FYI: Ill App Ct (3rd Dist) Rejects Arguments by Mortgagee to Undo Tax Sale

The Appellate Court of Illinois, Third District, recently upheld summary judgment in favor of a purchaser of delinquent real estate taxes in an action by a mortgagee for relief from a tax deed.

 

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

 

The matter arose out of a special assessment tax on a single-family residence. After the 2012 special assessment installment from a municipality was not paid, the county treasurer filed an application for judgment and an order of sale for the delinquent taxes.

 

The county's filing consisted of an affidavit from the county treasurer, a form judgment and order of sale to be signed by the court, a certification signed by the circuit clerk, and 15 pages listing delinquent tax assessments due to the county. The 15 pages did not include the subject residence.

 

On the same date, the collector for the municipality filed a 7 page list of properties with delinquent special assessments, an affidavit stating the list contained the properties with delinquent assessments and attesting that the notice required by law had been given.

 

The subject residence was on the 7 page list. The filing also included an advertisement published on October 15, 2013, but the advertisement was not filed at that time.

 

The judgment and order of sale was signed in October of 2013. On November 2013, the delinquent taxes were sold to a third-party ("Purchaser").

 

In 2016, Purchaser filed a petition for a tax deed. In the interim, the mortgage on the residence had been assigned to a mortgagee and recorded in December 2014. After mortgagee was served with the tax notice in July 2016, the existing mortgagee assigned the mortgage to another party ("Current Mortgagee").

 

Neither the prior mortgagee nor Current Mortgagee redeemed the delinquent special assessments for the property and neither appeared at the December 2016 hearing.  The trial court entered an order directing the county clerk to issue a tax deed. Neither the prior mortgagee nor Current Mortgagee filed any objection to the issuance of the tax deed. The deed was executed and delivered to Purchaser and recorded in March 2017.

 

In December 2017, Current Mortgagee filed a petition for relief from the judgment.  The Current Mortgagee argued that the order granting the tax deed was void.  The trial court denied the Current Mortgagee's petition.

 

The Current Mortgagee and Purchaser then filed cross-motions for summary judgment. The Current Mortgagee's motion was denied, and Purchaser's motion was granted. The trial court found the tax sale proceedings were informal, but the October 2013 order included the municipality's delinquent special assessment taxes. The Current Mortgagee's motion to reconsider was denied, and this appeal followed.

 

On appeal, the Current Mortgagee argued that the county collector did not properly apply for a judgment for the special assessments because the county filing did not include the delinquent special assessments from the municipality. Thus, the Current Mortgagee argued, the judgment and order did not authorize the sale of the special assessments, and absent the order authorizing the sale, the order directing the issuance of the tax deed was void.

 

Purchaser argued that the county and municipality followed an informal process, but the municipality's list was filed by the county collector with her affidavit and list of delinquent real estate taxes. Thus, Purchaser argued, the municipality's list was included as part of the "foregoing" list referenced by the county collector in her application.

 

The Appellate Court noted that the grounds for vacating an order for tax deed are limited to those set forth in section 22-45 of the Illinois Property Tax Code. 35 ILCS 200/22-45 (West 2016); Application of County Treasurer (Congua), 92 Ill. 2d 400 (1982).

 

The Current Mortgagee did not allege that Purchaser failed to notify and serve all interested parties nor did it allege any of the statutory grounds for vacating an order for a tax deed. However, the Court also noted, that a void tax deed can be attacked at any time.

 

Pursuant to Section 21-160 of the Illinois Property Tax Code, a collector "shall transcribe into a record prepared for that purpose, and known as the annual tax judgment, sale, redemption and forfeiture record, the list of delinquent properties." 35 ILCS 200/21-160 (West 2016).

 

The Appellate Court found that the municipality's collector provided a report in the form provided by section 9-2-85 of the Illinois Municipal Code of the properties with delinquent assessment to the county collector, and the county collector applied for the judgment against all the delinquent properties in accordance with the Illinois Property Tax Code.  The Court further found that the municipality's special assessments were included in the "foregoing list" that the county collector referenced in seeking judgment.

