HB3307 104TH GENERAL ASSEMBLY

LRB104 10531 JRC 20607 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB3307

Introduced 2/18/2025, by Rep. Kelly M. Cassidy

SYNOPSIS AS INTRODUCED:

735 ILCS 5/15-1704

from Ch. 110, par. 15-1704

Amends the Mortgage Foreclosure Law of the Code of Civil Procedure. Requires receivers of mortgaged real estate to use reasonable efforts to make repairs and improvements as necessary to comply with building, housing, or other similar codes that necessary for the safety, accessibility, and habitability of residential real estate. Creates the Residential Real Estate Ombudsperson Program of which the purpose is to ensure that tenants of residential real estate in receivership continue to have safe, habitable, and accessible homes throughout the receivership process and to facilitate communication between tenants, the receiver, and the court. Requires that in courts in counties of 50,000 or more residents must establish such a program, and in courts in counties of less than 50,000 residents may establish such a program. Provides for the powers of the Ombudsperson to include, but not be limited to, (i) taking, investigating, and making recommendations and reports of complaints of inadequate performance receivership duties relating to matters that may adversely affect the health, safety, welfare, or rights of tenants; (ii) entering the property under receivership at a reasonable time and with reasonable notice to the receiver or receiver's manager; (iii) communicating privately with tenants who consent to that communication; (iv) encouraging the facilitation of communication between receivers, tenants, and the court; (v) making recommendations to receivers regarding building conditions and court practices; (vi) submitting reports to the court regarding the status of the residential real estate, the receivership relationship, the use of the Ombudsperson services; and (vii) making recommendations to the court to improve the receivership relationship. Requires the Ombudsperson within 60 days of appointment to send a notice of contact information of the Ombudsperson to all known dwelling occupants of residential real estate through by posting a written notice on unit doors and in common areas. Effective January 1, 2026.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Code of Civil Procedure is amended by changing Section 15-1704 as follows:

(735 ILCS 5/15-1704) (from Ch. 110, par. 15-1704)

Sec. 15-1704. Receivers.

(a) Receiver. Notwithstanding the provisions of subsections (b), (c) and (d) of Section 15-1701, and except as provided in Section 15-1702, upon request of any party and a showing of good cause, the court shall appoint a receiver for the mortgaged real estate.

(b) Powers. A receiver appointed pursuant to this Article shall have possession of the mortgaged real estate and other property subject to the mortgage during the foreclosure, shall have full power and authority to operate, manage and conserve such property, and shall have all the usual powers of receivers in like cases. Without limiting the foregoing, a receiver shall have the power and authority to:

(1) secure tenants and execute leases for the real estate, the duration and terms of which are reasonable and customary for the type of use involved, and such leases shall have the same priority as if made by the owner of the real estate; but, unless approved by the Court, the receiver shall not execute oil, gas or other mineral leases, or (even if otherwise allowed by law) leases extending beyond the time of the receiver's possession; provided, however, with respect to residential real estate leased by the receiver, nothing in this Section shall affect the legal rights of any lessee with respect to the safety, and habitability, and accessibility of the residential real estate;

(2) collect the rents, issues and profits from the mortgaged real estate;

(3) insure the mortgaged real estate against loss by fire or other casualty;

(4) employ counsel, custodians, janitors and other help; and

(5) pay taxes which may have been or may be levied against the mortgaged real estate.

(c) Duties. A receiver appointed pursuant to this Article must manage the mortgaged real estate as would a prudent person, taking into account the effect of the receiver's management on the interest of the mortgagor. A receiver may, without an order of the court, delegate managerial functions to a person in the business of managing real estate of the kind involved who is financially responsible, not related to the mortgagee or receiver and prudently selected. However, the receiver shall remain responsible to the mortgagor or other persons for the acts or omissions of such management agent. When fees are paid to such a management agent, the receiver's fees may be adjusted to the extent the court deems appropriate. In managing the mortgaged real estate and other property subject to the mortgage, a receiver or receiver's delegate, to the extent the receiver receives sufficient receipts from the mortgaged real estate, such other property or other sources, except to the extent ordered otherwise by the court:

(1) shall maintain the existing casualty and liability insurance required in accordance with the mortgage or applicable to the real estate and other property subject to the mortgage at the time the receiver took possession;

(2) shall use reasonable efforts to maintain the real estate and other property subject to the mortgage in at least as good condition as existed at the time the receiver took possession, excepting reasonable wear and tear and damage by any casualty, and shall use reasonable efforts to make repairs and improvements as necessary to comply with building, housing, or other similar codes necessary for the safety, accessibility, and habitability of residential real estate;

(2.5) shall accept all rental payments from an occupant of the mortgaged property, and any payments from a third party or any rental assistance program in support of an occupant's housing;

(3) shall apply receipts to payment of ordinary operating expenses, including royalties, rents and other expenses of management;

(4) shall pay any shared or common expense assessments due to any association of owners of interests in real estate to the extent that such assessments are or may become a lien against the mortgaged real estate;

(5) may pay the amounts due under any mortgage if the mortgagee thereof is not a party in the foreclosure;

(6) may carry such additional casualty and liability insurance as is reasonably available and reasonable as to amounts and risks covered;

(7) may make other repairs and improvements necessary to comply with building, housing, and other similar codes or with existing contractual obligations affecting the mortgaged real estate;

(8) may hold receipts as reserves reasonably required for the foregoing purposes; and

(9) may take such other actions as may be reasonably necessary to conserve the mortgaged real estate and other property subject to the mortgage, or as otherwise authorized by the court.

