‘materially less’ still represents a pretty substantial difference. It’s a very difficult burden for a debtor to overcome. The debtor has to show a strong difference, a material difference.” Id. (The determination of materially less regarding a foreclosure sale price is to be made on a case-by-case basis under the particular facts presented. Courts cannot establish a bright-line percentage, above or below which the statutory presumption is rebutted).

A defendant’s claim as to the fair market value at the time of the foreclosure must be corroborated, and there must be evidence regarding the development and the economic climate in the surrounding area. Mere assertions will not suffice. The FirstBank decision confirms the defendant’s burden to overcome with admissible evidence the validity of the foreclosure sale price by establishing a material difference in the price obtained compared to the fair market value.

Additionally, the court in FirstBank upheld the right of the party seeking deficiency to an award of attorneys’ fees, finding that such an award, where expressly contemplated in the loan documents, complies with the American Rule that a party is entitled to attorneys’ fees if provided by statute or agreement.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Scott Lundberg
Lundberg & Associates – USFN Member (Utah)

The 2014 Utah legislative session resulted in five bills of interest to the default mortgage industry. Two of the bills, Senate Bill 20 and Senate Bill 130, have a direct impact on default mortgage servicers. The remaining three, Senate Bill 79, House Bill 16 and House Bill 315, have only limited, indirect impact. All five of the bills have been signed into law by the governor and are effective May 13, 2014 (except as noted in the discussion of Senate Bill 79, below).

Of the two bills having a direct impact, one, Senate Bill 130, requires prompt consideration by mortgage servicers and foreclosure trustees. It is discussed in detail below. The other four bills are also described briefly.

Senate Bill 130
Senate Bill 130 (Trust Deed Foreclosure Amendments) amends the provisions of Utah Code section 57-1-24.3. Senate Bill 130 clarifies some provisions in 57-1-24.3 and specifies that the single point of contact notice required by the statute must give the borrower at least 30 days in which to cure the loan default before foreclosure can be commenced. This change will require servicers whose single point of contact notice gives less than 30 days to change the notice to provide at least 30 days.

Senate Bill 130 also amends section 57-1-24.3 to require that the servicer provide the borrower with written notice of the servicer’s decision regarding foreclosure relief for which the borrower has applied. Previously, the statute did not specify that the servicer’s decision had to be in written notice form.

The most significant change brought about by Senate Bill 130 is a change in the language of subsection 57-1-24.3(12) which provides financial institution servicers an exemption from compliance with the requirements of the section. The statute’s requirement that the servicer designate and use a single point of contact was modified. A servicer which is a financial institution is now exempted from the pre-foreclosure single point of contact notice and other requirements of 57-1-24.3 if it makes use of “assigned personnel” in compliance with 12 C.F.R. 1024, Real Estate Settlement Procedures Act, “or other federal law, rules, regulations, guidance, or guidelines” governing the servicer and issued by the Fed, FDIC, OCC, NCUA, or CFPB.

This change, coupled with the implementation of the final servicing regulations by the CFPB in January 2014, qualify financial institutions (as defined in the bill) for complete exemption from the provisions of section 57-1-24.3. Financial institutions in compliance with the CFPB’s final servicing regulations are, therefore, exempt from compliance with section 57-1-24.3 in its entirety — effective May 13, 2014. Servicers should promptly analyze Senate Bill 130 and either (a) avail themselves of the exemption, or (b) take steps to ensure that their notices and procedures under section 57-1-24.3 comply with the changes enacted this year.

Other Bills
Senate Bill 20 extends the provisions of Utah Code section 57-1-25, subsections (1)(c), (3)(b), and (4) until December 31, 2016. Those subsections, which require that the foreclosure sale notice contain a specific notice to tenants regarding protections available under the federal Protecting Tenants at Foreclosure Act, were set to expire on December 31, 2014. This bill simply extends that sunset provision for an additional two years.

Senate Bill 79 enacts the Utah Uniform Real Property Electronic Recording Act (the Act). It provides for the immediate establishment of a commission to create electronic recording standards. It also provides for a phased implementation by class of county and authorizes the county recorder to collect an electronic recording surcharge to recover implementation costs. The focus of the Act is upon electronic recording of electronic documents. That part of the Act goes into effect July 1, 2015. Utah already has electronic recording of traditional paper documents in most counties.

House Bill 16 was enacted in an effort to cut down on the recording of nonconsensual “common law” liens against public officials. It requires anyone filing such a document for record to initiate a judicial proceeding to determine the enforceability of the lien and subjects anyone recording an unenforceable nonconsensual common law lien to liability for damages and criminal liability. If there is not a judicial determination of the enforceability of the lien within the time allowed by statute, the lien can be disregarded.

