97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5731

 

Introduced 2/16/2012, by Rep. Monique D. Davis

 

SYNOPSIS AS INTRODUCED:
 
735 ILCS 5/15-1202.5
735 ILCS 5/15-1701  from Ch. 110, par. 15-1701
735 ILCS 5/15-1707 new

    Amends the Code of Civil Procedure. Provides that a mortgagor has a right to remain in the mortgaged premises as a renter following foreclosure proceedings by paying rent to the mortgagee in possession or the purchaser at the judicial sale. Defines terms. Provides for a mortgagee's notice to the mortgagor of the right to remain in the mortgaged premises as a tenant, terms of tenancy, mortgagor's responsibilities while renting the foreclosed property, rental rate set by the court, responsibility for maintenance of the foreclosed property, and other matters. Effective June 1, 2012.


LRB097 17701 AJO 62915 b

 

 

A BILL FOR

 

HB5731LRB097 17701 AJO 62915 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Code of Civil Procedure is amended by
5changing Sections 15-1202.5 and 15-1701 and by adding Section
615-1707 as follows:
 
7    (735 ILCS 5/15-1202.5)
8    Sec. 15-1202.5. Dwelling unit. For the purposes of Sections
915-1508, 15-1508.5, 15-1703, and 15-1704, and 15-1707 only,
10"dwelling unit" means a room or suite of rooms providing
11complete, independent living facilities for at least one
12person, including permanent provisions for sanitation,
13cooking, eating, sleeping, and other activities routinely
14associated with daily life.
15(Source: P.A. 96-111, eff. 10-29-09; 97-575, eff. 8-26-11.)
 
16    (735 ILCS 5/15-1701)  (from Ch. 110, par. 15-1701)
17    Sec. 15-1701. Right to possession.
18    (a) General. The provisions of this Article shall govern
19the right to possession of the mortgaged real estate during
20foreclosure. Possession under this Article includes physical
21possession of the mortgaged real estate to the same extent to
22which the mortgagor, absent the foreclosure, would have been

 

 

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1entitled to physical possession. For the purposes of Part 17,
2real estate is residential real estate only if it is
3residential real estate at the time the foreclosure is
4commenced.
5    (b) Pre-Judgment. Prior to the entry of a judgment of
6foreclosure:
7        (1) In the case of residential real estate, the
8    mortgagor shall be entitled to possession of the real
9    estate except if (i) the mortgagee shall object and show
10    good cause, (ii) the mortgagee is so authorized by the
11    terms of the mortgage or other written instrument, and
12    (iii) the court is satisfied that there is a reasonable
13    probability that the mortgagee will prevail on a final
14    hearing of the cause, the court shall upon request place
15    the mortgagee in possession. If the residential real estate
16    consists of more than one dwelling unit, then for the
17    purpose of this Part residential real estate shall mean
18    only that dwelling unit or units occupied by persons
19    described in clauses (i), (ii) and (iii) of Section
20    15-1219.
21        (2) In all other cases, if (i) the mortgagee is so
22    authorized by the terms of the mortgage or other written
23    instrument, and (ii) the court is satisfied that there is a
24    reasonable probability that the mortgagee will prevail on a
25    final hearing of the cause, the mortgagee shall upon
26    request be placed in possession of the real estate, except

 

 

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1    that if the mortgagor shall object and show good cause, the
2    court shall allow the mortgagor to remain in possession.
3    (c) Judgment Through 30 Days After Sale Confirmation. After
4the entry of a judgment of foreclosure and through the 30th day
5after a foreclosure sale is confirmed:
6        (1) Subsection (b) of Section 15-1701 shall be
7    applicable, regardless of the provisions of the mortgage or
8    other instrument, except that after a sale pursuant to the
9    judgment the holder of the certificate of sale (or, if
10    none, the purchaser at the sale) shall have the mortgagee's
11    right to be placed in possession, with all rights and
12    duties of a mortgagee in possession under this Article.
13        (2) Notwithstanding paragraph (1) of subsection (b)
14    and paragraph (1) of subsection (c) of Section 15-1701,
15    upon request of the mortgagee, a mortgagor of residential
16    real estate shall not be allowed to remain in possession
17    between the expiration of the redemption period and through
18    the 30th day after sale confirmation unless (i) the
19    mortgagor pays to the mortgagee or such holder or
20    purchaser, whichever is applicable, monthly the lesser of
21    the interest due under the mortgage calculated at the
22    mortgage rate of interest applicable as if no default had
23    occurred or the fair rental value of the real estate, or
24    (ii) the mortgagor otherwise shows good cause. Any amounts
25    paid by the mortgagor pursuant to this subsection shall be
26    credited against the amounts due from the mortgagor.

