SB3216 100TH GENERAL ASSEMBLY

LRB100 18695 HEP 33927 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3216

Introduced 2/15/2018, by Sen. Jason A. Barickman

SYNOPSIS AS INTRODUCED:

735 ILCS 5/13-107	from Ch. 110, par. 13-107
735 ILCS 5/13-107.1 new
735 ILCS 5/13-109	from Ch. 110, par. 13-109
735 ILCS 5/13-109.1 new
735 ILCS 5/15-1603.5

Amends the Code of Civil Procedure. Provides that actions for the recovery of real property following a foreclosure shall be brought within 3 years after possession is taken. Provides that every person in the actual possession of lands or tenements, under claim and color of title, as a purchaser following a foreclosure, and who for 3 successive years continues in possession, and also, during such time, pays all taxes legally assessed on the lands or tenements, shall be held and adjudged to be the legal owner of the lands or tenements, to the extent and according to the purport of his or her paper title. In the Section concerning strict foreclosure of an omitted subordinate interest, provides that "omitted subordinate interest" includes a person who was a named party in a foreclosure action over which the court lacked personal jurisdiction due to defective service of process, or was a party over which the court initially had personal jurisdiction but whose judgment was vacated due to lack of personal jurisdiction over a co-defendant. Provides that a foreclosure proceeding may be reopened as to the defendant and co-defendants only if the defendant was a named party in the foreclosure action over which the court lacked personal jurisdiction due to defective service of process, and after the foreclosure proceeding is reopened, if the defendant is unsuccessful in defeating the foreclosure action, then the defendant or its co-defendants shall have the option to redeem the property. Provides that the redemption period shall extend 90 days after the entry of the order if the defendant has not been in possession of the real estate for a period of 6 months prior to the entry of the order. Provides that nothing in the Section concerning strict foreclosure affects any existing right that the holder of the certificate of sale or any person who acquired title following a judicial sale or any subsequent successor, assignee, transferee, or grantee of such a person may have against the defendant or the real estate. Makes other changes. Contains a statement of legislative purpose. Adds language concerning applicability and severability. Effective immediately.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Findings. The General Assembly finds that:

(1) The public's reliance on the finality of court orders entered in mortgage foreclosure actions is an important policy concern.

(2) Highly technical jurisdictional challenges on behalf of foreclosed landowners who long ago abandoned their property are injurious to the interests of third-party purchasers for value of foreclosed properties.

(3) It is important to balance the interests of third-party subsequent purchasers for value of foreclosed properties with the interests of foreclosed landowners.

(4) It is necessary to remedy the negative effects upon the real estate marketplace in Illinois that challenges to final court orders entered in mortgage foreclosures actions cause, including disincentives to third parties purchasing foreclosed properties, reduction of neighboring property values, reduction of the tax base, increased crime, additional costs on local governments, and the increased burden on the courts of this State.

(5) An expedited but fair process for these foreclosed property owners as set forth in this Act will provide notice to foreclosed parties and give them a right of relief, recovery, or redemption. This will help the citizens and the courts of this State by allowing these cases to proceed more efficiently through the court system.

Section 5. The Code of Civil Procedure is amended by changing Sections 13-107, 13-109, and 15-1603.5 and by adding Sections 13-107.1 and 13-109.1 as follows:

(735 ILCS 5/13-107) (from Ch. 110, par. 13-107)

Sec. 13-107. Seven years with possession and record title. Except as provided in Section 13-107.1, actions Actions brought for the recovery of any lands, tenements or hereditaments of which any person may be possessed by actual residence thereon for 7 successive years, having a connected title, deductible of record, from this State or the United States, or from any public officer or other person authorized by the laws of this State to sell such land for the non-payment of taxes, or from any sheriff, marshal, or other person authorized to sell such land for the enforcement of a judgment or under any order or judgment of any court shall be brought within 7 years next after possession is taken, but when the possessor acquires such title after taking such possession, the limitation shall begin to run from the time of acquiring title.

(Source: P.A. 82-280.)

(735 ILCS 5/13-107.1 new)

Sec. 13-107.1. Three years with possession and record title derived from a judicial foreclosure sale.