Finally, House Bill 315 requires parties asserting judgment liens against real property to file a separate information sheet with the county recorder.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Jill P. Jenkins
KML Law Group, P.C. – USFN Member (Pennsylvania)

Since 2008, the city of Philadelphia and the First Judicial District have seen significant changes in the way mortgage foreclosure matters are handled. Today, handling a foreclosure case in Philadelphia (for the lender and the borrower) can be a complex task, including tricky service issues, conciliation conferences, case management conferences and, more commonly in recent years, taking a case to a bench trial.

In years past, things in the mortgage foreclosure world were much different. With little court intervention, cases were often started and finished very quickly, with little delay or litigation involved at all. Very few cases actually became contested and, if they did, the parties controlled when a matter would be listed for trial if a resolution could not be reached. This gave all parties ample time to discuss resolution, serve discovery, prepare motions, and get ready for trial at their own pace, rather than in accordance with looming deadlines set by the court.

As we entered the 2000s, however, things began to shift towards more court-mandated appearances and court involvement in mortgage foreclosure cases. In 2004, the Mortgage Foreclosure Steering Committee formed in Philadelphia. The first of its kind in the city and still active today, it is a group of attorneys representing the lenders’ and the borrowers’ sides, led by The Honorable Annette Rizzo, a Common Pleas Court Judge. The committee meets regularly to discuss current issues in mortgage foreclosure and ways to improve the process in Philadelphia for both the lender and the borrower.

Formation of the group was only the beginning, however. In June 2008, the Philadelphia Mortgage Foreclosure Diversion Program began — now nearing its 6th anniversary. A court-ordered conciliation conference is scheduled for every owner-occupied mortgage foreclosure case. While the borrower is participating in the conciliation program, all proceedings are stayed. The program brings the borrower (or her representative) and a representative of the lender together to discuss how the mortgage foreclosure matter can be resolved amicably for both parties, through a number of possible options. Depending on the type of resolution that the borrower is seeking, this can involve a number of conferences over several months, where both sides meet to discuss how best to proceed towards achieving the chosen resolution.

Up until approximately one year ago, the court had continued the practice of not keeping mortgage foreclosure cases on a specific “track” for the purposes of discovery deadlines, dispositive motion deadlines, and an estimated trial date. This responsibility was left to the parties to determine when a case would be brought to trial, if a resolution could not be reached after the case was removed from conciliation.

Then, the world for mortgage foreclosure attorneys took a significant turn when the court started scheduling case management conferences. These conferences entailed a brief meeting of both parties and a “case management master” to discuss the case and set deadlines for discovery, dispositive motions, and to place the case into a trial pool, which would advise the parties as to the month the case would be called to trial. This conference also required both parties to prepare and present a “case management memorandum.” Moreover, many case management conferences would be scheduled at the same time, but would be called one at a time. This often caused a long period of waiting as more complex cases, such as personal injury or medical malpractice, completed their conferences so that a mortgage foreclosure case could be called, only to meet for a minute or two to be given a discovery deadline and trial date. It was difficult to see the benefit of attending these mandated conferences, sometimes spending hours at City Hall, when not a great deal of discussion regarding the discovery that was required and how long each party needed before a trial could be scheduled was needed for a mortgage foreclosure case.

More recently, it was noticed by the court that this method of case management may not be the right fit for mortgage foreclosure cases. Since December 2013, Philadelphia’s Court of Common Pleas began a new way of tracking its mortgage foreclosure cases. The court now is tracking the status of service of the complaint upon all defendants, and the status of the case after it is removed from the conciliation program, if a default judgment has not yet been entered against the defendants. Generally speaking, if proof of service is not on the docket within 90 days from the commencement of the action, a status conference will be scheduled in front of a judge who has taken ownership of mortgage foreclosure cases in recent months. At the status conference, the attorney is required to represent to the court why service has not yet been completed and when the attorney expects service will be completed.

Now fast forward four or five months, after service has been effectuated and the matter has run its course in conciliation or, in the alternative, the matter involves non-owner occupied property and never ventured into conciliation. The court will issue an order scheduling a case management conference. This may sound similar to what was done previously, but the court has now recognized that mortgage foreclosure matters in Philadelphia are unique, requiring different attention than a catastrophic injury case, business contract dispute, or asbestos lawsuit.

