Strict Foreclosure of an Omitted Subordinate Interest

Effective date: August 26, 2014

New statute: 735 ILCS 5/15-1603.5

The Act amends the Code of Civil Procedure by creating a new section allowing a holder of a certificate of sale or any person who acquired title pursuant to 735 ILCS 5/15-1508 to bring a complaint against a person who has an omitted subordinate interest in the property. An omitted subordinate interest in real estate means (1) the property is subject to foreclosure proceedings; (2) a motion to confirm judicial sale is pending or has been granted; (3) the interest attached to the property prior to the recording of notice of the interest; and (4) the individual with the subordinate interest is not named in the foreclosure complaint. The Act lists what a complaint must include.

The Act provides the court with the power to enter a judgment extinguishing the omitted subordinate interest, subject to the defendant’s objection or to allow the defendant to pay the redemption amount of the property. The redemption amount includes 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 in order to protect its interest in the property. However, the amount required to redeem does not include any costs or fees incurred by the plaintiff in the strict foreclosure case.

The Act denies a person whose omitted subordinate interest was not terminated by a prior foreclosure action the right to file a strict foreclosure action. Finally, the Act provides that though a person's omitted subordinate interest has been terminated, the Act does not extinguish or impair any claim of a person requesting proceeds of a sale that results in a surplus after the confirmation of the sale of the property for which the person had an omitted subordinate interest.