In addition to the legislation discussed in our prior update below, House Bill 99 was also recently signed into law in Illinois. The bill extends the provisions of Illinois' Homeowner Protection Act by three years through 2016, but does not otherwise alter the provisions of that Act.
The text of the legislation is available at: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0025
As you may recall, the Illinois Homeowner Protection Act (the "Act") requires that a mortgage foreclosure action against a residential property may not be filed until 30 days after a Grace Period Notice is mailed to the borrower(s). If the borrower consults with an approved counseling agency, and that agency notifies the mortgagee that the borrower is seeking counseling services, then the mortgagee may not take legal action for an additional 30 days from the date of that notice.
We note that we inadvertently referenced this HB99 bill by press release link, and "SB 58," in our summary of the recent changes to the law affecting tenants in foreclosed properties below. The correct Senate Bill number was 56. We apologize for any confusion.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mwbllp.com
Admitted to practice law in Illinois
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From: Ralph Wutscher [mailto:rwutscher@kahrlwutscherllp.com]
Sent: Sunday, June 30, 2013 7:08 PM
To: Ralph T. Wutscher
Cc: Chicago Office; DC Office; Florida Office; California Office
Subject: FYI: Illinois Enacts New Law Affecting Tenants in Foreclosed Properties
Illinois recently signed into law an act (SB 58) that alters the protections afforded to tenants of foreclosed properties under the Illinois Mortgage Foreclosure Law ("IMFL"), and sets out the circumstances in which new owners of foreclosed properties are bound by tenants' bona fide leases.
The press release announcing the bill is available at: http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=3&RecNum=11284
The text of the legislation is available at: Link to Text of Legislation.
As you may recall, the federal Protecting Tenants at Foreclosure Act ("PFTA") generally provides that new owners of foreclosed properties may not evict occupants other than those named in an order approving sale without first providing those occupants with a 90 day notice to vacate. Further, the PFTA also generally provides that new owners of foreclosed properties are bound by the terms of bona fide leases.
SB 58 largely mirrors the language of the PFTA, and adopts the PFTA's provision that new owners of foreclosed properties are bound by the terms of bona fide leases.
Accordingly, the SB 58 provides that tenants of foreclosed properties cannot be evicted absent a 90 day notice to vacate, and that bona fide leases are generally considered to be valid where: (1) the tenant is not a child, spouse, or parent of the mortgage; (2) the lease was the result of an arms-length transaction; (3) the rent provided for by the lease is not substantially less than the fair market value; and (4) the lease was entered into before the date of the judicial sale of the subject property.
However, SB 58 provides new owners of foreclosed properties with some protections that the PFTA does not. Specifically, it provides that bona fide leases of one year or greater "shall be deemed to be a bona fide lease for a term of one year." In contrast, the PFTA is silent as to bona fide leases for terms greater than one year.
In addition, SB 58 provides that oral leases that otherwise qualify as bona fide leases are to be considered leases with month-to-month terms, unless the lessee proves otherwise by a preponderance of the evidence.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mwbllp.com
Admitted to practice law in Illinois
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 are available on the internet, in searchable format, at:
http://updates.mwbllp.com