 

 

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1    (d) After 30 Days After Sale Confirmation. The holder of
2the certificate of sale or deed issued pursuant to that
3certificate or, if no certificate or deed was issued, the
4purchaser, except to the extent the holder or purchaser may
5consent otherwise, shall be entitled to possession of the
6mortgaged real estate, as of the date 30 days after the order
7confirming the sale is entered, against those parties to the
8foreclosure whose interests the court has ordered terminated,
9without further notice to any party, further order of the
10court, or resort to proceedings under any other statute other
11than this Article. This right to possession shall be limited by
12the provisions governing entering and enforcing orders of
13possession under subsection (g) of Section 15-1508. If the
14holder or purchaser determines that there are occupants of the
15mortgaged real estate who have not been made parties to the
16foreclosure and had their interests terminated therein, the
17holder or purchaser may bring a proceeding under subsection (h)
18of this Section or under Article 9 of this Code to terminate
19the rights of possession of any such occupants. The holder or
20purchaser shall not be entitled to proceed against any such
21occupant under Article 9 of this Code until after 30 days after
22the order confirming the sale is entered.
23    (e) Termination of Leases. A lease of all or any part of
24the mortgaged real estate shall not be terminated automatically
25solely by virtue of the entry into possession by (i) a
26mortgagee or receiver prior to the entry of an order confirming

 

 

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1the sale, (ii) the holder of the certificate of sale, (iii) the
2holder of the deed issued pursuant to that certificate, or (iv)
3if no certificate or deed was issued, the purchaser at the
4sale.
5    (f) Other Statutes; Instruments. The provisions of this
6Article providing for possession of mortgaged real estate shall
7supersede any other inconsistent statutory provisions. In
8particular, and without limitation, whenever a receiver is
9sought to be appointed in any action in which a foreclosure is
10also pending, a receiver shall be appointed only in accordance
11with this Article. Except as may be authorized by this Article,
12no mortgage or other instrument may modify or supersede the
13provisions of this Article.
14    (g) Certain Leases. Leases of the mortgaged real estate
15entered into by a mortgagee in possession or a receiver and
16approved by the court in a foreclosure shall be binding on all
17parties, including the mortgagor after redemption, the
18purchaser at a sale pursuant to a judgment of foreclosure and
19any person acquiring an interest in the mortgaged real estate
20after entry of a judgment of foreclosure in accordance with
21Sections 15-1402 and 15-1403.
22    (h) Proceedings Against Certain Occupants.
23        (1) The mortgagee-in-possession of the mortgaged real
24    estate under Section 15-1703, a receiver appointed under
25    Section 15-1704, a holder of the certificate of sale or
26    deed, or the purchaser may, at any time during the pendency

 

 

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1    of the foreclosure and up to 90 days after the date of the
2    order confirming the sale, file a supplemental petition for
3    possession against a person not personally named as a party
4    to the foreclosure. The supplemental petition for
5    possession shall name each such occupant against whom
6    possession is sought and state the facts upon which the
7    claim for relief is premised.
8        (2) The petitioner shall serve upon each named occupant
9    the petition, a notice of hearing on the petition, and, if
10    any, a copy of the certificate of sale or deed. The
11    proceeding for the termination of such occupant's
12    possessory interest, including service of the notice of the
13    hearing and the petition, shall in all respects comport
14    with the requirements of Article 9 of this Code, except as
15    otherwise specified in this Section. The hearing shall be
16    no less than 21 days from the date of service of the
17    notice.
18        (3) The supplemental petition shall be heard as part of
19    the foreclosure proceeding and without the payment of
20    additional filing fees. An order for possession obtained
21    under this Section shall name each occupant whose interest
22    has been terminated, shall recite that it is only effective
23    as to the occupant so named and those holding under them,
24    and shall be enforceable for no more than 120 days after
25    its entry, except that the 120-day period may be extended
26    to the extent and in the manner provided in Section 9-117

 

 