(a) Actions brought for the recovery of any lands, tenements, or hereditaments of which any person may be possessed for 3 successive years, having a connected title, deductible of record, as a purchaser at a judicial foreclosure sale, other than a mortgagee, who takes possession pursuant to a court order under the Illinois Mortgage Foreclosure Law, or a purchaser who acquires title from a mortgagee or a purchaser at a judicial foreclosure sale who received title and took possession pursuant to a court order, shall be brought within 3 years after possession is taken. When the purchaser acquires title and has taken possession, the limitation shall begin to run from the date a mortgagee or a purchaser at a judicial foreclosure sale takes possession pursuant to a court order under the Illinois Mortgage Foreclosure Law or Article IX of this Code. The vacation or modification, pursuant to the provisions of Section 2-1401, of an order or judgment entered in the judicial foreclosure does not affect the limitation in this Section.

(b) This Section applies to actions filed on or after 180 days after the effective date of this amendatory Act of the 100th General Assembly.

(735 ILCS 5/13-109) (from Ch. 110, par. 13-109)

Sec. 13-109. Payment of taxes with color of title. Except as provided in Section 13-109.1, every Every person in the actual possession of lands or tenements, under claim and color of title, made in good faith, and who for 7 successive years continues in such possession, and also, during such time, pays all taxes legally assessed on such lands or tenements, shall be held and adjudged to be the legal owner of such lands or tenements, to the extent and according to the purport of his or her paper title. All persons holding under such possession, by purchase, legacy or descent, before such 7 years have expired, and who continue such possession, and continue to pay the taxes as above set forth so as to complete the possession and payment of taxes for the term above set forth, are entitled to the benefit of this Section.

(Source: P.A. 88-45.)

(735 ILCS 5/13-109.1 new)

Sec. 13-109.1. Payment of taxes with color of title derived from judicial foreclosure. Every person in the actual possession of lands or tenements, under claim and color of title, as a purchaser at a judicial foreclosure sale, other than a mortgagee, who takes possession pursuant to a court order under the Illinois Mortgage Foreclosure Law, or a purchaser who acquires title from a mortgagee or a purchaser at a judicial foreclosure sale who received title and took possession pursuant to such a court order, and who for 3 successive years continues in possession, and also, during such time, pays all taxes legally assessed on the lands or tenements, shall be held and adjudged to be the legal owner of the lands or tenements, to the extent and according to the purport of his or her paper title. All persons holding under such possession, by purchase, legacy, or descent, before such 3 years have expired, and who continue possession, and continue to pay the taxes as above set forth so as to complete the possession and payment of taxes for the term above set forth, are entitled to the benefit of this Section. The vacation or modification, pursuant to the provisions of Section 2-1401, of an order or judgment entered in the judicial foreclosure does not affect the limitation in this Section.

This Section applies to actions filed on or after 180 days after the effective date of this amendatory Act of the 100th General Assembly.

(735 ILCS 5/15-1603.5)

Sec. 15-1603.5. Strict foreclosure of an omitted subordinate interest.

(a) As used in this Section, "omitted subordinate interest" means a recorded subordinate interest in real estate where:

(1) the real estate is the subject of a foreclosure action under this Article;

(2) a motion to confirm judicial sale under subsection (b) of Section 15-1508 is either pending or has been granted;

(3) the interest attached to the real estate prior to the filing or recording of any notice in accordance with Sections 2-1901 and 15-1503; and

(4) the person who has the interest was not named in the foreclosure complaint, was a named party in a foreclosure action over which the court lacked personal jurisdiction due to defective service of process, or was a party over which the court initially had personal jurisdiction but whose judgment was vacated due to lack of personal jurisdiction over a co-defendant.

