Can second mortgage holder sue after foreclosure?
Q. I read your article about mortgages and wanted to ask a quick question. My second mortgage holder is suing me 8½ years after foreclosure (and 8½ years after the last payment was made - the account was never paid on again).
Texas has a four-year statute of limitations for written contracts that are unsecured, which this second loan became after the foreclosure.
Is this just an attempt to get me to pay something or could this stand up in court? Just curious for your opinion and if you've seen cases pursued outside of the statute of limitations.
A. The statute of limitations on written contracts in Illinois is 10 years. So, if this property is in Illinois, it would appear the holder of the note has a viable case, though there may be other relevant factors. If the property is in Texas, I suggest you speak to a Texas real estate attorney. As a general rule, if this action fell outside the statute of limitations, the court would dismiss the case upon the defendant's motion.
You do raise an issue however that many folks going through foreclosure don't entirely grasp. This is in situations where the mortgagor (homeowner) is foreclosed upon and there is also a second mortgage recorded against the property. As a general rule, when the Order of Foreclosure is entered in favor of the first mortgagee, the second mortgagee's interest in the property is eliminated. They no longer retain a lien on the property. However, one doesn't owe money on a mortgage, one owes money on the note that the mortgage secures. So, even though the note is no longer secured by the property, the holder of the note may still pursue a breach of contract action against the homeowner.
Q. I lease a commercial space in a strip mall. I'm in the third year of a five-year lease with an option for an additional five years.
I would like to break my lease. Many of the tenants have moved out and there are numerous empty units. One of the units has been rented to a massage therapist and given how often the police are coming around, I'm guessing something more is going on there. The parking lot is always full of garbage, the landscaping is overgrown and snow plowing is inconsistent. And I'm now concerned with summer coming up because I was having trouble with my air conditioning unit all last summer.
I don't want to leave and risk getting sued. What can I do to get out of the lease and not end up in court?
A. The first step would be to speak to a real estate attorney and have him review the lease. There may be provisions in the lease that would legally support your terminating the agreement. Also, start documenting everything. Send a certified letter to your landlord documenting these issues and be specific. Note dates, times and events. Indicate that in the event these issues are not resolved, you will be required to terminate your lease. Take pictures of the garbage, unkempt landscaping, unplowed snow and police activity. In the event you determine that you must leave and you do get sued, put yourself in the best position possible to defend the suit. In trials such as these, documents, correspondence and pictures often carry the day.
• Send your questions to Attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.