The Appellate Court of Illinois, First District, recently reversed a summary judgment ruling in favor of a mortgagee on its post-foreclosure forcible entry and detainer claim, finding genuine disputes as to materials facts where the tenant presented evidence that she was a qualified tenant under the Chicago Protecting Tenants in Foreclosed Rental Property Ordinance (Ordinance), and that the mortgagee did not pay her the $10,600 relocation assistance fee required by the Ordinance.
A copy of the opinion is available at: Link to Opinion
A mortgagee became the owner of the subject property pursuant to an order approving the judicial sale in a mortgage foreclosure case. The mortgagee filed its forcible entry and detainer complaint for possession of the property against tenant and other defendants.
The tenant answered the complaint and raised as an affirmative defense that she resided in the property pursuant to a valid lease and that she was entitled to a relocation assistance fee because she was a qualified tenant. The tenant also alleged that the mortgagee's non-compliance with the Ordinance precluded a judgment in the mortgage's favor.
As you may recall, the Chicago Protecting Tenants in Foreclosed Rental Property Ordinance provides that:
"[T]he owner of a foreclosed rental property shall pay a one-time relocation assistance fee of $10,600 to a qualified tenant unless the owner offers such tenant the option to renew or extend the tenant's current rental agreement with an annual rental rate." Chicago Municipal Code § 5-14-050(a)(1) (added June 5, 2013).
A "qualified tenant" means a person who: "(1) is a tenant in a foreclosed rental property on the day that a person becomes the owner of that property; and (2) has a bona fide rental agreement to occupy the rental unit as the tenant's principal residence." Chicago Municipal Code § 5-14-020 (added June 5, 2013).
The mortgagee filed a motion for summary judgment arguing that the order approving the judicial sale and the underlying deed entitled it to possession.
The tenant responded to the motion by presenting evidence that she had resided in the property for several years prior, during, and after the foreclosure pursuant to a written lease, and was a "qualified tenant" under the Ordinance because she was a tenant in a foreclosure rental property pursuant to a "bona fide rental agreement" before the mortgagee became the owner.
The original annual lease contained provisions that would convert it to a month-to-month lease after it expired. The tenant averred in an affidavit that she paid $950 a month in rent and continued to reside in the property pursuant to a lease entered into after the borrower lost the property in the foreclosure. Thus, the tenant argued that she was entitled to the $10,600 relocation fee and that the mortgagee was not entitled to possession of the property until it complied with the Ordinance's relocation provision.
In response, the mortgagee argued that the Ordinance did not apply to it because the foreclosure order wiped out the prior owner's rights, and therefore the tenant's post-foreclosure lease with the borrower was not a bona fide lease, as required.
The trial court granted the mortgage's motion for summary judgment. This appeal followed.
Initially, the Appellate Court considered the mortgagee's argument that compliance with the Ordinance's relocation provision is not a condition precedent to a forcible entry and detainer action.
The mortgagee argued that failure to comply with the Ordinance could not bar this action because the Ordinance states: "The owner shall pay the relocation fee to the qualified tenant no later than seven days after the day of complete vacation of the rental unit by the qualified tenant." Chicago Municipal Code § 5-14050(b) (added June 5, 2013). Thus, the mortgagee claimed that any obligation to pay the relocation fee is only triggered when a qualified tenant vacates the property.
The Appellate Court disagreed, concluding that the mortgagee's alleged failure to comply with the Ordinance's relocation provision is an affirmative defense to a forcible entry and detainer action.
Specifically, the Appellate Court noted that the Illinois Forcible Entry and Detainer Act states that "[t]he defendant may under a general denial of the allegations of the complaint offer in evidence any matter in defense of the action" and that "no matters not germane to the distinctive purpose of the proceeding shall be introduced by joinder, counterclaim or otherwise." 735 ILCS 5/9-106.
Germane in this context means "closely allied." Rosewood Corp. v. Fisher, 46 Ill. 2d 249, 256 (1970). The Appellate Court found that the Ordinance is "closely allied" with or "germane" to the Illinois Forcible Entry and Detainer Act because a "qualified tenant must bring a claim for relocation assistance prior to the entry of a judgment of possession of the rental unit." See Chicago Municipal Code § 5-14-050(e)(2) (added June 5, 2013).
Thus, the Court held, "a tenant's claim to a relocation fee from an owner, if not previously asserted in a separate legal action, must be raised during the eviction proceedings." See Chicago Municipal Code § 5-14-070(a) (added June 5, 2013) (allowing a tenant to bring a private cause of action under the Ordinance).
The Appellate Court observed that reading the Ordinance as a whole supports its conclusion because it states "the owner of a foreclosed property shall pay a one shall pay a one-time relocation assistance fee of $10,600 to a qualified tenant unless the owner offers such tenant the option to renew or extend the tenant's current rental agreement." Chicago Municipal Code § 5-14-050(a)(1)
The Appellate Court next analyzed if a genuine issue of material fact existed regarding whether tenant "was a qualified tenant pursuant to a bona fide rental agreement under the Ordinance." Specifically, the Appellate Court examined whether the initial pre-foreclosure lease constituted a bona fide rental agreement.
The Appellate Court observed that the original pre-foreclosure lease contained a valid month-to-month tenancy provision. In addition, the tenant's affidavit averred that she had resided in the property since before the foreclosure pursuant to a rental agreement that required her to pay $950 a month to the property owner.
Although tenant's affidavit did not also state that she paid the rent each month, the Court held she did not have to prove her case to withstand summary judgment. In the Court's view, the evidence that tenant had a rental agreement that required her to pay rent every month on the day the mortgagee became the owner of the foreclosed property was sufficient to defeat summary judgment. Chicago Municipal Code § 5-14-020.
Viewing the evidence in a light most favorable to the tenant, the Appellate Court held that the trial court erred in granting summary judgment because a genuine issue of material fact exists as to whether tenant was a month-to-month tenant under the original lease when the court approved the judicial sale in favor of the mortgagee. Thus, the mortgagee's "right to a judgment of possession is not clear and free from doubt."
Accordingly, the Appellate Court reversed the trial court's summary judgment order in favor of the mortgagee, and remanded the case for further proceedings consistent with its decision.
Ralph T. Wutscher
Maurice Wutscher LLP
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