 

Finally, the Court found that the errors and informalities, namely, the failure to physically attach the municipality's affidavit and delinquent tax list to the county's application and the failure to attach the advertisement that the municipality's collector attested was published, did not invalidate the tax sale. See 35 ILCS 200/21-185 (West 2016); cf. People v. Jennings, 3 Ill. 2d 125 (1954) (failure to publish was a valid objection to the tax where there was no attempt to comply with the law regarding publishing the list).

 

The Current Mortgagee also argued that the trial court never acquired jurisdiction over the property since the municipality's publication notice was insufficient.

 

The Appellate Court quickly dispensed with this argument as tax proceedings are in rem in nature and the court acquires jurisdiction after the county collector makes his application for judgment and order of sale. In re Application of the 7 County Collector, 2011 IL App (3d) 100181, ¶ 13.  Because jurisdiction over the land itself grants the court power to act, thus, the notice requirements sufficiency only brings into question whether the court should order the tax deed issued. In re County Treasurer & Ex-Officio County Collector of Cook County, 386 Ill. App. 3d 906, 909 (2008).

 

In addition, the Appellate Court found that the municipality complied with the publication requirements. The affidavit filed by the county collector contained the requisite oath that the advertisement was published, and the municipality's publication notice was in the record and certified that the "attached advertisements" were published. A list of the delinquent properties was also included. Additionally, Purchaser included a certificate of the publisher, and a copy of the printed advertisement with included the property number.

 

The Appellate Court found that the failure to attach a printed copy of the advertisement the county collector's affidavit was not enough to deem the municipality had failed with the publication requirements.

 

Thus, the Appellate Court held the tax deed was authorized and as such, found no basis to find the order void and affirmed the trial court's ruling.

 

 

 

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

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

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FYI: Ill App Ct (1st Dist) Affirms Denial of Borrower's Evidentiary Challenge to Foreclosure Sale

The Illinois Court of Appeals, First District, recently affirmed a trial court's order granting a mortgagee's motion to confirm judicial sale of a borrower's property and denying the borrower's motion to set aside and vacate the sale.

 

In so ruling, the First District among other things held that:

 

- An evidentiary hearing may be conducted after a foreclosure sale where the defendant presents evidence that the sale did not comport with Illinois law

 

- The defendant must provide evidence at the hearing indicating the sale was unjust

 

- The trial court may deny a request for continuance of the evidentiary hearing in its discretion.

 

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

 

This appeal arises from a 2010 foreclosure action. During the course of the litigation, the mortgage and note were assigned numerous times, eventually being assigned to the appellee mortgagee that was substituted as plaintiff.

 

In January 2018, the trial court entered a judgment of foreclosure and sale. The judgment provided that if redemption was not made, the property would be sold at a public sale. The trial court also entered summary judgment in favor of the mortgagee and against the borrower.

 

The judicial foreclosure sale was stayed multiple times, and finally went forward on February 8, 2019. In July 2019, mortgagee filed a motion to confirm the sale and the borrower was granted leave to file a response.

 

Borrower filed a motion to set aside the judgment of foreclosure and vacate the sale, arguing that, as he had filed a bankruptcy petition prior to the sale, the automatic bankruptcy stay provision should have prevented the selling office from holding the sale. In support of his motion, Borrower submitted an alleged visitor pass to the judicial sale office dated February 8, 2019 at 11:59 p.m., a notice of bankruptcy case filing indicating that his bankruptcy petition was filed on February 8, 2019 at 11:29 a.m., and notice of the automatic stay with his signature.

 

In response, the mortgagee argued that the sale occurred prior to Borrower's filing his bankruptcy petition and therefore the sale was not held in violation of an automatic bankruptcy stay. In support of the motion, the mortgagee attached an electronic message which reflected the sale occurred at 10:41 a.m. on February 8, 2019.