The Philadelphia Court is now holding a brief meeting of the parties with a court administrator, in a courtroom separate from the other case management conferences, so that appropriate deadlines can be quickly decided, and pro se litigants can address any questions they have with the court administrator and the lender’s attorney. Discovery and trial deadlines are still set and expected to be adhered to, but the case management conference itself is completed much more promptly. It appears, at least for now, that this style of case organization is here to stay in Philadelphia.

Not surprisingly, this latest method of tracking cases by the courts has forced firms to reorganize their tracking of cases as well. Firms now are required to calendar and attend court-ordered hearings and status conferences, keep strict calendars for discovery and trial dates (often in cases that are not contested), and confirm attorney coverage for all court appearances, among other new responsibilities. This has added another layer of complexity to the cases that has necessarily increased the costs of prosecuting the case.

It has yet to be seen whether this type of case management will be beneficial to either party or, ideally, to both parties. Given the fact that most mortgage foreclosure matters require similar deadlines for discovery and trial, could it be more efficient to simply issue a case management order with the same proposed deadlines for all mortgage foreclosure cases and allow parties with special, more complex cases to move for an exception? Is there a way to avoid having the court require a pro se litigant to take time off from his or her employment to come to City Hall for a conference to discuss the discovery deadline in a case where no discovery is required? Can another (possibly superfluous) court appearance in the already demanding schedule of the lender’s attorney be avoided? On the other hand, are these conferences providing another opportunity for both parties to be in the same room and discuss a resolution? These are all questions that will likely be addressed over the coming months.

The evolution of case management in Philadelphia has been interesting to observe. It is clear that the courts are open and willing to consider implementing a process that works best for everyone, including the lender, borrower, and court staff. There is still work to be done, but it appears that there is movement in that direction.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Meghan E. Smith
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

The Connecticut Appellate Court recently issued a decision where it discussed the applicability of the federal Protecting Tenants at Foreclosure Act (PTFA) to Connecticut eviction laws. In the case of Customers Bank v. Boxer, 148 Conn. App. 479 (2014), the appellate court affirmed the judgment of the trial court, which found that the defendant had failed to meet his burden of proof to establish that he was a bona fide tenant under the PTFA, thereby triggering the 90-day notice required by that act. On appeal, it was determined that there was sufficient evidence to support the trial court’s conclusion that the defendant did not establish that the value of the repairs or improvements made to the property was commensurate with the fair market value rent of the property.

The PTFA does not define the term “receipt of rent,” so the appellate court turned to the Connecticut General Statutes for guidance. The court specifically stated that the “PTFA does not preempt state law with respect to the requirements of eviction proceedings.” The appellate court went on to cite federal cases that have stated that the PTFA “does not create a federal right of action, but indeed provides directives to the state courts” and “the PTFA is not a recognized area of complete preemption” (emphasis added). Therefore, Connecticut eviction statutes are not preempted by the PTFA.

This is important in regards to Connecticut General Statutes § 47-19. This statute provides in relevant part that a lease exceeding one year is not effectual against any persons other than the lessor and lessee unless it is in writing, executed, attested, acknowledged, and recorded in the same manner as a deed of land. Tenants in summary process actions where the landlord has been foreclosed often present leases ranging from two to four years in term that have not been attested, acknowledged, and recorded on the land records. Frequently they will obtain counsel who will try to argue that the PTFA “preempts” C.G.S. § 47-19 and the lease is enforceable against the new owner. This Connecticut Appellate Court decision will assist greatly in defending against those arguments.

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Brian Jordan
McCalla Raymer, LLC – USFN Member (Georgia)

On October 25, 2013, a bankruptcy court in the Southern District of Georgia (Savannah Division) held that a Chapter 7 case would not be reopened for the purpose of entering into a reaffirmation agreement where the agreement was not made prior to discharge. See In re Conner, 2013 WL 5781682 (Bankr. S.D. Ga. 2013).

Under Bankruptcy Code § 350(b), a case may be reopened to administer assets, to accord relief to the debtor, or for other cause. For a reaffirmation to be enforceable, Bankruptcy Code § 524(c) requires, among other things, that the agreement to reaffirm be made before the granting of a discharge. In Conner, the debtors motioned the court to reopen their Chapter 7 case for the purpose of filing a reaffirmation agreement so that they could pursue a loan modification with their mortgage lender. Although both debtors and the mortgage lender had agreed to reaffirmation terms as of the motion to reopen and no party had objected to the motion to reopen, debtors’ counsel stated that no reaffirmation agreement had been made prior to discharge.