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1    of Article 9 and except as provided in item (4) of this
2    subsection (h).
3        (4) In a case of foreclosure where the occupant is
4    current on his or her rent, or where timely written notice
5    of to whom and where the rent is to be paid has not been
6    provided to the occupant, or where the occupant has made
7    good-faith efforts to make rental payments in order to keep
8    current, any order of possession must allow the occupant to
9    retain possession of the property covered in his or her
10    rental agreement (i) for 120 days following the notice of
11    the hearing on the supplemental petition that has been
12    properly served upon the occupant, or (ii) through the
13    duration of his or her lease, whichever is shorter,
14    provided that if the duration of his or her lease is less
15    than 30 days from the date of the order, the order shall
16    allow the occupant to retain possession for 30 days from
17    the date of the order. A mortgagee in possession, receiver,
18    holder of a certificate of sale or deed, or purchaser at
19    the judicial sale, who asserts that the occupant is not
20    current in rent, shall file an affidavit to that effect in
21    the supplemental petition proceeding. If the occupant has
22    been given timely written notice of to whom and where the
23    rent is to be paid, this item (4) shall only apply if the
24    occupant continues to pay his or her rent in full during
25    the 120-day period or has made good-faith efforts to pay
26    the rent in full during that period. No

 

 

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1    mortgagee-in-possession, receiver or holder of a
2    certificate of sale or deed, or purchaser who fails to file
3    a supplemental petition under this subsection during the
4    pendency of a mortgage foreclosure shall file a forcible
5    entry and detainer action against an occupant of the
6    mortgaged real estate until 90 days after a notice of
7    intent to file such action has been properly served upon
8    the occupant.
9        (5) The court records relating to a supplemental
10    petition for possession filed under this subsection (h)
11    against an occupant who is entitled to notice under item
12    (4) of this subsection (h), or relating to a forcible entry
13    and detainer action brought against an occupant who would
14    have lawful possession of the premises but for the
15    foreclosure of a mortgage on the property, shall be ordered
16    sealed and shall not be disclosed to any person, other than
17    a law enforcement officer or any other representative of a
18    governmental entity, except upon further order of the
19    court.
20    (i) Right to rent.
21        (1) Notwithstanding any other provision of law or
22    contract, no mortgagee, receiver, holder of a certificate
23    of sale, holder of the deed issued pursuant to that
24    certificate, or if no certificate or deed was issued, the
25    purchaser at the sale entitled to take possession of
26    mortgaged real estate under this Section shall take

 

 

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1    possession or seek to remove an eligible mortgagor from the
2    mortgaged real estate without providing at least 30 days'
3    written notice of the eligible mortgagor's right to rent as
4    provided in subsection (c) of Section 15-1707.
5        (2) If a mortgagor has elected to occupy the mortgaged
6    real estate as a tenant pursuant to Section 15-1707, the
7    mortgagee, receiver, holder of a certificate of sale,
8    holder of the deed issued pursuant to that certificate, or
9    if no certificate or deed was issued, the purchaser at the
10    sale entitled to take possession under this Section shall
11    take possession subject to the tenancy created under
12    Section 15-1707.
13        (3) A holder of a certificate of sale, holder of the
14    deed issued pursuant to that certificate, or if no
15    certificate or deed was issued, the purchaser at the sale
16    entitled to take possession of the property under this
17    Section may take possession of the property that is
18    occupied pursuant to Section 15-1707 without providing
19    notice as required under paragraph (1) of this subsection
20    (i) if:
21            (A) the holder of a certificate of sale, holder of
22        the deed issued pursuant to that certificate, or if no
23        certificate or deed was issued, the purchaser at the
24        sale entitled to take possession is not:
25                (i) the mortgagee or a subsidiary, parent,
26            trustee, or agent of the mortgagee;

 

 

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1                (ii) any other financial institution or its
2            subsidiary, parent, trustee, or agent;
3                (iii) the Federal National Mortgage
4            Association;
5                (iv) the Federal Home Loan Mortgage
6            Corporation; or
7                (v) the Federal Deposit Insurance Corporation;
8            and
9            (B) the holder of a certificate of sale, holder of
10        the deed issued pursuant to that certificate, or if no
11        certificate or deed was issued, the purchaser at the
12        sale entitled to take possession under this Section
13        provides written notice of the termination of the
14        tenancy to the eligible mortgagor at least 30 days
15        prior to the termination.
16(Source: P.A. 95-262, eff. 1-1-08; 95-933, eff. 8-26-08; 96-60,
17eff. 7-23-09; 96-111, eff. 10-29-09; 96-1000, eff. 7-2-10.)
 
