Hometown Condo. Ass'n No. 2 v. Mohammed

2018 IL App (2d) 171030

118 N.E.3d 1218

427 Ill.Dec. 547

HOMETOWN CONDOMINIUM ASSOCIATION NO. 2, Plaintiff-Appellee,

v.Saleem MOHAMMED, Defendant-Appellant.

No. 2-17-1030

Appellate Court of Illinois, Second District.

Opinion filed November 29, 2018

Frank J. Wesolowski, of Law Office of Frank J. Wesolowski P.C., of Downers Grove, for appellant.

Robert M. Prince, of Cervantes Chatt & Prince P.C., of Burr Ridge, for appellee.

JUSTICE BURKE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Hometown Condominium Association No. 2, created a lien against one of its condominium units, based on the owners' failure to pay assessments and late fees for several years. Defendant, Saleem Mohammed, purchased the unit at a sheriff's sale following the foreclosure on the unit but did not pay his assessments either.

¶ 2 Plaintiff notified defendant that section 9(g)(3) of the Condominium Property Act (Act) ( 765 ILCS 605/9(g)(3) (West 2016) ) required him to extinguish the lien by paying certain association dues and late fees, including those that had gone unpaid by the previous owners. When defendant did not pay dues of any kind for 12 months after the judicial confirmation of sale, plaintiff filed a complaint for forcible entry and detainer and breach of contract.

¶ 3 On the eve of trial, defendant tendered payment purporting to cover the assessments and the late fees that had accrued over the six months before the foreclosure sale and the first month thereafter. Defendant claimed that the payment extinguished the lien, even though he had made no other payments toward the assessments that were accruing during his ownership.

¶ 4 Following a bench trial, plaintiff obtained a judgment that appears to include all past-due assessments, late fees, and interest accruing before and after the sale. Section 9(g)(3) permits a purchaser of foreclosed property to confirm the extinguishment of the association's lien for the unpaid assessments of the prior owner by making his own common-expense assessment payments following the sale. 765 ILCS 605/9(g)(3) (West 2016). The trial court determined that defendant's only payment, which was about 17 months late and less than the amount owed, did not extinguish the lien. On appeal, plaintiff argues that, to extinguish a lien, the payments by a foreclosure purchaser for postsale assessments must be reasonably "prompt" and completely up to date and that defendant failed to meet that standard. Defendant contends that a foreclosure purchaser need pay only a single month's assessment following the sale and may make that payment at any time before judgment is entered on the lien. We need not decide whether a foreclosure purchaser's payment of common expenses must be "prompt" under section 9(g)(3) of the Act, because here defendant made only a partial payment, which did not extinguish the lien. We affirm.

¶ 5 I. BACKGROUND

¶ 6 This action illustrates two ways a condominium association may recover from a foreclosure sale purchaser certain unpaid assessments owed by the previous owner: enforcement of a lien against the property and an independent statutory remedy to recoup unpaid assessments.

¶ 7 Section 9(g)(1) of the Act permits a condominium association to assert a lien against a unit owner for unpaid common expenses and fines, along with interest, late charges, reasonable attorney fees, and costs of collection. Any action brought to extinguish the lien of the association shall include the association as a party. 765 ILCS 605/9(g)(1) (West 2016).

¶ 8 Where the condominium unit is foreclosed upon and the title is vested with the purchaser of the property following a judicial foreclosure sale, section 9(g)(3) provides that the purchaser must pay postsale assessments "from and after the first day of the month after the date of the judicial foreclosure sale." 765 ILCS 605/9(g)(3) (West 2016). Payment of those postsale assessments "confirms the extinguishment" of any lien for presale assessments that were unpaid by the previous owner. 765 ILCS 605/9(g)(3) (West 2016).

¶ 9 In addition, section 9(g)(4) states that the purchaser of a condominium unit at a judicial foreclosure sale must pay the unpaid common expenses for the unit during the six months immediately preceding the institution of an action to enforce the collection of assessments against the prior owner. 765 ILCS 605/9(g)(4) (West 2016). The purpose of section 9(g)(4) is to allow the association to recover a portion of the prior owner's unpaid assessments from the new owner. 1010 Lake Shore Ass'n v. Deutsche Bank National Trust Co. , 2015 IL 118372, ¶ 32, 398 Ill.Dec. 95, 43 N.E.3d 1005.

