Illinois Judgments, Mortgages and Survivorship

In Illinois, a mortgage lien executed by less than all joint tenants does not sever joint tenancy, and if the joint tenant who executed the mortgage dies, then the surviving tenant becomes sole owner of the estate in its entirety, free and clear of the mortgage made by the deceased joint tenant. Harms v Sprague, 473 NE2d 930, 934 (Ill. 1984). This article will look at the case law in Illinois that led up to the Harms v Sprague case, examining both liens of mortgages as well as judgments, and their effect upon survivorship interests in property.

The first in a string of cases dealing with whether survivorship extinguishes a lien is People’s Trust & Savings Bank v Haas. 160 NE 85 (Ill. 1927). In that case, a surviving wife petitioned the court to remove a cloud on the title of property that was held in joint tenancy between her and her deceased husband. 85. The cloud was the result of a judgment lien against the husband prior to his death. Id. The creditors contended that they “followed the procedure required by law” including filing the lien with the registrar of titles which operated to sever the joint tenancy. 86.The court held that recording a lien does not sever joint tenancy and the wife and husband were joint tenants on the property deed and nothing was done by the couple to sever the joint tenancy prior to the husband’s death. Id. Therefore, upon the death of her husband, the wife “succeeded to the title in fee to the whole of the land by operation of law” affirming the lower court’s decree to remove and cancel the lien from the property proper. Id. at 85-86.  

After Haas, the court again addressed this issue in Van Antwerp v Horan. 61 NE2d 358 (Ill. 1945). In September 1941, Englewood Hospital Association of Chicago recovered a judgment against Frank Ormond. Id. at 358-59. The judgment was executed and a levy was placed on real estate owned in joint tenancy by Frank and his wife, Eva Ormond. 359. In September 1942, Frank died, leaving Eva as surviving joint tenant. Id. In August 1944, Eva conveyed the property to Bertha Van Antwerp. Id. In September of that same year, Harry Peters purchased Englewood Hospital’s interest in the judgment and sought recovery. Id. Bertha filed a complaint seeking to restrain Peters from collecting on the debt. Id. Peters contended that a levy severed joint tenancy because it destroyed the unity of interest, which reduced Frank and Eva’s interests into a tenancy in common. Id. Following from the decision in Haas, the court held that because a judgment lien would not sever a joint tenancy the making of a levy upon the interest of the joint tenant debtor would not server the joint estate because of the fact that the levy gives no greater interest than that which the judgment creditor already possessed.” Id. at 360. The court reasoning was a judgment creditor “only obtained a lien which might or might not ripen into title, and until such title has been perfected, there has not been that destruction of unity of interest of the joint tenant which causes severance of joint tenancy.” Id.

The court expanded the decision from Van Antwerp in Jackson v Lacey. 97 NE2d 839 (Ill. 1951). In that case, Lucille and Walter Lacey were joint tenants of property. A creditor recovered a judgment and made a levy on Walter’s half interest. Id. at 840. The creditor’s interest was then sold by a bailiff of the court to Lucille and a sale certificate was issued to her. Id. Before the redemption period expired from the sale, Lucille died and the certificate of purchase was not recorded until after her death. Id. Sometime after the recording, Walter Lacey quitclaimed the whole of the property. Id. The creditors argued that they still maintained a one half interest in the property because the judgment, levy, and sale by the bailiff severed the joint tenancy. Id. The court held that the destruction of “identity of interest or any other unity which must occur” before the estate of joint tenancy is severed had yet to occur. Id. at 841. Furthermore, the act of sale is “but another step forward toward a divestiture of title which can only come about at a future time[.]” Id.

Finally, in Harms v Sprague, the court addressed the issue of whether survivorship extinguishes a mortgage lien. 473 NE2d at 934. In 1973, William Harms and his brother John Harms took title to property located in Roodhouse, IL as joint tenants. Id. at 932. Years later, Charles Sprague, John’s friend, asked John to co-sign a note for $7,000 and give a mortgage on his interest in the Roodhouse property so that Charles could purchase property from Carl and Mary Simmons. Id. On June 12, 1981, John and Charles jointly and severally executed the note payable to the Simmonses. Id. The noted stated that the principal was to be paid from the proceeds of the sale of John’s interest in the Roodhouse property no later than six months from the date the note was signed. Id. Without informing his brother, John also executed a mortgage in favor of the Simmonses on his undivided one-half interest in the Roodhouse property. Id. On December 10, 1981, John died and, by the terms of his will, left Charles as devisee of his entire estate. Id.

Subsequently, William filed a complaint against Charles and the Simmonses to quiet title and for declaratory judgment. Id. at 931. Affirming the appellate court’s reversal of the trial court’s decision, The court held that a mortgage executed by one joint tenant’s interest in property does not sever joint tenancy and that the surviving joint tenant’s right of survivorship becomes operative upon death of the joint tenant who executed the mortgage; and, as such, the surviving tenant becomes sole owner of the estate in its entirety, free and clear of the mortgage. Id. at 933-34. Relying on the Haas, Van Antwerp and Jackson courts’ decisions, the court reasoned that Illinois “adheres to the rule that a lien on a joint tenant’s interest in property will not effectuate a severance of joint tenancy absent a conveyance[,]” and then pointed to the holding from Kling v Ghilarducci that title of property is “ not separated with the execution of a trust deed but rather only upon execution and delivery of a master’s deed.” Id. at 933, (see also, Kling v Ghilarducci 121 NE2d 752 (Ill. 1954)).

In closing, case law in Illinois provides that a mortgage lien does not sever joint tenancy because a lien is not a conveyance of the real property. Furthermore, a mortgage lien made by only one joint tenant on their half interest in the property will not remain attached in the event that the joint tenant debtor dies prior to conveying the property. In the end, the surviving joint tenant will take the deceased’s interest in its entirety, free and clear of a mortgage lien.

Posted on: Fri, 12/05/2014 - 10:23am