The court held that, because no reaffirmation agreement had been made prior to discharge, it cannot be enforceable. Accordingly, as the reaffirmation agreement put forth by the debtors was unenforceable, the Chapter 7 case would not be reopened. This outcome echoes the Northern District of Georgia where a bankruptcy court there held that a Chapter 7 case may be reopened for the purpose of filing a reaffirmation agreement where the parties had agreed to all terms prior to discharge. See In re Farris, 2009 WL 6499264 (Bankr. N.D. Ga. 2009).

© Copyright 2014 USFN. All rights reserved.
May e-Update

May 6, 2014

by Blair T. Gisi
South & Associates, P.C. – USFN Member (Kansas, Missouri)

A residential mortgage foreclosure case involved, among other issues, the effect of the borrowers’ failure to execute and to timely return a loan modification agreement. The bank had obtained summary judgment, relying on K.S.A. §§ 16-117 and 16-118. The Kansas Court of Appeals affirmed the trial court’s decision granting summary judgment to the bank on all issues. SunTrust Mortgage, Inc. v. Giardina, No. 109,840, 2014 WL 1193433 (Kan. Ct. App. Mar. 21, 2014), slip op.

The borrowers defaulted on a mortgage loan, but proceeded to work with the bank to modify their loan. The borrowers made all required loan modification trial payments and were approved for a loan modification. A proposed loan modification agreement was sent to the borrowers with explicit instructions to sign, notarize, and timely return the proposed agreement along with the first required payment. The borrowers did make the monthly payments for August and September 2011 as set forth in the proposed agreement, but failed to timely return the loan modification agreement itself and provided no proof at all that they ever executed the document.

SunTrust viewed the borrowers’ failure to both sign and timely return the loan modification agreement as a rejection of the offer to modify the loan. Accordingly, SunTrust advised the borrowers that they remained in default and that failure to cure the default would result in foreclosure proceedings. There was no cure, so SunTrust proceeded with a foreclosure suit, which ultimately resulted in the lower court granting judgment in favor of SunTrust, despite the borrowers’ raised defenses. The borrowers’ appeal followed.

The Kansas Court of Appeals held that the proposed loan modification agreement fit within the state statutory definition of “credit agreement” and, as such, that the material terms of the credit agreement must be in writing and signed by both the creditor and the debtor for it to be relied upon for any legal or equitable action. The appellate court found that the failure of the borrowers to come forward with a copy of the loan modification agreement signed by the parties precluded the defense of an implied agreement based on course of dealing or partial performance. In addition, the court concluded that under the plain language of the mortgage and the note that SunTrust’s acceptance of the borrowers’ payments did not waive the bank’s rights to file the foreclosure action.

In addition to the loan modification issue, the appellate court considered two other issues. The first was the oft-repeated argument that SunTrust holding the note and Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for SunTrust, holding the mortgage resulted in a splitting of the note and mortgage. The appellate court held that by the language of the mortgage, MERS acted as the express agent of SunTrust and, therefore, that the note and mortgage were never separated. Secondly, the appellate court found that a consent order entered into by SunTrust and the Federal Reserve was not a material issue to bar summary judgment because the borrowers were not a party to the consent order and the consent order did not have the force and effect of law.

© Copyright 2014 USFN. All rights reserved.
May e-Update

April 30, 2014

by Matthew B. Theunick
Trott & Trott, P.C.
USFN Member (Michigan)

In a “for publication” opinion, the appellate court affirmed a decision of the Oakland County Circuit Court regarding the entry of a judgment ordering the plaintiff to pay defendant $15,597.90 in condominium assessments and late fees for a condominium unit assessed between March 8, 2011, and April 30, 2013. [Wells Fargo Bank v. Country Place Condominium Association, No. 312733, __ Mich. App. __ (Mar. 18, 2014)].

For the legal practitioner, this opinion offers guidance as to an issue of first impression concerning when condominium assessments are attributable to a party after a foreclosure sale by advertisement. In reviewing this matter, the court ruled that MCL § 559.158 controls over MCL § 559.211 and, further, noted that a party is not liable for association fees incurred “prior to the acquisition of title.”

In elaborating upon what constitutes “acquisition of title” within the meaning of § 559.158, the court observed that the statute does not require that the purchaser have “absolute title,” just a “title,” and an equitable title is a form of title. As such, the court held that the plaintiff-purchaser at the March 8, 2011 sheriff’s sale acquired a “title” interest in the real property and was therefore responsible for condominium assessments from the date of the sheriff’s sale going forward, as opposed to the date of the expiration of the statutory redemption period when legal title would vest.

The consequences of this judicial decision are that foreclosure sale purchasers will now be responsible for condominium assessments during the statutory redemption period, wherein they do not yet have legal title to the real property or full, absolute title, but only an equitable title interest.

