THE AMENDED LAW

Section 1701(h)(4) of the IMFL was revised to state:

In a case of foreclosure where the tenant is current on his or her rent, or where timely written notice of to whom and where the rent is to be paid has not been provided to the tenant, or where the tenant has made good-faith efforts to make rental payments in order to keep current, any order of possession must allow the tenant to retain possession of the property covered in his or her rental agreement (i) for 120 days following the notice of the hearing on the supplemental petition that has been properly served upon the tenant, or (ii) through the duration of his or her lease, whichever is shorter. If the tenant has been given timely written notice of to whom and where the rent is to be paid, this item (4) shall only apply if the tenant continues to pay his or her rent in full during the 120-day period or has made good-faith efforts to pay the rent in full during that period. No mortgagee-in possession, receiver or holder of a certificate of sale or deed, or purchaser who fails to file a supplemental petition under this subsection during the pendency of a mortgage foreclosure shall file a forcible entry and detainer action against a tenant of the mortgaged real estate until 90 days after a notice of intent to file such action has been properly served upon the tenant.

The legislation added a new section to IMFL.
Section 1701(h)(5) states: The court records relating to a supplemental petition for possession filed under this subsection (h) against a tenant who is entitled to notice under item (4) of this subsection (h), or relating to a forcible entry and detainer action brought against a tenant who would have lawful possession of the premises but for the foreclosure of a mortgage on the property, shall be ordered sealed and shall not be disclosed to any person, other than a law enforcement officer or any other representative of a governmental entity, except upon further order of the court.

THE EVICTION PROCESS

A tenant or occupant may be evicted from a foreclosed property after the foreclosure has been completed two ways:
 (1) a supplemental petition for possession or
 (2) a forcible entry and detainer action. A supplemental petition for possession is an additional proceeding in foreclosure court. A forcible entry and detainer action is a separate lawsuit filed against the occupants of the property pursuant to Article IX of the Illinois Code of Civil Procedure, 735 ILCS 5/9-101 et. seq.

Forcible entry and detainer is the prudent choice of action for the eviction of occupants remaining in the property.  The rationale is that a supplemental petition for possession is limits the parties that may be added as defendants (i.e. you cannot name unknown occupants as a defendant).
 
The revisions to Section 1701 require that a notice of intent to file a forcible action be properly served upon the occupant or tenant at least 90 days prior to filing a forcible entry and detainer action with the courts. Before the revisions, there was no mechanism or requirement to serve such notice on tenants or occupants before filing a forcible action.  Previously, waiting 90 days from the confirmation of the judicial foreclosure sale before filing a forcible action enable the foreclosing party to add unknown occupants as a party defendant. When taken together, as likely desired by the Illinois legislature, no material extensions of time occur.

SECTION 1701(h)(5)’ 's EFFECT ON EVICTIONS

Section 1701(h)(5) requires that the court records relating to a supplemental petition for possession or forcible entry and detainer action be sealed by the court and not disclosed to any other person, other than a law enforcement officer or other representative of a governmental entity.  Illinois counsel advised that because law enforcement is required to be on-site during the procedure, the guiding rule is to follow their direction.  Law enforcement will open the sealed documents, review them and direct the third party to proceed, whether that third party is a preservation company, a realtor, broker or their independent subcontractors.  The rule of thumb is to follow the sheriff's instructions on-site and document your compliance.

CONCLUSION AND RECOMMENDED PROCEDURES

Mortgage servicers should revise their internal processes, and instruct their foreclosure counsel and other vendors to issue notice of intent letters to occupants advising them that the have 90 days to vacate the property or a forcible entry and detainer action will be filed against them. Unfortunately, the institution of this new requirement means that all complaints not filed prior to August 26, 2008 will need to have
the notice of intent letter served on all tenants and occupants before a complaint can be filed 90 days after service. Internally, closer scrutiny should be observed to ensure that compliance with Section 1701(h)(5)occurs and no information about the eviction of occupants from the foreclosed properties is being shared with improper parties 

Following is a summary provided by Jill D. Rein, Esq. Managing Attorney Pierce & Associates, P.C.

NEW LAW AFFECTING POSSESSION IN ILLINOIS PASSES

A bill was signed August 26, 2008, affecting tenant’s rights to possession of foreclosed property in Illinois, the law is effective immediately. What this law does is substantially increase the time frame in which we will be able to obtain possession from a tenant that occupies the property after our foreclosure is complete. A copy of the new statute is attached in its entirety and below is a summary.
 
There are two ways to obtain possession from a tenant after theforeclosure is complete in Illinois; we can file a separate forcibledetainer action or we can file a supplemental petition for possession inthe foreclosure proceeding.

Under the new law, before we can file a forcible detainer actionagainst
the tenants we first have to serve them with a copy of a Notice ofIntent
to File Forcible Entry and Detainer Action. We then must wait 90 daysafter service of this notice before our forcible detainer complaint canbe filed.
This new provision adds at least 90 days to our time frame to obtainpossession from a tenant after the foreclosure is complete.

Under the new law, if we proceed with a supplemental petition for
possession in the foreclosure proceeding (which can be done any time upto 90 days after the order confirming possession has been entered) weneed to serve a notice of hearing of the petition on the tenant (thehearing must be within 21 days of the date of service) and if thetenant:
* is current on their rent – or –
* is not provided timely notice of to whom and where the rent is to
be paid – or –
* where the tenant has made good-faith efforts to make rental
payments in order to keep current any order of possession granted mustgive the tenant 120 days possession following the notice of the hearingon the petition or possession through the term of their lease, whicheveris shorter. The new provisions of this section virtually ensure a tenantwill be given 120 days or the duration of their lease.

Supplemental petitions are not usually practical or time efficient aswe
can not name unknown occupants in them (which we can do in forcible
detainer actions) and the time frames are often impossible to comply withdue to court scheduling issues; accordingly, the process we use to evicttenants after the foreclosure is complete is the forcible detainer actionwhich now will take an additional 90 days to complete. The forcibledetainer action however will still be more effective and time efficientthan a supplemental petition in most cases.

If you have any questions please contact Jill Rein atjrein@atty-pierce.com

Jill D. Rein, Esq.
Managing Attorney

Pierce & Associates, P.C.
One North Dearborn Street
Suite 1300
Chicago, IL 60602
(Ph) 312 346-9088 x5156
(Fx) 312 551-4400


To view a copy of the final bill, please click here.

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 500 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.