Monday, October 10, 2022

FYI: Ill App Ct (5th Dist) Holds Release of Mortgage May Be Obtained by Citation to Recover in Probate

The Illinois Court of Appeals, Fifth District, affirmed a trial court's judgment granting the release of a mortgage and vacated the trial court's order denying an award of attorney's fees.


In so ruling, the Appellate Court held that a citation to recover under section 16-1 of the Illinois Probate Act is a proper vehicle to be used to obtain a release of mortgage.


A copy of to the opinion is available at:  Link to Opinion


The borrower (Decedent) died in August of 2016. After Decedent's death, a financial institution (Lender) filed a claim against the Decedent's estate (Estate) regarding two promissory notes personally guaranteed by the decedent.


The first promissory note (First Note) was secured by a mortgage on four separate parcels of real property along with the leases and rents associated with the properties.  The second promissory note (Second Note) refinanced a separate parcel of real estate and was secured by a mortgage along with the leases and rents associated with the property. The Decedent personally guaranteed the First and Second Note, and Decedent's limited liability company (LLC) owned the real estate.


After Decedent's death, Lender sued the Estate in Jackson County. Count I of the Lender's lawsuit was a foreclosure proceeding against the LLC that owned the properties secured by the First and Second Notes. Count II was an action on the guaranties against the Estate.  The trial court in the Lender's lawsuit entered judgment of foreclosure, approved the report of sale, and issued a deficiency judgment against LLC and Estate. The trial court in Jackson County also awarded the Lender possession of the properties and required the Estate to transfer all security deposits to the Lender.


The Estate responded by filing a petition in Marion County for citation to recover release of mortgage (Petition) as to the portion of the collateral property located in Marion County. The Petition alleged that Decedent paid off the loans associated with the Marion County property and the Lender wrongfully foreclosed on the property.


The Estate requested a release of the mortgage and penalties and legal fees under the Illinois Mortgage Certificate of Release Act and section 16-1(d) of the Illinois Probate Act of 1975  which provides an Illinois trial court authority to "determine all questions of title, claims of adverse title and the right of property and may enter such orders and judgment as the case requires." 755 ILCS 5/16-1.


The trial court in the Estate's action in Marion County held an evidentiary hearing and ultimately found that both of the loans were paid in full before Decedent's death. As a result, the First and Second Notes for the loans were no longer secured by the Marion County mortgage. The trial court further held that promissory notes regarding the LLC and personal guaranties of the Decedent were merged into the judgment from the Lender's lawsuit in Jackson County and the Lender's deficiency judgment in Jackson County was not a debt secured by the Marion County mortgage. The trail court ordered the Lender to execute and deliver releases of the mortgages under Section 2 of the Illinois Mortgage Act, 765 ILCS 905/2. The trial court also allowed the Estate to file a petition for its attorney's fees and costs, which the trial court later denied.


The Lender and Estate both appealed.


On appeal, the Lender argued that a release of mortgage is not "property subject to a citation to recover" under the Illinois Probate Act. Second, the Lender argued that the mortgage secures the debt which remained outstanding from Decedent and Decedent's estate.


The Appellate Court disagreed, holding that a citation to release the mortgage is a proper remedy under section 16-1 of the Illinois Probate Act. The Lender argued it was improper because a release of mortgage was not a document already in existence and therefore section 16-1 did not apply. However, the Appellate Court noted that the trial court determined that the existing loans secured by the mortgages were satisfied. As a result, the trial court had jurisdiction to issue an order requiring the release of the lien under section 16-2(d) of the Illinois Probate Act.


The Lender also argued that the deficiency judgment obtained in the Lender's lawsuit in Jackson County should be considered a debt that is ultimately secured by the mortgage on the property in Marion County. However, the Appellate Court noted that the plain language of the mortgage required the Lender to provide the borrower with notice of the right of recission if the Lender alleged the security instrument secured any other debt. Because there was no proof in the record that the Lender complied with this provision, the Appellate Court affirmed the release of the Marion County mortgage.


The Estate's cross appeal raised one issue: Whether the trial court erred in denying the Estates motion for attorney's fees and costs. The Estate sought attorney fees under the Section 4 of the Illinois Mortgage Act, which states in relevant part:


If any mortgagee or trustee, in a deed in a mortgage, of real property, or his or her executor or administrator, heirs or assigns, knowing the same to be paid, shall not, within 30 days after the payment of the debt secured by such mortgage or trust deed, comply with the requirements of section 2 of this Act, he or she shall, for every such offense, be liable for and pay to the party aggrieved $200 which may be recovered by the party aggrieved in a civil action, with reasonable attorney's fees.


765 ILCS 905/4.


Because the probate court's order granted the Estate's petition for citation under section 4 of the Illinois Mortgage Act, the Appellate Court held that the probate court improperly denied the Estate's petition for attorney's fees.


As a result, the Appellate Court vacated the probate court's denial of the Estate's request for legal fees. In addition, the Appellate Court vacated the probate court's award of costs to the Estate because section 4 of the Illinois Mortgage Act does not include an award of costs to the prevailing party.




Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 6th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874


Admitted to practice law in Illinois




Alabama   |   California   |   Florida   |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Tennessee   |   Texas   |   Washington, DC



NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates and webinar presentations are available on the internet, in searchable format, at:


Financial Services Law Updates




The Consumer Financial Services Blog