Associations May Be Able to Recover Six Months of Unpaid Assessments From Foreclosure Purchasers Without Filing Suit Against the Former Owner
On June 4, 2018, the Appellate Court issued its opinion in Sylva, LLC v. Baldwin Court Condominium Association, Inc. (“Sylva”) holding that the “initiation of an action” requirement in section 9(g)(4) of the Illinois Condominium Property Act (“ICPA”) may be satisfied even when an association does not file suit against the former owner. This expansion of the law may provide associations with an opportunity to recover up to six months of unpaid assessments following a foreclosure when a collection suit was not filed.
ICPA Section 9(g)(4) requires “initiation of an action” to enforce the collection of assessments before an association is entitled to collect up to six months of unpaid assessments from a foreclosure purchaser. Filing a collection suit against the former unit owner satisfies the “initiation of an action” requirement. The court’s decision in Sylva expands the law on section 9(g)(4) by holding that filing suit against a former owner is not the exclusive means by which a condominium association may protect its right to collect unpaid assessments from a foreclosure purchaser.
In the Sylva case, the court determined that the “initiation of an action” requirement was satisfied by (1) the association’s recording of a lien against the unit that specified the amount owed, and (2) notice to the foreclosure purchaser of its liability for up to six months of unpaid assessments. The Sylva court supported its decision noting that ICPA section 9(g)(5) requires the notice of foreclosure sale to include a statement advising prospective purchasers that they are obligated to pay up to six months of the prior owner’s unpaid assessments and the foreclosure purchaser was thereby forewarned of the outstanding assessments and the obligation to pay.
While filing suit against a former owner provides a proven method of ensuring that a foreclosure purchaser is obligated to pay an association up to six months of unpaid assessments, the Sylva case makes it clear that associations may satisfy the “initiation of an action” requirement in other ways. Under the Sylva decision, associations that didn’t file suit against former owners may now still have an opportunity to recover up to six months of unpaid assessments from a foreclosure purchaser.
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