© Copyright 2014 USFN. All rights reserved.
Spring 2014 USFN Report

April 30, 2014

by Robert H. King
Rosicki, Rosicki & Associates, P.C.
USFN Member (New York)

Vacant property news came to the forefront of New York foreclosure law earlier this year. There’s legislation pending that would increase the number of land banks, require foreclosure plaintiffs to maintain vacant properties upon notification that the property is abandoned, and create a statewide registry to track abandoned homes.

In a February 21, 2014 press release, the New York State Attorney General’s office lauded the Home Owner Protection Program, which claims responsibility for 6,600 approved and pending loan modifications, but took issue with the lengthy foreclosure process for the increased number of vacant and abandoned properties.

Under current law, a foreclosure plaintiff is only required to maintain a property when a judgment of foreclosure and sale has been obtained. However, when the chief administrative judge for the Office of Court Administration imposed administrative rules, which some say were designed to slow down the foreclosure process in 2010 and 2011 during the economic recession, the pathway to obtain such a judgment narrowed to a trickle. It could appear that New York State is struggling with conflicting policies: Keep homeowners in their homes at all costs but, at the same time, speed up the foreclosure. This conflict is evident in the courts of Kings and other counties, which began to summarily dismiss foreclosure actions for failure to prosecute.

Currently pending in both houses of the New York State Legislature are companion bills that would amend the Real Property Actions and Procedure Law to allow summary foreclosure proceedings for vacant or abandoned properties. The proposed legislation will allow a foreclosing plaintiff who reasonably believes a property to be vacant or abandoned to make the allegation in the complaint and to move for a judgment of foreclosure, even when a defendant serves an answer but fails to contest the allegations that the property is vacant or abandoned.

The law as proposed defines vacant property as a property not occupied by a mortgagor or a tenant with a lease agreement in possession prior to the foreclosure action, and presents one of the following situations: (1) property is not maintained by the mortgagor in accordance with law; (2) the property is a risk to health, safety, or public welfare; (3) the property is subject to uncorrected municipal violations or housing codes; (4) a written statement by the mortgagor of expressed intent to abandon the property; or, (5) there is reasonable indicia of abandonment. If these bills pass in their current form, the anticipated effect will be a reduction in time frames in obtaining a judgment of foreclosure and sale — at least for vacant properties.

© Copyright 2014 USFN. All rights reserved.
Spring 2014 USFN Report

April 30, 2014

by Jill Rein
Pierce & Associates, P.C.
USFN Member (Illinois)

In Illinois evictions are handled differently depending on whether the party occupying the property is a prior mortgagor/owner, or a tenant or an occupant.

Prior Mortgagors or Owners — If the party to be evicted is a prior mortgagor or owner, the process is much simpler than when the party is not. Because a prior mortgagor or owner is a party to the judicial foreclosure action, a court order is entered in the foreclosure case ordering that the named mortgagors or owners be evicted. (The language to evict the named mortgagors or owners is contained in the order confirming sale.)

If a prior mortgagor or owner does not vacate the premises when required (30 days after the order confirming sale is entered by the court), the order confirming sale, containing the language allowing the eviction, is placed with the sheriff in the county where the property is located to have the party evicted. Once an order is placed with a sheriff, the time it takes to evict varies significantly depending on the county where the property is located.

Other Occupants — Evicting occupants who are not prior mortgagors/owners is much more complicated and time-consuming. These occupants and tenants of the property are not named in the judicial foreclosure action and cannot be evicted through the mortgage foreclosure action. Accordingly, no language is contained in the order confirming sale ordering their eviction. A separate lawsuit must be filed with the court to obtain an order to evict these occupants. This lawsuit is called a forcible entry and detainer action. Once this lawsuit is completed, and a court order is obtained allowing for the eviction of these occupants, this order must then be placed with the sheriff of the county where the property is located.

In addition to the need for a separate lawsuit to evict a tenant or an occupant who is not a prior mortgagor or owner, there are several laws and ordinances enacted to specifically protect these individuals from being evicted too quickly or without proper notice. These laws exist on the federal, state, and local levels in Illinois. When the laws conflict, compliance with the strictest applicable statute or ordinance is necessary.

