Wednesday, October 23, 2013

The Landlord-Tenant Relationship Following a Foreclosure Sale

The Illinois Mortgage Foreclosure Act and the Forcible Entry and Detainer (Eviction) Act have both been amended, effective November 19, 2013, to provide stronger protections to tenants following foreclosures.  

The new foreclosure section is 735 ILCS 5/15-1508.5. This section imposes an affirmative duty on a foreclosure purchaser to make a good faith effort to ascertain the identities of the occupants of the property within 21 days of confirmation of the sale. All known occupants must then be served with a written notice that must inform the occupant of the contact information for the new owner of the property. The notice must also inform the occupant of their right to contact an attorney to discuss their rights, among other requirements. You should review section 1508.5(a)(2) to see all of the required language. That notice can be served by regular mail.

There is also another notice that must be served following all foreclosure sales, not only when the identities of the occupants can be confirmed. This notice must be posted within 21 days of the confirmation of sale. The requirements for this notice can be found in 1508.5(e). These two notices allow the purchaser to collect rent from the occupants and to terminate their tenancy for the non-payment of rent.

The new eviction statute is contained in 735 ILCS 5/9-207.5. This section applies when the purchaser simply wants to terminate the tenancy and is not concerned about recovering rent. The section allows bona fide residential tenants to remain in the property until the end of their lease term. Even then, the foreclosure purchaser must provide 90 days' written notice. Month-to-month tenancies can also be terminated using the new 90 day notice. Subsection (b) allows for termination of a bona fide lease mid-term upon 90 days' notice if the purchaser intends to occupy the property as his or her primary residence. 

There are many additional requirements in both of these new statutes that I did not address. If you have recently purchased a property at a foreclosure sale, or if you live in a property that is in foreclosure, please feel free to contact me with any questions.

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