Recently I represented a buyer who was under contract to purchase a bank owned property ("REO" in real estate lingo). The buyer was quite pleased with what he believed was a great deal on a nice suburban Chicago condominium. All was proceeding swiftly toward an easy close when the subject property condominium association disclosed that the buyer would be on the hook for $10,000 in past due assessment charges. As you might imagine, the buyer was shocked. Particularly in light of the fact that the regular monthly assessment was only $50. The buyer's Realtor professed ignorance of the issue. The seller argued that the buyer was liable pursuant to Illinois law. Who was right? Well, as with many real estate legal issues, the answer depends on the particular facts.
Begin the analysis with the law. There is in fact an Illinois law that does under certain situation require a buyer to pay the prior owner's past due assessments and fees. Section 9(g) of the Illinois Condominium Property Act provides:
(4) The purchaser of a condominium unit at a judicial foreclosure sale, other than a mortgagee, who takes possession of a condominium unit pursuant to a court order or a purchaser who acquires title from a mortgagee shall have the duty to pay the proportionate share, if any, of the common expenses for the unit which would have become due in the absence of any assessment acceleration during the 6 months immediately preceding institution of an action to enforce the collection of assessments, and which remain unpaid by the owner during whose possession the assessments accrued. If the outstanding assessments are paid at any time during any action to enforce the collection of assessments, the purchaser shall have no obligation to pay any assessments which accrued before he or she acquired title.
A careful reading of the statute is required to determine if it in fact applies to a particular purchaser. The buyer must be buying from the bank that was the mortgagee (e.g. the foreclosing bank). If the seller is in fact a subsequent purchaser or an investor that purchased at the foreclosure sale, then the law does not apply. In my situation, our seller was indeed the mortgagee that had foreclosed and was now the owner selling the property. The next inquiry is the most critical. The law limits an association’s right to collect to those amounts that accrued “...during the 6 months immediately preceding institution of an action to enforce collection of assessments...” What does this mean? Well, the law requires that the association must have tried to collect what was due from the owner. In fact, the law goes further and requires that the association must have instituted an “action” which has been read to mean that the association must have filed a lawsuit (a joint action forcible entry and detainer or a civil collection) or a counterclaim against the owner in the foreclosure. If this was not done, the inquiry ends there and the association has no right to collect. If an action was indeed filed, that triggers the second part which requires the association to look back six months from the date the action was started. Assessments and fees which fall outside of this window are excluded and cannot be collected.
In my particular case, a close analysis of the assessment ledger revealed only $300 fell within that period and that the bulk of the money sought by the association was in fact not due.
Several lessons can be taken from this example. First, never take for fact what an association says without double checking. Most associations are quick to claim money due for six monthly assessment payments when they never did anything to try to collect. Routinely they get paid because of the ignorance of the law. Stand your ground and do your homework. Second, make sure buyers are aware of the law at the outset before going under contract. Ask whether there are indeed past due assessments claimed. Know what the issue is before going under contract and take that into account when setting a price with your buyer. Go in with “eyes wide open.” Finally, even when all else seems lost, negotiate. The seller still wants to sell and the buyer is ready to close on a deal. Use that leverage to negotiate a better deal. In my example, my buyer insisted on paying nothing (even though he was in fact liable for six monthly assessment payments of $50). When he threatened to walk away, the seller caved and agreed to pay the amounts due to the association.
I hope this example is helpful in your own dealings with this issue.
Rusty Payton is an Illinois Realtor and a licensed Illinois real estate attorney with over twenty four years experience in real estate. He may be reached at 773-800-1051.
Chicago's Mag Mile has a new look. Yes, "planter heads" have arrived just in time for summer. Check em out if you are shopping Mag Mile.
We like em. What do you think?
We are excited to learn that LA Fitness, a national gym operation, will be opening in Edgewater at the site of the former Hancock Fabrics building at 6101 N Broadway.
Together with the new Edgewater Branch of the Chicago Public Library and the new Walgreens next door, this area of Edgewater is seeing a dramatic transformation.
Yesterday, in the Back Bay neighborhood of Boston, two non-descript parking spaces went on the auction block. Starting bids was fixed at $42,000... but a bidding war soon broke out and the spaces ultimately sold for.... wait for it... $560,000. Wow! The seller: the IRS which had seized the spots for back taxes.
The next time you complain about the cost of parking in Chicago, remember this story.
Ok, this is one truly useful site. We have all been there... forgot to take notice of that orange sign about street sweeping only to find a familiar orange parking ticket and the sinking feeling that $60 just left your pocket. Fear no more.... www.sweeparound.us has the solution. The site is so simple yet so necessary we are surprised it took this long. Simply input your email and address and get text or email notices of the upcoming street sweepers visiting your area. How cool is that? And, its totally free! Spread the word... pay the man no more!.
It's official, Edgewater Andersonville area is finally getting its very own Trader Joe's!!!! YES! The new store is to be located in the long vacant Blockbuster Video store on Broadway and Berwyn. According to the Alderman's office, the new store is expected to open April 1, 2014. We can't wait.