Federal Law — Under the Protecting Tenants at Foreclosure Act (PTFA), a bona fide tenant cannot be evicted from a foreclosed property without at least 90 days’ notice. Furthermore, if there is a bona fide tenant in the property, and his lease was entered into prior to the execution of the deed in the foreclosure action, he is entitled to occupy the property until the end of the remaining term of that lease. (Exception: where the foreclosed property is sold to a purchaser who will occupy the property as a primary residence, then the lease can be terminated on the date of sale to this new purchaser, subject to the receipt of the above-mentioned 90-day notice.) If no lease exists, or the lease is terminable at will pursuant to state law, the occupant must still receive the 90-day notice before a forcible entry and detainer action can be filed.

A bona fide tenant under the PTFA is defined as follows:

• The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
• The lease or tenancy was the result of an arms-length transaction; and
• The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state, or local subsidy.

Accordingly, under this federal statue a forcible entry and detainer action cannot be filed with the court until the 90-day notice has been given and the lease term has expired (if a bona fide tenant resides in the property).

Illinois Statutes — Illinois has several statutes dealing with the eviction of tenants and occupants in foreclosed properties who are not the former mortgagor or owner.

735 ILCS 5/15-1701 requires that a 90-day notice of intent to file a forcible entry and detainer action be served on the occupant before the action can be filed. (This is similar to, and concurrent with, the 90-day notice requirement in the federal PTFA).

735 ILCS 5/15-1508.5 states that if a purchaser at a foreclosure sale wants to collect rent due and owing from a known occupant, or terminate a known occupant’s tenancy for non-payment of rent, the purchaser at the sale must make a good faith effort to ascertain the identities of all occupants of the property and provide a particular notice to the occupants in a particular manner.

Following the judicial sale, but no later than 21 days after the confirmation of sale, the purchaser must make a good faith effort to ascertain the identities and addresses of all occupants of the property.

Following the judicial sale, but no later than 21 days after the confirmation of sale is entered by the court, the purchaser must serve a written notice on all known occupants (by delivering a copy to the occupant or by leaving the notice with some person of the age of 13 years or upwards who is residing on, or in possession of, the premises; or by sending a copy of the notice by first-class mail, addressed to the occupant), which includes the following information: (i) Identify the occupant being served by the name known to the holder or purchaser; (ii) Inform the occupant that the mortgaged real estate at which the dwelling unit is located is the subject of a foreclosure and that control of the mortgaged real estate has changed; (iii) Provide the name, address, and telephone number of an individual or entity whom the occupants may contact with concerns about the mortgaged real estate or to request repairs of that property; (iv) Include the following language, or language that is substantially similar: “This is NOT a notice to vacate the premises. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights that you may have.”; (v) Include the name of the case, the case number, and the court where the order confirming the sale has been entered; and (vi) Provide instructions on the method of payment of future rent if applicable.

If the identity and address of an occupant of a dwelling unit is identified more than 21 days after the confirmation of sale is entered, the purchaser shall provide the above notice within seven days of ascertaining the identity and address of the occupant.

Within 21 days of confirmation of sale, the purchaser must also post a notice on the primary entrance of each dwelling unit subject to the foreclosure action containing the following information: (i) Inform occupant that the dwelling unit is the subject of a foreclosure action and that control of the mortgaged real estate has changed; (ii) Include the following language: “This is NOT a notice to vacate the premises.”; (iii) Provide the name, address, and telephone number of an individual or entity whom the occupants may contact with concerns about the mortgaged real estate or to request repairs of that property; and (iv) Provide instructions on the method of payment of future rent if applicable.

735 ILCS 5/9-207.5 is the Illinois statute that is equivalent to the federal PTFA. It states that a purchaser may terminate a bona fide lease only (i) at the end of the term of the bona fide lease, by no less than 90 days’ written notice, or (ii) in the case of a bona fide lease that is for a month-to-month or week-to-week term, by no less than 90 days’ written notice. If the purchaser at a judicial sale plans to occupy the premises as his primary residence, any lease may be terminated subject to the 90-day notice requirement.

Under this statute, a bona fide lease is:

• The mortgagor or the child, spouse or parent of the mortgagor is not the tenant; [Note: Notwithstanding the requirements of a bona fide lease, a child, spouse, or parent of the mortgagor may prove by a preponderance of evidence that a written or oral lease that otherwise meets the requirements of a bona fide lease is actually bona fide under this statute.];
• The lease was the result of an arms-length transaction;
• The lease requires the receipt of rent that is not substantially less than fair market rent for the property or the rent is reduced or subsidized pursuant to a federal, state, or local subsidy; and
• Either the lease was entered into on or before the date of the filing of the lis pendens on the residential real estate in the foreclosure or the lease was entered into or renewed after the date of the filing of the lis pendens on the residential real estate in the foreclosure and before the date of the judicial sale of the residential real estate in foreclosure, and the term of the lease is for one year or less.