(d) Allocation of Receipts. Receipts received from operation of the real estate and other property subject to the mortgage by the receiver shall be applied in the following order of priority.

(1) to reimbursement of the receiver for all reasonable costs and expenses incurred by the receiver or the receiver's delegates;

(2) to payment of insurance premiums authorized in paragraph (1) of subsection (c) of Section 15-1704;

(3) to payment of the receiver's delegates of any reasonable management fees for managing real estate of the type involved;

(4) to payment of receiver's fees allowed by the court;

(5) to payment of expenses authorized in paragraphs (2), (3) and (4) of subsection (c) of Section 15-1704;

(6) to payment of amounts authorized in paragraph (5) of subsection (c) of Section 15-1704;

(7) to payment of expenses authorized in paragraphs (6) and (7) of subsection (c) of Section 15-1704; and

(8) the balance, if any, shall be held or disbursed as ordered by the court.

(e) Non-Liability for Allocations. A receiver shall in no event be liable to any person for the allocation of, or failure to allocate, receipts to possible expenditures within the same priority category.

(f) Notice to occupants.

(1) Following an order appointing a receiver pursuant to Section 15-1704, but no later than 21 days after the entry of such order, the appointed receiver shall make a good faith effort to ascertain the identities and addresses of all occupants of dwelling units of the mortgaged real estate.

(2) Following an order appointing a receiver pursuant to Section 15-1704, but no later than 21 days after the entry of such order, the appointed receiver shall notify all known occupants of dwelling units of the mortgaged real estate that the receiver has been appointed receiver of the mortgaged real estate. Such notice shall be in writing and shall:

(i) identify the occupant being served by the name known to the receiver;

(ii) inform the occupant that the mortgaged real estate at which the dwelling unit is located is the subject of a foreclosure action and that control of the mortgaged real estate has changed;

(iii) provide the name, address, and telephone number of the individual or entity whom occupants may contact with concerns about the mortgaged real estate or to request repairs of that property;

(iv) include the following language, or language that is substantially similar: "This is NOT a notice to vacate the premises. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights that you may have.";

(v) include the name of the case, the case number, and the court where the foreclosure action is pending; and

(vi) provide instructions on the method of payment of future rent, if applicable.

(3) The written notice required by item (2) of this subsection (f) shall be served by delivering a copy thereof to the known occupant, or by leaving the same with some person of the age of 13 years or upwards, who is residing on or in possession of the premises; or by sending a copy of the notice to the known occupant by first-class mail, addressed to the occupant by the name known to the receiver.

(4) In the event that a receiver ascertains the identity and address of an occupant of a dwelling unit of the mortgaged real estate more than 21 days after appointment pursuant to Section 15-1704, the receiver shall provide the notice required by item (2) of this subsection (f) within 7 days of ascertaining the identity and address of the occupant.

(5)(i) A receiver who fails to comply with items (1), (2), (3), and (4) of this subsection (f) may not collect any rent due and owing from a known occupant, or terminate a known occupant's tenancy for non-payment of such rent, until the receiver has served the notice described in item (2) of this subsection (f) upon the known occupant. After providing such notice, the receiver may collect any and all rent otherwise due and owing the receiver from the known occupant and may terminate the known occupant's tenancy for non-payment of such rent if the receiver otherwise has such right to terminate.

(ii) An occupant who previously paid rent for the current rental period to the mortgagor, or other entity with the authority to operate, manage, and conserve the mortgaged real estate at the time of payment, shall not be held liable for that rent by the receiver, and the occupant's tenancy shall not be terminated for non-payment of rent for that rental period.

(6) Within 21 days of appointment, the receiver shall post a written notice on the primary entrance of each dwelling unit subject to the foreclosure action that informs occupants that the receiver has been appointed to operate and manage the property. This notice shall:

(i) inform occupant that the dwelling unit is the subject of a foreclosure action and that control of the mortgaged real estate has changed;

(ii) include the following language: "This is NOT a notice to vacate the premises.";

(iii) provide the name, address, and telephone number of the individual or entity whom occupants may contact with concerns about the mortgaged real estate or to request repairs of the property; and

(iv) provide instructions on the method of payment of future rent, if applicable.