On March 27, 2013, the First District Illinois Appellate Court issued an opinion against a Chicago area landlord for alleged violations of the Chicago Landlord Tenant Ordinance. The case is important because it was brought as a class action, meaning the landlord could suffer damages equal to one month's rent for each and every violation of CRLTO during the two year class period. Plaintiff filed class action complaint alleging that defendant landlord violated Chicago Residential Landlord Tenant Ordinance by failing to disclose to tenants City Building Code citations as to their apartments and common areas, in 12 months prior to their leases. Termination of the lease and surrender of the premises to the landlord are not required to recover the greater of one month's rent or actual damages when a landlord, after receiving the required statutory written notice, failed to provide tenant with notice of Code violations. Here is a full copy of the Court's decision in the case:
iMove Chicago is proud to work with Tulia to give our clients added online exposure for their sales and rental listings. We were recently ranked as one of the Top 5% of agencies in terms of profile vies. Check us out at http://www.trulia.com/profile/imovechicago/
Can you go to "debtor's prison" for not paying your bills? Yes... well, sort of. The answer is somewhat murky in many states.
Here are some basic principals to guide you. Be aware, your local jurisdiction may have different laws and you should always consult an attorney and explain your exact factual situation.
The debts most people incur these days are credit cards and I'll use that as an example. When you "sign up" for a credit card, you are in fact entering into a contract with the card issuer. The basic terms of that agreement are that the credit card issuer agrees to extend you credit with which you make purchases of goods and services and in exchange, you agree to pay the issuer the money back and with interest. Sure, thee is lots of other fine print, but that is the basic agreement. Your contract with the credit card issuer also provides that if you fail to pay the money owed that you can be found in default and the credit card issuer can sue you for breaking your promise to pay back the money you agreed to pay.
If the credit issuer wants to sue you, it commences a lawsuit based on your breach of the contract. You have the right to defend against that lawsuit just like any other if you believe that you are not in breach of your agreement or that there are other reasons you should not be held responsible. If you fail to defend against the lawsuit or if the court does not accept your defense, a judgment can be entered against you. Nothing in that judgment will send you to jail. It is just a finding that you are liable for the debt.
That part is pretty straight forward. It is what typically comes next that gets folks in difficult situations. Once a creditor has a judgment, the law gives it several means to collect that judgment. The creditors can garnish a bank account, place a lien on your house, or ask the court to conduct an inquiry of your assets. Which assets? How much? Well, that depends on where you work, where you live, and what you own. These are questions the creditor has the right to insist you answer in writing. This form is usually called a Financial Disclosure Form or Citation to Discover Assets. The court can order you to appear to answer the questions that your creditor has about your financial assets. If you ignore the writing, or if your writing is confusing, or you don't back it up with pays-tubs, bank statements, tax documents, and so forth, you might get a letter in the mail informing you of a "supplemental examination" in front of a court. When the creditor uses the power of the court to insist you appear, you must show up - if you ignore it then you are ignoring a court order. The court doesn't care much about the debt but it cares a lot about you not showing up, even if you don't have money to pay the debt. That's what can land you in jail. You can be jailed for not obeying a court order to appear - in effect, you are being held in contempt of court.
Thus, the important thing to remember is to always read and understand any papers you receive from a court regarding a debt. Even if you have no money to pay the debt, you are obligated to appear and explain that fact to the court. You cannot be jailed for owing the money, but you can be in trouble if you fail to abide by the Court's orders.
It is important that when you face any financial distress to consult with a professional who can assist you in making the right decisions. Chicago attorney Rusty Paytonhttp://www.attorneypayton.com is an attorney with 24 years experience in bankruptcy, foreclosure and distressed real estate. His firm is located in the Rogers Park neighborhood of Chicago. Call on him for a free consultation today.
Although for many decades travelers have been welcomed into the homes of relatives and friends and offered the couch as a cheap place to stay, it was not until this decade that this tried and true option was revolutionized by the internet. With the advent of Craigslist, Airbnb, and similar sites, almost anyone and everyone is offering up couches, spare bedrooms and even entire homes for rent as a hotel alternative. While the notion of renting a room in a friendly owner’s home may at first glance seem appealing economically, there are a few words of caution to be offered before you jump in head first.
Renting such accommodations pose risks to both pocketbook and safety. Here is why.
Hotels, motels, bed and breakfast inns are almost universally regulated by local governmental authorities. Local statutes provide for minimum safety and health requirements. Establishments must has work smoke and carbon dioxide detectors, operating fire extinguishers, emergency exit lighting, and posted fire exit plans. I operate a B&B here in Chicago and can personally attest to the fact that each year we get a thorough inspection by the fire department, by the department of buildings, and by the department of health. If we don’t take appropriate measures to protect the safety and health of our guests, we do not get to operate.
Now compare those protections to what you get when you rent a night on a stranger's couch. Has that stranger devoted the same concern and resources to your safety and health? Do you know what you would do in a fire? How would you get out? Is there anyone on-site that can help you in an emergency? Is the location, building and apartment you are renting safe? Remember, you are staying in an unfamiliar city in an unconventional alternative to a hotel, motel or B&B. Ask yourself if the potential savings is truly worth the additional risks posed.
You should also be extremely alert for the potential financial pitfalls of renting such accommodations. If you send money to a stranger you found on the internet, is there going to actually be a place for you to stay when you arrive? Sites such as Craigslist are fertile ground for scam artists of all types. They will often go to great lengths to make their scams appear legitimate with wonderful photos of fantastic abodes near all the sites and available just when you are looking to travel and at unbelievable prices. Beware, they are often adept at making you part with your money. Check out the business and ask for references. Legitimate places to stay in most cities like Chicago has a website, a Facebook page, are on Google+, LinkedIn and other social media sites. Determine how you will get a refund if all is not as promised. Because of recent scams and problems with unregulated vacation rentals, many jurisdictions have adopted new local laws that require registration and licensing. Check the locale you intend to visit and check with the local tourism bureau or visitors center for further information.
Traveling to a new city is always an adventure. Make it a pleasurable, memorable one by heeding these few words of caution.