THE PROBLEM OF NON-RECORD TENANTS IN MORTGAGE FORECLOSURE

A problem that frequently arises at the end of a foreclosure action is obtaining possession of the foreclosed property from a person or persons over whom the court does not have jurisdiction. This situation generally occurs when the persons living on the premises are not recorded on the title, are interlopers, or the plaintiff did not exercise due diligence to determine all of the occupants living there. These parties are legally addressed by various titles such as "parties now in possession," "unknown tenants," "unknown occupants," "non-record tenants," "non-record owners," or non-record claimants." The generalized name of these persons may differ, but the result is the same regarding eviction after a mortgage foreclosure proceeding and sale.

Prior to 1994, Illinois law permitted the enforcement of an order of possession after foreclosure upon persons named specifically or generally in the notice. For example, an order addressed to "John and Jane Doe and all Unknown Occupants" would allow the sheriff or other enforcement official to evict any and all persons on the premises. Since 1994, unknown occupants have had some success challenging their eviction on the grounds of lack of adequate notice.

Effective in January 1994, Public Act 88-265 amended the guidelines for a foreclosure complaint. Complaints should now include the "name or names of defendants whose right to possess the mortgaged real estate, after the confirmation of a foreclosure sale, is sought to be terminated...." 735 ILCS 5/15-1504(a)(3)(T). This provision was not the main issue for the initial litigation in Rembert v Sheahan, No 92 C 67, 1994 WL 325796 (ND IL 1994), but the tenants in that case later argued that these amended complaint guidelines regulated the execution of orders of possession after foreclosure. The Remberts and a class of others similarly situated were apartment leaseholders in Chicago that were evicted by employees of Cook County Sheriff Michael Sheahan. The Remberts and their class filed a Section 1983 suit against the sheriff for violating their right to due process because of lack of adequate notice. Their complaint revolved around the enforcement of eviction notices that referred to the tenants using generalized names such as "unknown tenant," or were addressed to individuals other than those evicted, not referring to them specifically or generally. The court relied on the provision of the Illinois Mortgage Foreclosure Act that defines the rights of "non-record claimants," which says that notice "may simply be addressed to 'nonrecord claimants.'" See 735 ILCS 5/15-1502(b) and (c). The sheriff was ordered to cease enforcing notices that misnamed tenants, but was allowed to continue enforcing those addressed to tenants specifically or in generalized terms.

The amendments to Section 1504 were not mentioned during the original Rembert litigation, but were later brought to the court's attention in the tenants' motion for reconsideration. The tenants argued that the amendments prohibited the sheriff from enforcing orders against "unknown tenants" and therefore they were due relief. The court disagreed. Refusing to alter its original opinion, the court said that the provisions for nonrecord claimants in Section 1502 governed notice; the amendments had no impact on the issue. Notice addressed to "unknown tenants" was not a violation of due process because other notice provisions in foreclosure law, such as Section 1502(c), ensure that fair and adequate measures are taken to provide proper notice to these nonrecord claimants. See Rembert v Sheahan, 62 F3d 937, 940 (7th Cir 1995). The tenants appealed.

On appeal, the tenants continued to argue that their rights to due process were violated. There was some discrepancy as to whether the enforcement policies of the sheriff had changed since the lower court's order, and whether recent amendments, including the foreclosure complaint amendment, rendered the controversy moot. The court of appeals vacated the order against the sheriff and remanded the case for the district court to make findings of fact. See Rembert, 62 F3d 937, FN2.

The Illinois Legislature made the next move in an amendment effective in July of 1995 that permits enforcement of orders of possession after mortgage foreclosure only against "those persons personally named as individuals in the complaint or petition." See 735 ILCS 5/15-1508 (g). No longer could the sheriff enforce eviction notices against "unknown tenants" and other generalized addressees. Although the court of appeals decided Rembert in August of 1995, this amendment was not mentioned in the court's opinion.

On remand, the district court enjoined Sheriff Sheahan from enforcing orders of possession unless they specifically named the persons to be evicted. Orders addressed with generalized names could not be enforced. In People v Wheeler, 299 Ill App 3d 245, 253, 701 NE2d 178, 184, 233 Ill Dec 535, 541 (4th D 1998), the court summarized the state of the law as follows:

Orders of possession cannot be entered against persons who are not personally named in the original petition for foreclosure unless a supplemental petition so naming them has been filed. This legislation was apparently enacted in response to Rembert as it protected the possessory rights to real estate of people not properly named in the petition to foreclose.

