Bank not liable under Illinois law for condominium assessments which accrued prior to the time bank took title to the unit in the foreclosure

In Pembrook Condominium Association-One v. North Shore Trust & Savings, 2013 IL App (2d) 130288 the mortgage holder of a unit filed a foreclosure joining the condominium association as a party for unpaid assessment liens. The mortgagee was the purchaser at the foreclosure sale and paid the assessments that accrued after it took title, but would not pay prior assessments. The association brought an eviction action and the mortgagee, as new owner, moved to dismiss. The trial court held that association’s lien was unenforceable which the reviewing court upheld on appeal. There the association argued that there was legal precedent to support its ability to recover association charges that came due before the new owner acquired the property. The court said otherwise. Illinois law provides that title remains with the unit’s owner until the sheriff’s deed conveyed it to the new owner and an association cannot enforce a lien against the mortgagee to recover charges that had come due before the mortgagee obtained title. Because the obligation to pay condominium assessments is a covenant that runs with the land and is binding only upon title holders, we conclude that the bank is not liable for the assessments which accrued from the expiration of the redemption period to the date the bank exchanged the certificate for the deed.” Thus, even if the plaintiff condominium association’s lien survived the foreclosure judgment, it could not be enforced against the mortgagee to the extent that it was based on association charges that came due before the bank obtained title to the property. The court also held that the under the Illinois Condominium Property Act the mortgagee’s payment of the association charges after it took title defeated the association’s attempt to enforce its lien. Under the Act, the purchaser of a condominium unit at a judicial foreclosure sale must pay the charges that are assessed from and after the first day of the month after the date of the judicial foreclosure sale. Under the Act, if the sale is confirmed, the payment extinguishes any lien created by the failure of the previous unit owner to pay assessments that came due earlier. Regardless of when the new owner paid the assessments its payment extinguished any lien that the association had based on the owner’s failure to pay the assessment that came due before the foreclosure sale.

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