(7)(i) The provisions of item (5) of this subsection (f) shall be the exclusive remedy for the failure of a receiver to provide notice to a known occupant under this Section.

(ii) This Section shall not abrogate any right that a receiver may have to possession of the mortgaged real estate and to maintain a proceeding against an occupant of a dwelling unit for possession under Article IX of this Code or subsection (h) of Section 15-1701.

(g) Increase of rents. Notwithstanding any other provision of this Article, a receiver shall not charge an occupant of the mortgaged real estate a rental amount above that which the occupant had been paying for use and occupancy of the mortgaged real estate prior to the appointment of a receiver without leave of court. The court may allow an increase of rent if, upon motion by the receiver, the court finds by a preponderance of the evidence, that the increase of rent is necessary to operate, manage, and conserve the mortgaged real estate pursuant to this Section. A list of the current rents for each unit in the mortgaged real estate, and a list of the proposed rent increase for each of those units, must be attached to a motion for a rent increase under this subsection (g). All occupants of the mortgaged real estate who may be affected by the motion for a rent increase, if not otherwise entitled to notice, shall be notified in writing of the nature of the motion, the date and time of the motion, and the court where the motion will be heard. Such notice shall be by personal service or first-class mail. In the event that the receiver and an occupant of a dwelling unit agree to a rent increase for that dwelling unit, the receiver is excused from the requirements of this subsection (g) as to that dwelling unit. Nothing in this subsection (g) shall alter the terms of any lease agreement.

(h) Removal. The court may remove a receiver upon a showing of good cause, in which case a new receiver may be appointed in accordance with subsection (b) of Section 15-1702 and subsection (a) of Section 15-1704.

(i) Residential Real Estate Ombudsperson Program. The purpose of the Residential Real Estate Ombudsperson Program is to ensure that tenants of residential real estate in receivership continue to have safe, habitable, and accessible homes throughout the receivership process and to facilitate communication between tenants, the receiver, and the court. It is the policy of this State to facilitate availability of residential real estate through effective receivership and to ensure that tenants' rights to safe, habitable, and accessible living is accomplished by providing communication and advocacy services for tenants of residential real estate during the receivership.

(1) Residential Real Estate Ombudsperson Program. Courts in counties of 50,000 or more residents shall, and courts of other counties may, establish a Residential Real Estate Ombudsperson Program in which a Residential Real Estate Ombudsperson is appointed to effectuate this Act. Courts may establish this program using existing staff or new resources. Courts may include in this program receiverships of residential real estate established by municipal request under Section 11-31-2 of the Illinois Municipal Code.

(2) Powers of Residential Real Estate Ombudsperson. Residential Real Estate Ombudspersons are authorized to:

(A) outline the rights and abilities for tenants to contact the Ombudsperson program on the court website;

(B) display name and public registered agents of all active receivers of residential real estate on the court's website;

(C) ensure that contact information of receiver, any receiver-hired management company, as well as emergency maintenance information, is sent to and accessible to all current and future tenants of residential real estate under receivership;

(D) take, investigate, and make recommendations and reports of complaints of inadequate performance by a receiver on any matters that may adversely affect the health, safety, welfare, or rights of tenants, whether these complaints are from tenants, tenant associations, municipal building departments, or otherwise discovered;

(E) enter the property under receivership at a reasonable time with reasonable notice to receiver or receiver's manager;

(F) communicate privately with tenants who consent to that communication;

(G) encourage the facilitation of communication between receivers, tenants, and the court, including timelines for improvements to building conditions, court hearings, schedules for receiverships, and estimated timelines for the end of the receivership;

(H) make recommendations to receivers regarding building conditions and court practices;

(I) submit reports to the court regarding the status of the residential real estate, the receivership relationship, the use of the Ombudsperson services, and may include statements from tenants, receivers, municipal officials and employees, witnesses, and managers pertinent to the status of the receivership relationship; and

(J) make recommendations to the court to improve the receivership relationship, including but not limited to, a request to discharge a receiver and replace that receiver for good cause as provided in this Section.

(3) Notice to tenants. Within 60 days of appointment, receivers shall send notice of contact information of an Ombudsperson to all known dwelling occupants by posting a written notice on unit doors and in common areas. The notice may be combined with a notice required in paragraph (2) of subsection (f). This notice shall include the following text:

"The responsibilities and powers of receivers of residential real estate in Illinois are outlined in Section 15-1704 of the Mortgage Foreclosure Law and include managing the property on behalf of the [Insert County] Court for the purpose of future sale while protecting tenants' rights to safe, habitable, and accessible dwelling units during the receivership period. The court has established an Ombudsperson program to ensure that receiver is meeting these obligations. If you believe your receiver is not meeting those obligations after a good faith effort to work with the receiver or receiver's management company, you may contact the Ombudsperson.

[Contact information for Ombudsperson]".

(Source: P.A. 98-514, eff. 11-19-13.)

Section 99. Effective date. This Act takes effect January 1, 2026.