Sheriff Sheahan often cited theRembertinjunction when he was challenged for refusing to enforce orders of possession. Since orders addressed to "unknown occupants" were no longer enforceable, foreclosure attorneys began to resort to forcible entry and detainer actions to obtain jurisdiction over and possession from these individuals. Charges were brought against the sheriff when, relying on theRembertinjunction, he refused to enforce orders of possession against "unknown occupants" in forcible entry and detainer actions. InNorwest Mortgage, Inc v Ozuna, 302 Ill App 3d 674, 706 NE2d 984, 236 Ill Dec 110 (1st D 1998), the court determined that the injunction dealt only with orders of possession after mortgage foreclosure proceedings, and did not regulate the procedures in forcible entry and detainer actions. Therefore, the sheriff could not rely on theRembertinjunction to refuse to enforce the orders of possession. Refusal to enforce the orders was not a contemptible offense since the sheriff acted in good faith reliance on the injunction. The "unknown occupants" still prevailed in this case however because the plaintiffs failed to comply with 735 ILCS 5/2-413, which guides proper notice to "unknown parties" in any action. To obtain personal jurisdiction over unknown parties, the law requires the following:

...that, prior to the issuance of summons for such parties, a plaintiff file an affidavit stating that, upon due investigation, the proper names of certain persons who may have an interest in the underlying action are unknown. 735 ILCS 5/2-413. The provisions ... further mandate that summons be served by publication.

Norwest, 302 Ill App 3d at 678, 706 NE2d at 988, 236 Ill Dec at 114. Since affidavits were not produced or summons by publication made, orders addressed to "unknown occupants" were voidab initio. Without substantial adherence to the notice provisions by the foreclosure attorneys, the court did not have personal jurisdiction over the unknown occupants.

At this point the law seemed to be clear regarding eviction of unknown occupants after mortgage foreclosure, however more was to come. In People v Wooters, 188 Ill 2d 500, 722 NE2d 1102, 243 Ill Dec 33 (Ill 1999), the Illinois Supreme Court declared that Public Act 89-203, the legislative act that required orders of possession to specifically name the people against whom they are to be enforced, was unconstitutional because it violated the single subject requirement in the Illinois Constitution. The Act had eight sections, seven of which dealt with criminal issues and law enforcement. The eighth section included the amendments to Illinois Mortgage Foreclosure Law. The Wheeler court noticed this but concluded that the mortgage provisions related to "law enforcement," and therefore did not violate the single subject rule. It rationalized that since the sheriff and his deputies are law enforcement officers and the provision concerns the execution of their duties in the proper service of orders of possession, there was a logical and natural connection to the rest of the act. The Court in Wooters disagreed explaining that, "the mere fact that the sheriff enforces orders of possession and notices of eviction does not transform sections 15-1508 and 15-1701 into legislation concerning 'crime.'" 188 Ill 2d at 514, 722 NE2d at 1111, 243 Ill Dec at 42. The Act violated the single subject provision and therefore was unconstitutional. Three months later, the Illinois Supreme Court ordered the lower court to vacate the Wheeler judgment and reconsider it in light of the Wooters decision. People v Wheeler, 187 Ill 2d 589, 722 NE2d 1140, 243 Ill Dec 71, (Ill 2000).

The Illinois Legislature has yet to act again concerning notice requirements for unknown occupants. Since the Illinois Supreme Court deemed 89-203 unconstitutional, it is unclear what further stance the Legislature wants to take on the issue. A look at legislative history seems to imply that the General Assembly had to "piggyback" the mortgage foreclosure amendments with the law enforcement act in order for it to be passed by the majority. See Wooters, 188 Ill 2d at 518-19, 722 NE2d at 1112-13, 243 Ill Dec at 43-44. The Rembert injunction against Cook County Sheriff Sheahan is still valid, and it is clear from Norwest that the injunction does not apply to orders of possession for forcible entry and detainer actions. Since Rembert, Illinois courts have yet to decide that Section 1504(a)(3)(T), which requires name specificity on foreclosure complaints, may be applicable to orders of possession after foreclosure.

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