(b) The holder of the certificate of sale or any person who acquired title pursuant to Section 15-1509 or any subsequent successor, assignee, transferee, or grantee who discovers an omitted subordinate interest may file a strict foreclosure complaint naming the person who has the omitted subordinate interest as the defendant. A complaint filed under this Section must include substantially the following:

(1) the identity of the plaintiff and how the plaintiff acquired its interest in the property which is the subject of the strict foreclosure;

(2) the docket number of the prior foreclosure action and the recording number and date of the mortgage that was previously foreclosed;

(3) the legal description, common address, and parcel identification number of the real estate which is the subject of the strict foreclosure;

(4) the recording number and a copy of the recorded instrument identifying the person who has the omitted subordinate interest that is named as the defendant;

(5) the amount of the successful bid at the foreclosure sale, as stated in the report of sale in the prior foreclosure action, with a copy of the report of sale attached to the complaint;

(6) an allegation that, due to inadvertence or mistake or such other reason as may be applicable, the person who has the omitted subordinate interest was not made a party defendant in the prior foreclosure action or was a party over which the court initially had personal jurisdiction but whose judgment was vacated due to lack of personal jurisdiction over a co-defendant and the omitted subordinate interest was not terminated by the judgment of foreclosure and when the subject property was sold by judicial sale; and

(7) a request for relief setting forth the redemption period as provided in this Section and identifying a contact by name and telephone number who will accept tender of the redemption amount.

(c) Subject to the objection of the defendant, the court shall enter a judgment extinguishing the omitted subordinate interest and the interest of other parties that were made a defendant to the action.

(d) If the defendant or any additional co-defendants object objects to the entry of the judgment, the court, after a hearing, shall enter an order providing either:

(1) that the defendant and any additional co-defendants have has not agreed to pay the amount required to redeem, in which event the court shall proceed to enter the judgment; or

(2) that the defendant or a co-defendant has agreed to pay the amount required to redeem.

The foreclosure proceeding may be reopened as to the defendant and co-defendants only if the defendant was a named party in the foreclosure action over which the court lacked personal jurisdiction due to defective service of process. After the foreclosure proceeding is reopened, if the defendant is unsuccessful in defeating the foreclosure action, then the defendant or co-defendant shall have the option to redeem pursuant to subsection (e) of this Section. Nothing contained in this Section affects any existing right that the holder of the certificate of sale or any person who acquired title pursuant to Section 15-1509 of this Code or any subsequent successor, assignee, transferee, or grantee of such a person may have against the defendant or the real estate.

(e) The amount required to redeem shall be the sum bid at the prior foreclosure sale plus any costs and fees incurred subsequent to the sale for the payment of taxes, preservation of the property, or any other actions taken by the holder of the certificate of sale to protect its interest in the property. The amount required to redeem shall not include any costs or fees incurred by the plaintiff in the strict foreclosure case filed under this Section.

Notwithstanding any provision of Sections 15-1602, 15-1603, or 15-1604 to the contrary, the redemption period shall extend 90 days after the entry of the order if the defendant has not been in possession of the real estate for a period of 6 months prior to the entry of the order. The order shall state that upon payment of the redemption amount within the redemption period, which shall extend 30 days after the entry of the order, title to the real estate shall vest in the defendant who redeems pursuant to this Section. If the defendant subject to the order has not paid the amount required to redeem within the 30-day redemption period, the interest of the defendant in the property is terminated.

(f) A person whose omitted subordinate interest was not terminated by a prior foreclosure action does not have a right to file a strict foreclosure action.

(g) Notwithstanding that the person's omitted subordinate interest in the real estate has been terminated pursuant to this Section, nothing in this Section shall be construed to extinguish or impair any claim of such person in the surplus proceeds of a sale held or distributed pursuant to subsection (d) of Section 15-1512 of this Code after the confirmation of the sale of the real estate for which such person had an omitted subordinate interest.

(h) Notwithstanding the provisions of Section 15-1701 of this Code relative to possession of a mortgaged real estate during the pendency of the foreclosure proceedings, if the mortgagor has vacated the property in advance of or pursuant to either an order confirming the sale in the prior foreclosure proceedings or an eviction order based upon the order confirming the sale in the prior foreclosure proceedings and the mortgaged real estate has been occupied by a purchaser not a party to the mortgage foreclosure proceedings and any successor purchaser for more than 6 months, the purchaser or successor purchaser shall remain in possession of the property during the strict foreclosure proceedings unless and until the subordinate omitted party or a necessary party made defendant pursuant to this Section redeems from the foreclosure sale.

(i) The changes to this Section made by this amendatory Act of the 100th General Assembly are meant to be procedural in nature and thus apply retroactively.

(Source: P.A. 98-1099, eff. 8-26-14.)

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect upon becoming law.