Illinois Supreme Court rules that the failure to pay current assessments following a condominium foreclosure means that a preexisting lien for past due assessments will not be extinguished

On December 3, 2015 the Illinois Supreme Court affirmed a lower court ruling that a lien for past due condominium assessments will not be extinguished in a foreclosure proceeding where the new purchaser fails to pay the current assessments. The case turned on Section 9(g)(3) of the Illinois Condominium Property Act (Act). The Act provides that [t]he purchaser of a condominium unit at a judicial foreclosure sale shall have the duty to pay the unit’s proportionate share of the common expenses for the unit assessed from and after the first day of the month after the date of the judicial foreclosure sale. It further provides Such payment confirms the extinguishment of any lien created by virtue of the failure or refusal of a prior unit owner to make payment of common expenses . The bank in that case purchased the condominium at a judicial sale in 2010. In May 2012, the association sued for unlawful withholding of possession because the bank owed assessments of $62,530.81, which included $000 in assessments that accrued prior to the foreclosure sale. The circuit court granted judgment for the association in the amount of all the unpaid assessments and possession of the property. On appeal, the bank argued that it was not liable for the pre-existing unpaid assessments because they were extinguished in the foreclosure. The court found that under the plain reading of the Act the extinguishment of that prior lien was conditioned on the new owner’s payment of post-sale assessments. The Supreme Court agreed with this analysis. The second sentence provides an incentive for prompt payment of postforeclosure sale assessments [so] the payment of postforeclosure sale assessments formally approves and makes certain the cancellation of the condominium association’s lien. The Court rejected the bank’s argument (which mirrored the dissent in the appellate court) that subsection 9(g)(3) of the Act provides foreclosure sale purchasers an alternative means of extinguishing a condominium association’s lien if the bank fails to extinguish the lien by not joining the association as a party to the foreclosure. The Court said that this argument is contrary to the plain language of section 9(g)(3) which assumes that the lien has already been extinguished by including the association as a party. The bank’s alternative argument that the appellate court erred in allowing the association to enforce the lien through a personal money judgment action rather than a lien foreclosure proceeding, was deemed waived. 1010 Lake Shore Ass’n v. Deutsche Bank Nat. Trust Co., 2015 IL 118372 (Dec. 3, 2015).

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