Two Recent Condominium Cases: Pembrook Condominium Association-One and 1010 Lake Shore Association

Two recent condominium cases interpret section 9(g)(3) of the Illinois Condominium Act regarding treatment of unpaid association assessments in the case of foreclosure. 765 ILCS 605/9(g)(3). In both cases, the foreclosing mortgagee purchased a condominium unit at the judicial foreclosure sale. In both cases, there were unpaid assessments due and owing from the foreclosed homeowner. However, one key factual difference distinguishes the two cases.

 

In Pembrook Condominium Association-One v. North Shore Trust & Savings, the Second District Appellate Court held that (1) a condominium association may not recover from the foreclosure sale purchaser unpaid assessments that came due before the purchaser obtained title, and (2) payment of post-foreclosure sale assessments by the foreclosure sale purchaser confirms the extinguishment of the lien created by the failure of the previous unit owner to pay assessments that came due before the purchaser obtained title.

 

The key fact in this case is that the foreclosure sale purchaser sent payment for the unit's assessments "from and after the first day of the month after the date of the judicial foreclosure sale" (i.e., the purchaser paid the first assessment that came due after it obtained title to the property).

 

In 1010 Lake Shore Association v. Deutsche Bank National Trust Company, the First District Appellate Court held that an association's lien for unpaid assessments from before the judicial sale is not fully extinguished following a judicial foreclosure and sale until the foreclosure sale purchaser makes a payment for assessments due after the sale.

 

The court in 1010 Lake Shore Association distinguished this case from Pembrook because the purchaser in this case never "made any association payments after it purchased the unit, and, therefore, never extinguished the preexisting lien created pursuant to section 9(g)(1)."

 

Together, the holdings in these two cases give foreclosing lenders who purchase condominium units at a foreclosure sale some guidance moving forward on how to handle payment of association dues.

 

ATG's policy remains the same regarding the requirement to have a paid assessment letter at the closing of a condominium unit. All assessments stated on the letter must be paid through the month of closing.

 

Posted on: Mon, 12/08/2014 - 4:42pm