by Christopher Beck, ATG Law Clerk

Since January 1, 1997, attorneys in Illinois have been confronted with the real threat of being exposed to criminal sanctions for filing a lien that is without legal basis. 720 ILCS 5/32-13 imposes tough penalties on anyone in Illinois who files, or causes to be filed, a lien on property that is not grounded in a legitimate legal theory. What requirements does this legislation impose on real estate attorneys practicing in Illinois?

The Language of the Statute
720 ILCS 5/32-13 was passed to combat the number of liens, lis pendens, and other recorded documents that impair title to real property and burden the legal system in order to harass and intimidate. The statute states that "[a]ny person who intentionally records or files or causes to be recorded or filed any document…that is a cloud on the title of land in this State, knowing that the theory upon which the purported cloud on title is based is not recognized as a legitimate legal theory by the courts of this State or the United States, commits the offense of unlawful clouding of title," which is a Class A misdemeanor. The statute goes on to define "cloud on the title" as "an outstanding claim or encumbrance that, if valid, would affect or impair the title of the owner of an estate in land and on its face has that effect, but can be shown by extrinsic proof to be invalid or inapplicable to that estate."

This statute may give attorneys, especially those practicing in real estate, a reason to take pause; after all, criminal sanctions are more menacing then fighting off a slander of title suit. However, the legislature kept attorneys in mind when it amended the original draft of the bill, adding section (c-5), which states that "[t]his Section does not apply to an attorney…who in good faith files a lien on behalf of his or her client and who in good faith believes that the validity of the lien is supported by a statutory law, by a decision of a court of law, or by a good faith argument for an extension, modification, or reversal of existing court decisions relating to the validity of the lien." Despite this protection, however, some speculate that the threat of criminal charges may have a chilling effect on attorneys, an effect that may ultimately result in some good faith liens not being filed.

No cases have yet been decided at the appellate level in Illinois interpreting this statute. The legislature's intent in passing a statute can be seen most readily in the language of the statute itself, and it is here that courts will look when interpreting a statute for the first time. The language in sub-section (a) clearly requires that the recorded document must impair title to the property, and the person filing the document must know that the cloud is not based on any recognized legal theory. Subsection (c-5) adds what seems to be additional protection for attorneys. This subsection requires that attorneys who file a lien on real property are required only to have a good-faith belief that the lien is supported by law, or a good-faith argument for the law's extension. The critical phrase in this sub-section, and the phrase that courts will need to interpret, is what constitutes "good faith" in the context of this section.

Supreme Court Rule 137
When trying to properly interpret the language of a statute, courts will often look to other statutes that contain similar language. One statute that contains similar language is Supreme Court Rule 137, which addresses the responsibilities imposed on attorneys when signing and filing pleadings, motions, and other court documents. Supreme Court Rule 137 states that when an attorney signs a court document, that attorney is certifying that he or she has read the document and believes "after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law." Courts have not hesitated to impose sanctions for frivolous motions, and now there may be reason to fear that criminal sanctions could be imposed for filing frivolous liens, although some of this fear may be unfounded. When attempting to properly interpret one statute by drawing from another statute, courts do not merely read the words that are shared between the statutes; they read those words in the context of the statute in which they are found.

Supreme Court Rule 137 may have a purpose that is similar to 720 ILCS 5/32-13, but the language of Supreme Court Rule 137 requires a stricter standard. A lawyer is allowed to rely on a good faith belief only after a "reasonable inquiry" has been made. 720 ILCS 5/32-13 carries no such requirement and seems to require less diligence from attorneys when filing a lien than is required for attorneys who are filing motions in courts of law. It further requires a good faith belief that the lien is based on a theory of law. However, it makes no requirement that a reasonable inquiry be made. This suggests that if an attorney is approached by a client seeking to file a lien that is based on an accepted theory of law, the attorney would be protected from criminal charges if he or she, in good faith, relied on the client without making further reasonable inquiry.