A written lease for a term exceeding one year that is entered into or renewed after the date of the filing of the lis pendens on the residential real estate in foreclosure and before the date of the judicial sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for the term of one year.

An oral lease entered into before the date of the judicial sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for a month-to-month term, unless the lessee proves by a preponderance of evidence that the oral lease is for a longer term. In no event shall an oral lease be deemed to be a bona fide lease for a term of more than one year.

A written or an oral lease entered into on or after the date of the judicial sale and before the date of the order confirming the sale that otherwise meets the requirements of a bona fide lease shall be deemed to be a bona fide lease for a month-to-month term.

City of Chicago Ordinance — Chapter 5-14 of the Municipal Code of Chicago, “Protecting Tenants in Foreclosed Rental Property Ordinance.” The ordinance has several sections, dealing with, among other things, eviction protection and relocation assistance, as well as addressing the registration of foreclosed rental property. For more on the ordinance, read on.

Eviction Protection and Tenant Relocation Assistance (5-14-050) — The owner (the purchaser of a foreclosed rental property after the sale has been confirmed by the court and any special right to redeem has expired, or a mortgagee who has accepted a deed-in-lieu of foreclosure or consent foreclosure on a foreclosed rental property) of a foreclosed rental property (defined below) shall pay a one-time relocation assistance fee of $10,600 (per unit, not per occupant) to a qualified tenant (defined below) unless the owner offers such tenant the option to renew or extend the tenant’s current rental agreement with an annual rental rate that: (1) for the first twelve months of the renewed or extended lease, does not exceed 102 percent of the qualified tenant’s current annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102 percent of the immediate prior year’s annual rental rate. This provision does not apply to an owner who became an owner prior to the effective date of this act (9/24/13), a bona fide third-party purchaser, or an owner who will occupy the rental unit as the person’s principal residence.

“Foreclosed Rental Property” means: (a) A building containing one or more dwelling units that are used as rental units, including a single-family house; or a dwelling unit that is subject to either the Condominium Property Act or the Common Interest Community Association Act that is used as a rental unit; (b) For which legal and equitable interests in the building or dwelling unit were terminated by a foreclosure action pursuant to the Illinois Mortgage Foreclosure Law; and (c) One or more of the units are occupied on the date a person becomes the owner.

“Qualified Tenant” means a person who: (a) is a tenant in a foreclosed rental property on the day that a person becomes the owner of that property; and (b) has a bona fide rental agreement to occupy the rental unit as the tenant’s principal residence. For the purposes of the definition, a lease shall be considered bona fide only if:

• The mortgagor or the child, spouse, or parent of the mortgagor is not the tenant;
• The lease was a result of an arms-length transaction; and
• The lease requires the receipt of rent that is not substantially less than fair market rent for the property, or the rental unit’s rent is reduced or subsidized due to the government subsidy.

Any relocation fee must be paid no later than seven days after the day of complete vacation of the rental unit by the qualified tenant by certified or cashier’s check. The owner may deduct from the relocation fee all rent due and payable for the rental unit occupied by the qualified tenant prior to the date on which the rental unit is vacated, unless such rent has been validly withheld or deducted pursuant to state, federal, or local law.

An owner is not liable to pay the relocation fee to any qualified tenant who (1) does not enter into a rental agreement after being offered a renewal or an extension of the tenant’s rental agreement with a rent in an amount that complies with this ordinance, or (2) against whom the owner has obtained a judgment for possession of the rental unit. If an owner fails to comply with this section, the qualified tenant shall be awarded damages in an amount equal to two times the relocation assistance fee and other damages to which they may be otherwise entitled. The owner shall comply with this section of the ordinance until the property is sold or transferred to a bona fide third-party purchaser. If a qualified tenant is evicted for cause, the owner is not liable for any relocation assistance provided under this section.

Written Notice to Tenants (5-14-040) — No later than 21 days after a person becomes the owner (the date of sale confirmation or acceptance of a deed-in-lieu or consent judgment of foreclosure) of a foreclosed rental property, the owner shall make a good faith effort to ascertain the identities and addresses of all tenants of the rental units in the foreclosed rental property and notify, in writing, all known tenants of such rental units that, under certain circumstances, the tenant may be eligible for relocation assistance. The notice shall be given in English, Spanish, Polish, and Chinese and be as follows:

“THIS IS NOT A NOTICE TO VACATE THE PREMISES. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any right that you may have.
Pursuant to the City of Chicago’s Protecting Tenants in Foreclosed Rental Property Ordinance, if you are a qualified tenant you may be eligible for relocation assistance in the amount of $10,600 unless the owner offers you the option to renew or extend your current written or oral rental agreement with an annual rent that: (1) for the first twelve months, does not exceed 102% of the immediate prior year’s annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102% of the immediate prior twelve-month period’s annual rent. The option to renew or extend your lease shall continue until the property is sold to a bona fide third-party purchaser.
If you are eligible as a qualified tenant and the owner fails to pay you the relocation assistance that is due, you may bring a private cause of action in a court of competent jurisdiction seeking compliance with the Protecting Tenants in Foreclosure Rental Property Ordinance, Chapter 5-14 of the Municipal Code of Chicago, and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.”