18    (735 ILCS 5/15-1707 new)
19    Sec. 15-1707. Right to rent.
20    (a) Definitions. For the purposes of this Section:
21    "Covered foreclosure proceeding" means a foreclosure
22proceeding with respect to an eligible mortgage under the
23Illinois Mortgage Foreclosure Law.
24    "Eligible mortgage" means a first or subordinate mortgage:
25        (1) on a property that:

 

 

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1            (A) is a single family property located in this
2        State;
3            (B) has been used as the principal residence of the
4        eligible mortgagor for a period of not less than 2
5        years immediately preceding the initiation of the
6        covered foreclosure proceeding involved; and
7            (C) had a purchase price, at the time purchased by
8        the eligible mortgagor, that is (i) less than the
9        median purchase price for residences that are located
10        in the same metropolitan statistical area or, (ii) if
11        the property is not located in a metropolitan
12        statistical area or information for the area is not
13        available, less than the median purchase price as
14        determined according to information collected and made
15        available by the National Association of Realtors for
16        the area, or in this State, for the most recently
17        completed month for which such information is
18        available; and
19        (2) that was originated before July 1, 2007.
20    "Eligible mortgagor" means a mortgagor under an eligible
21mortgage.
22    "Financial institution" means any bank, savings bank,
23savings and loan association, credit union, mortgage broker,
24mortgage banker, licensee under the Consumer Installment Loan
25Act or the Sales Finance Agency Act, or a corporate fiduciary,
26subsidiary, affiliate, parent company, or holding company of

 

 

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1any such licensee, or any institution involved in real estate
2financing that is regulated by State or federal law.
3    "Foreclosed property" means the single family property
4that is subject to the eligible mortgage being foreclosed under
5the Illinois Mortgage Foreclosure Law.
6    "Party entitled to possession" means the mortgagee,
7receiver, holder of a certificate of sale, holder of the deed
8issued pursuant to that certificate, or if no certificate or
9deed was issued, the purchaser at the sale entitled to take
10possession under Section 15-1701 of the real estate that was
11secured by an eligible mortgage.
12    "Single family property" means:
13        (1) a residential property consisting of one to 4
14    dwelling units;
15        (2) a dwelling unit in a condominium property together
16    with an undivided interest in the common areas and
17    facilities serving the property; or
18        (3) a dwelling unit in a multi-unit project for which
19    purchase of stock or a membership interest entitles the
20    purchaser to permanent occupancy of that unit.
21    (b) Right to rent subject to foreclosure. Notwithstanding
22any other provision of law, an eligible mortgagor under an
23eligible mortgage that is in foreclosure may, at the sole
24option of the eligible mortgagor, continue to occupy the
25foreclosed property as a tenant subject to the requirements of
26subsection (d) of this Section if the eligible mortgagor

 

 

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1provides written notice to a party entitled to possession of
2his or her intention to exercise the right to rent within 30
3days after the receipt of the notice described in subsection
4(c) of this Section.
5    (c) Notice of the right to rent. A party entitled to
6possession shall provide written notice of the eligible
7mortgagor's right to rent at least 30 days prior to taking
8possession of the property or seeking to remove the eligible
9mortgagor from the property. The notice shall:
10        (1) be headed in bold 14-point type "RIGHT TO RENT
11    NOTICE";
12        (2) state the following in 14-point type:
13"YOUR PROPERTY IS CURRENTLY IN FORECLOSURE AND SUBJECT TO
14POSSESSION BY ................. PURSUANT TO STATE LAW, YOU HAVE
15THE RIGHT TO CONTINUE TO OCCUPY YOUR HOME AS A RENTER AT A FAIR
16MARKET RATE APPROVED BY THE COURT. TO EXERCISE YOUR RIGHT TO
17RENT, YOU MUST PROVIDE WRITTEN NOTICE OF YOUR INTENTION TO
18EXERCISE YOUR RIGHT TO RENT TO ................. AT
19..................... WITHIN 30 DAYS AFTER THE RECEIPT OF THIS
20NOTICE.";
21        (3) include the name, address, and telephone number of
22    the party entitled to possession;
23        (4) clearly set forth the terms of the tenancy under
24    subsection (d) of this Section; and
25        (5) be sent by first class mail to the eligible
26    mortgagor at the common address of the residential property

 

 