Legislative History
Courts will also look to the legislative history to assist them in interpreting the statute and to help them determine the legislature's intent. Looking at the legislative history, one finds that sub-section (c-5) was not included in the original Senate bill, but was added through House amendment. Because this subsection was specially inserted, the implication is that it was done for a purpose above and beyond that already included in the section, or to explain an aspect of the section. Obviously, lawyers are in a special class who, depending on the area of law in which they practice, may be called on to file liens on a regular basis. The legislature seemed to recognize this fact and responded by adding a sub-section that would provide attorneys with additional protection. In effect, the only requirement for attorneys is to act on a good faith belief. Furthermore, if the attorney does not act on a good faith belief, then the rest of the section does apply, and the attorney must have knowledge that the lien is not based on a recognized theory of law.

Wisconsin as a Model
Illinois is not the first state to institute the criminalization of slander of title actions. Other states, including Michigan and Wisconsin, have passed similar statutes in their respective states. Wisconsin passed its criminal slander of title act in 1979. Although it is similar to the Illinois law, a violation is considered a felony, and the statute does not contain a provision that protects attorneys. Several actions that were brought under this statute have reached the appellate level in Wisconsin. These cases have established that under Wisconsin law, the statutes are constitutional.

The Wisconsin law was passed to target those who sought to slander title in order to harass others and had not been deterred by civil slander of title actions. The first case brought under Wisconsin's statute was State v. Minniecheske, 347 N.W.2d (Wis. App. 1984). The defendant in this case had "previously filed four lis pendens, twelve common law liens, and twelve writs of attachment." The court goes on to say that some of these filings resulted in civil judgments against the defendant for slander of title. In sentencing, the court considered the defendant's lack of remorse, the unlikelihood of rehabilitation, and the public's outrage at the defendant using the legal system to harass those with whom he disagreed. Minniecheske at 612. Whether Wisconsin reserves prosecution for only the most egregious of cases or for those undeterred by civil action is unclear. But, since the elements for the criminal action of unlawful clouding of title are nearly parallel to the slander of title civil action, it appears that anyone found guilty of slander of title in Wisconsin might also be liable for criminal charges.

A final concern the Wisconsin statute presents is what becomes of the absolute privilege afforded attorneys in judicial proceedings. In a case of first impression in the state, the doctrine of absolute privilege for statements made by an attorney in a judicial or quasi-judicial setting was extended to the filing of a lis pendens. Ringier America, Inc. v. Enviro-Technics, Ltd., 284 Ill. App. 3d 1102, 673 N.E.2d 444 (Ill. App. 1st Dist. 1996). Absolute privilege protects attorneys' actions that are "necessarily preliminary to judicial or quasi-judicial proceedings." However, case law is clear that the privilege extends only to civil actions. Now that the criminal slander of title has been codified, it seems unlikely that attorneys who violate the statute will be granted any kind of immunity from criminal prosecution. The lack of absolute immunity may be seen as an erosion of the protections previously enjoyed by attorneys when filing liens. However, it is not clear whether the holding in Ringier would be extended to the lien filings or be limited only to lis pendens filings. Allowing the law to be subverted by merely hiring an attorney is not a concept likely to be embraced by the courts.

It is difficult to say what effect the statute will have on the methods and practices of Illinois attorneys. Those who have been judicious in their lien filings prior to the statute's enactment are not likely to be affected. Those who played fast and loose with lien filings will most likely want to exercise more caution. The language of the statute seems to merely codify the standard attorneys should be practicing, and it provides stiff penalties for those who do not. Only time will tell if the threat of criminal sanctions will have an effect on the number of legitimate liens filed, or if it will merely raise the bar for those whose standards previously fell short. However, assuming that enforcement is exercised with restraint, the statute should pay future dividends by making the entire legal system more efficient. To be sure, compliance with 720 ILCS 5/32-13 will be challenging for attorneys.

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