The notice shall also include the name, address and telephone number of the owner, property manager or owner’s agent who is responsible for the foreclosed rental property.

If the owner ascertains the identity of a tenant more than 21 days after becoming the owner, the owner shall provide the notice within seven days of ascertaining the identity of the tenant.

The notice must be served by: (a) Delivering a copy of the notice to the known tenant; (b) Leaving a copy of the notice with some person of the age of 13 years or older who is residing in the tenant’s rental unit; or (c) Sending a copy of the notice by first-class or certified mail, return receipt requested, to each known tenant, addressed to the tenant.

The notice must also be posted on the primary entrance of each foreclosed rental property no later than 21 days after a person becomes the owner (the date of sale confirmation or execution of a deed-in-lieu or entry of consent judgment of foreclosure). An owner may not collect rent from any tenant until the written notice is served and posted.

Registration of Foreclosed Rental Property (5-14-060) — No later than 10 days after becoming the owner of a foreclosed rental property, the owner shall register such property with the commissioner. The registration shall be in a form and manner prescribed by the commissioner and shall contain the following information:

• Name, address, and telephone number of owner;
• Address of foreclosed rental property;
• If more than one unit is located in the property, the number of rental units in the property and whether each rental unit was occupied by a known tenant at the time the person became the owner. If occupied, the name and address of each known tenant;
• If the foreclosed rental property consists of only one rental unit, the name of the known tenant at the time the person became the owner;
• Name, address, and telephone number of the owner’s agent for the purpose of managing, controlling, or collecting rents and any other person not an owner who is controlling such property, if any;
• Name, address, and telephone number of a natural person 21 years of age or older, designated by the owner as the authorized agent for receiving notices of code violations and for receiving process, in any court proceeding or administrative enforcement proceeding, on behalf of such owner in connection with the enforcement of this code. This person must maintain an office, or actually reside, in Cook County, Illinois. An owner who is a natural person and who meets the requirements of this subsection as to location of residence or office may designate himself as agent;
• An affidavit signed by the owner that lists, by rental unit, all of the qualified tenants at the time the person became the owner; and
• Any other pertinent information reasonably required by the commissioner.

Any owner who fails to register under this section shall be deemed to consent to receive, by posting at the foreclosed rental property, any and all notices of code violations and all process in an administrative proceeding brought to enforce code provisions concerning the property.

The owner shall pay a $250 fee at the time of registration.

If any of the pertinent information changes, the owner shall file a statement indicating the nature and effective date of the change within 10 days after the change takes effect.

If the property is sold to a bona fide third-party purchaser the owner shall, within 10 days of such sale or transfer, notify the commissioner in writing in a form and manner prescribed by the commissioner.

If the property becomes vacant after registration pursuant to this section, the owner shall comply with the vacant building registration requirement of chapter 13-12, if applicable.

Remedies (5-14-070) — A tenant may bring a private cause of action seeking compliance with sections 040 and 050, and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.

Waiver of Right Not Allowed (5-14-080) — No rental agreement offered or entered into by an owner after the effective date of this chapter may provide that a tenant agrees to waive or forego the rights and remedies provided under this chapter and any such provision in a rental agreement is unenforceable.

Violation-Penalties-Liability (5-14-100) — Any person found guilty of violating this Chapter, or any rule or regulation promulgated hereunder, shall be fined not less than $500 nor more than $1,000. Each failure to comply with respect to each person shall be considered a separate offense and each day that a violation exists shall constitute a separate and distinct offense.

Conclusion — As this article tries to make clear, when an eviction of a tenant or an occupant who is not the prior mortgagor or owner of the property is required in Illinois, there are many statutes and ordinances that must be considered. This makes the process a complicated and time-consuming one. Although the various statutes and ordinances do, at times, contradict one another, the most restrictive one applicable for the specific property must be followed.

© Copyright 2014 USFN. All rights reserved.
Spring 2014 USFN Report