Court case supports collection of unpaid fees

My Aug. 26 column "teased" that I would address in a future column the circumstances under which the purchaser of a foreclosure condominium at a judicial sale may be responsible for all unpaid sums due from the prior, foreclosed owner.

The Illinois appellate court has issued another opinion on this issue, and I'll address it here. In Country Club Estates Condominium Association v. Bayview Loan Services LLC, decided by the appellate court on Aug. 8, an association filed a forcible entry and detainer (eviction) lawsuit against the entity that purchased a condominium unit through a foreclosure sale.

Seven months after the foreclosure sale, the purchaser still failed to pay any assessments to the association; either past or present. That led to the filing of the eviction lawsuit by the association. Two months after the lawsuit was filed, and seven months after the purchase of the unit at the foreclosure sale, the purchaser tendered a payment to the association. The payment represented only the assessments that accrued after the foreclosure sale.

The purchaser then sought summary judgment at the trial court in the eviction case stating that under Section 9(g)(3) of the Condominium Property Act, its tender of assessments accruing after the foreclosure sale extinguished the association's lien for assessments that accrued before the foreclosure sale. The trial court agreed with this argument and granted partial summary judgment to the purchaser as to the amount of the pre-foreclosure sale assessments due and owed by the prior owner whose interest was foreclosed.

To the delight of condominium associations, the appellate court reversed the trial court decision. The appellate court held that: "in order to extinguish presale assessments under Section 9(g)(3) of the Condominium Property Act, the buyer in a foreclosure must make prompt payment of assessments after acquiring the property." The appellate court went on to further state that "the question of whether a particular payment is 'prompt' is fact-based, and takes the particular circumstances and equities of the situation into account."

The appellate court said that "(I) n the absence of any extenuating circumstances, we would expect assessments to be tendered in the month after purchase."

The extenuating circumstances that come immediately to my mind would be if the foreclosure sale is not confirmed within that next month, or if for some reason the purchaser was unable to make contact with the association to obtain the assessment amount. But who knows what else a purchaser might contend to avoid the impact of failing to pay assessments that accrue from and after the first day of the month after the foreclosure sale.

The bottom line here is that in order to extinguish a condominium association's lien for pre-foreclosure sale assessments under Section 9(g)(3) of the Condominium Property Act, a buyer of a unit at the judicial sale in a foreclosure must make "prompt" payment of post-sale assessments.

This holding sends a strong message that a condominium can expect assessments that accrue from and after the first day of the month after the foreclosure sale to be tendered by the purchaser in the month after the judicial sale. If payment is not made within that time, the association can contend that the lien for pre-foreclosure sale assessments has not been extinguished, and proceed with an eviction against the person or entity that purchased the unit at the foreclosure sale. This could lead to further litigation, and another opinion from the appellate court.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.