 

The trial court granted both parties leave to present evidence of when the sale occurred.  The mortgagee submitted an affidavit of the President and CEO of the selling office, averring that the sale occurred at 10:41 a.m.  Borrower filed a copy of a summons and subpoena for the front desk secretary/clerk ("Clerk") from the selling office and a copy of the affidavit which Borrower prepared for Clerk to sign. On the affidavit was written: "need lawyer permission to sign 10/18/2019 2:48."

 

A hearing was held on the motions at which Borrower stated that he had gone to the selling office after filing his bankruptcy petition and spoke with Clerk who indicated that a bid had not yet been entered and thus, the property had not been sold before he filed his petition.

 

Borrower requested a continuance to produce Clerk as a witness. The trial court denied this request and confirmed the judicial foreclosure sale. The trial court ruled that Borrower's statements about his conversation with Clerk were inadmissible hearsay and Borrower had failed to produce sufficient admissible evidence to prove he had filed for bankruptcy prior to the sale.

 

Borrower filed numerous post-judgment motions including a motion to stay possession, motion for reconsideration, emergency motion and temporary restraining order to stay eviction. Borrower attached to his motion to reconsider, an email from the selling office which indicated that the affidavit prepared by Borrower could not be executed as the staff had no independent recollection of the conversation or that the bankruptcy documents were delivered on February 8, 2019. The email further confirmed the sale occurred at 10:41 a.m.

 

The trial court denied Borrower's motions but entered an order continuing Borrower's second emergency motion to stay possession until December 31, 2019.  On December 31, 2019, the trial court denied Borrower's motion for lack of jurisdiction based on a filed notice of appeal.

 

On appeal, Borrower argued that the trial court abused its discretion in approving the judicial sale that was unjust under section 1508(b) of the Illinois Mortgage Foreclosure Law and erred by denying his request for a continuance to hold an evidentiary hearing before confirming the sale.

 

As to his first argument, Borrower contended the foreclosure sale was unjust as it occurred after he filed for bankruptcy. He further asserted that he submitted sufficient allegations and evidence that he filed for bankruptcy before the foreclosure sale to warrant an evidentiary hearing. Borrower alleged the hearing held was not an evidentiary hearing as Clerk failed to appear and the mortgagee did not present any witnesses.

 

The First District found that the trial court's confirmation of the foreclosure sale was not an abuse of discretion. The Appellate Court held the record supported the trial court's decision to confirm the sale after the hearing at which both the mortgagee and Borrower presented arguments and evidence in support of when the sale took place.

 

As to Borrower's argument that the trial court erred in denying his request for continuance and that he presented sufficient allegations and evidence to warrant an evidentiary hearing, the Appellate Court disagreed. The First District stated that absence an abuse of discretion, it would not disturb the trial court's decision, as granting or denying a motion for a continuance is within the trial court's sound discretion. ICD Publications, Inc. v. Gittlitz, 2014 IL App (1st) 133277, ¶ 88.

 

As to the evidentiary hearing, the First District held that an evidentiary hearing may be conducted after a foreclosure sale where the defendant presents evidence that the sale did not comport with section 15-1508(b). The Appellate Court clarified that this meant the defendant should already have evidence indicating the sale was unjust. See Resolution Trust Corp. v. Holtzman, 248 Ill. App. 3d 105, 115 (1993).

 

Because Borrower was unable to produce any new evidence except the alleged conversation with Clerk and the email which did not support his assertion that the sale occurred later than 11:29 a.m., the Appellate Court found the trial court reasonably questioned whether granting another continuance would be fruitful. Thus, the First District found the trial court did not abuse its discretion in denying Borrower's further request for continuance.

 

Therefore, the Appellate Court affirmed the trial court's orders confirming the foreclosure sale and denying Borrower's request for a continuance.

 

 

 

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

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

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

 

and

 

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and

 

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