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1    securing the eligible mortgage.
2    (d) Terms of tenancy.
3        (1) Period of tenancy.
4            (A) The occupancy of a foreclosed property by an
5        eligible mortgagor pursuant to this Section shall be
6        under a periodic month-to-month tenancy that shall not
7        be terminated unless:
8                (i) except as provided in subparagraph (B) of
9            this paragraph (1), the property is sold and the
10            purchaser or holder of the certificate of sale,
11            holder of the deed issued pursuant to that
12            certificate, or if no certificate or deed was
13            issued, the purchaser at the sale entitled to take
14            possession under Section 15-1701 provides written
15            notice of the termination to the eligible
16            mortgagor at least 30 days prior to the
17            termination;
18                (ii) the tenancy is terminated pursuant to
19            paragraph (3) of this subsection (d); or
20                (iii) the eligible mortgage has been
21            reinstated pursuant to Section 15-1602.
22            (B) An eligible mortgagor may continue to occupy
23        the foreclosed property as a tenant under this Section
24        if the property is sold and the purchaser is any of the
25        following:
26                (i) the mortgagee or a subsidiary, parent,

 

 

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1            trustee, or agent of the mortgagee;
2                (ii) any other financial institution or its
3            subsidiary, parent, trustee, or agent;
4                (iii) the Federal National Mortgage
5            Association;
6                (iv) the Federal Home Loan Mortgage
7            Corporation; or
8                (v) the Federal Deposit Insurance Corporation.
9        (2) Responsibilities of eligible mortgagor. An
10    eligible mortgagor who occupies a foreclosed property
11    pursuant to this Section shall:
12            (A) timely pay rent on a monthly basis in an amount
13        approved by the court pursuant to subsection (e) of
14        this Section;
15            (B) use the property as his or her principal
16        residence; and
17            (C) maintain the property in safe, habitable
18        condition.
19        (3) Termination by party entitled to possession or
20    eligible mortgagor.
21            (A) The party entitled to possession may terminate
22        the tenancy of an eligible mortgagor for material
23        breach but shall not have the authority, at will, to
24        terminate the tenancy during the occupancy if the
25        eligible mortgagor has met the requirements of
26        paragraph (2) of this subsection (d). The party

 

 

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1        entitled to possession shall provide written notice of
2        the termination to the eligible mortgagor at least 30
3        days prior to the termination. The notice shall include
4        an explanation of the reason for termination.
5            (B) The eligible mortgagor occupying a foreclosed
6        property under this Section may terminate the tenancy
7        at will upon at least 30 days' written notice to the
8        party entitled to possession.
9        (4) Failure to surrender possession. If an eligible
10    mortgagor fails to surrender possession of the property
11    upon termination of the tenancy, the party entitled to
12    possession may seek possession of the property through an
13    action for forcible entry and detainer or ejectment.
14    (e) Rental rate.
15        (1) Initial determination. The rent for a foreclosed
16    property occupied under this Section shall be a fair market
17    rate approved by the court overseeing the foreclosure of
18    the eligible mortgage. The rent shall not be greater than
19    the amount the eligible mortgagor was required to pay per
20    month pursuant to the eligible mortgage subject to
21    foreclosure.
22        (2) Redetermination. The party entitled to possession
23    or the eligible mortgagor may request that the court
24    redetermine the fair market rent for the foreclosed
25    property in the same manner provided under paragraph (1) of
26    this subsection (e), except that no such redetermination

 

 

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1    shall be made pursuant to this subsection (e) before the
2    expiration of the 12-month period beginning upon the most
3    recent redetermination conducted at the request of the same
4    party.
5    (f) Payment for maintenance of property. If a tenancy under
6this Section is terminated due to the sale of the property, the
7eligible mortgagor shall receive 5% of the purchase price
8unless the eligible mortgagor has:
9        (1) occupied the property as a tenant under this
10    Section for less than 12 months;
11        (2) failed to maintain the property in safe, habitable
12    condition during the tenancy; or
13        (3) caused substantial damage to the property during
14    the tenancy.
15    (g) Construction. This Section shall not be construed to
16delay, or otherwise modify, affect, or alter any right of a
17creditor under an eligible mortgage to foreclose on an eligible
18mortgage and to sell the foreclosed property in connection with
19such foreclosure, except that the right of any owner of the
20property to possession of the property shall be subject to the
21leasehold interest established pursuant to this Section.
22    (h) Applicability and sunset.
23        (1) This Section shall apply to any covered foreclosure
24    proceeding that has not been finally adjudicated as of the
25    effective date of this amendatory Act of the 97th General
26    Assembly.

 

 

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1        (2) This Section shall not apply to any foreclosure
2    commenced after 5 years from the effective date of this
3    amendatory Act of the 97th General Assembly.
 
4    Section 99. Effective date. This Act takes effect June 1,
52012.