¶ 10 Section 9(g)(4) creates an independent claim for the association directly against the new owner, and the obligation arises at the time of the foreclosure purchase. Sylva, LLC v. Baldwin Court Condominium Ass'n , 2018 IL App (1st) 170520, ¶¶ 12-13, 423 Ill.Dec. 725, 106 N.E.3d 431. The statute imposes an independent obligation on the new owner, and once that obligation is breached, a separate statutory lien under section 9(g)(4) arises in favor of the association. Sylva , 2018 IL App (1st) 170520, ¶ 13, 423 Ill.Dec. 725, 106 N.E.3d 431. That separate statutory lien is based not on the prior owner's delinquency, but on the new owner's failure to make the payment required by the Act. Sylva , 2018 IL App (1st) 170520, ¶ 13, 423 Ill.Dec. 725, 106 N.E.3d 431.

¶ 11 Section 9(g)(4) allows a condominium association to recover a portion of the prior owner's unpaid assessments from a new third-party purchaser. 1010 Lake Shore , 2015 IL 118372, ¶ 32, 398 Ill.Dec. 95, 43 N.E.3d 1005. "Section 9(g)(3), in contrast, applies to all foreclosure sale purchasers, including mortgagees, and it simply requires the purchaser to pay assessments beginning the month following the foreclosure sale to confirm the extinguishment of the lien created by the prior owner's failure to pay assessments." 1010 Lake Shore , 2015 IL 118372, ¶ 33, 398 Ill.Dec. 95, 43 N.E.3d 1005. Section 9(g)(3) does not require a foreclosure sale purchaser to pay any of the prior owner's unpaid assessments if the purchaser pays the assessments coming due following the sale. Thus, section 9(g)(3) ensures payment of assessments accruing after the foreclosure sale.

¶ 12 With this statutory framework in mind, we summarize the underlying facts, which are mostly undisputed but suffer from gaps in the record. Plaintiff is a condominium association as defined by the Act and is governed by a certain declaration of condominium ownership for Hometown Condominium No. 2. The declaration requires owners to pay assessments and other common expenses to plaintiff. Section 6.04 provides that assessments are due "[o]n or before the first day of the fiscal year, and on or before the first day of each and every month thereafter until the effective date of the next Annual Assessment."

¶ 13 Defendant purchased his unit, which is part of the association, at a sheriff's sale as part of a foreclosure proceeding in Kane County. The record does not indicate the date of the sale, but the purchase was confirmed in the foreclosure proceeding on March 28, 2016. Defendant recorded his deed to the unit more than a year later, on May 8, 2017.

¶ 14 The unit's previous owners had failed to pay plaintiff their proportionate share of common expenses for years. To recover the arrearage, plaintiff initiated a foreclosure action against the previous owners on a date that is not specified in the record. On November 7, 2012, the court in the foreclosure action entered an amended judgment against the previous owners and for plaintiff in the amount of $14,053, plus $470 in attorney fees.

¶ 15 On February 17, 2017, plaintiff sent a 30-day notice to defendant pursuant to section 9102 of the Forcible Entry and Detainer Act. See 735 ILCS 5/9-102 (West 2016). The notice demanded payment of both preforeclosure and postforeclosure amounts, but defendant did not pay assessments of any kind.

¶ 16 On April 4, 2017, one year after the judicial confirmation of the sale, plaintiff filed a two-count complaint for forcible entry and detainer and breach of contract. On August 31, 2017, which was the scheduled trial date and 17 months after the sale confirmation, defendant tendered $1670 to plaintiff. At oral argument, the parties agreed that the payment represented the assessments and late fees incurred by the previous owners from September 2015 through April 2016, which was the six-month period preceding the confirmation of sale and the first month after the confirmation. The record contains no notation regarding the payment, but the amount of the check corresponds to the unit's statement of account during that period.

¶ 17 The court continued the trial to October 18, 2017, and expressly allowed plaintiff to deposit the payment, stating that "said deposit of funds shall not in any way waive, infringe or impair plaintiff's rights for relief in this cause except to give defendant credit for said funds."

¶ 18 There is no report of proceedings for the bench trial, but plaintiff represents that the court considered testimony, documentary evidence, and argument on the amounts owed and the effect of defendant's payment on August 31, 2017. The court found that defendant failed to extinguish plaintiff's lien and it continued the case for the entry of a judgment to enforce that lien against defendant. The court denied plaintiff certain late fees and repair charges that it had incurred for the property, but those rulings are not a part of this appeal.

¶ 19 On November 22, 2017, judgment was entered for plaintiff in the amount of $24,249 in unpaid assessments and late fees, $562 in court costs, and $1412 in attorney fees. Plaintiff was also awarded possession of the unit. The court applied defendant's $1670 payment to the judgment. Otherwise, the record does not indicate the court's method for calculating the judgment. Defendant's timely appeal followed.

¶ 20 II. ANALYSIS

¶ 21 A. Standard of...