Illinois appellate court affirms that improperly submitted judgment figures will not be a factor to consider in setting aside a judicial sale

In BMO Harris Bank v. Wolverine Properties, 2015 IL App (2d) 140921(August 2015) the mortgagee screwed up when it failed to include the amount it paid to redeem taxes in its foreclosure judgment amount. The mortgagee later sought to recover the payment against the mortgagors and guarantors at the confirmation of sale. The trial court inferred that in order for the mortgagee to recover the tax payment, the judgment of foreclosure would have to be amended to include the tax payment, which would mean the sale would have to be set aside since the judgment of foreclosure is what dictated the terms of the sale. But the Court found that none of the four allowable circumstances for setting aside a sale under Section 15-1508(b) of the Illinois Mortgage Foreclosure Law (IMFL) were present; and a party’s own negligence did not constitute an injustice which would warrant setting aside the sale. The appellate court agreed. It rejected mortgagee’s argument that it is allowed to recover the tax payment under Section 15-1512. The appellate court held that Section 15-1512 only allows recovery for a real estate tax payment that was made between judgment and sale, not prior to judgment. There was no injustice in upholding the sale. Key to the court’s analysis was the fact that it was possible that if the tax payment were included in the judgment the sale’s outcome might have been different. But it is impossible to know whether a different judgment amount would have led to a different sale price which leaves intact the causal link between the judgment amount and the sale price such that the trial court stood on firm ground when reasoning that one cannot be manipulated without impacting the other. The court was also not persuaded by the mortgagee’s contention that section 15-1505 entitles a mortgagee to ask for taxes paid prior to the sale because it makes no reference to a back-end time limitation for recovery of tax payments. The court noted that although section 15-1505 does not reference a back-end time limitation for recovery, it does not reference recovery at all. Moreover, to accept mortgagee’s argument means there would be no incentive to seek a judgment amount that accurately reflects the amount of recovery. The court also disallowed mortgagee from pursuing the deficiency from the guarantors on the grounds that a mortgagee can recover under section 5/15/1504(f) of IMFL a guarantee the amount found due. This figure is calculated by subtracting the judgment amount from the sale price. The court also found that a guarantor cannot be liable for more than the borrower. The findings of this case reiterate the importance of reviewing the judgment figures for accuracy before proceeding to sale.

Download Related Document