HB3058 101ST GENERAL ASSEMBLY

LRB101 10528 LNS 55634 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3058

Introduced , by Rep. Sonya M. Harper

SYNOPSIS AS INTRODUCED:

New Act
735 ILCS 5/15-1701	from Ch. 110, par. 15-1701
735 ILCS 5/15-1702	from Ch. 110, par. 15-1702

Creates the Abandoned Residential Property Act. Imposes requirements on first lien mortgage holders concerning the inspecting, securing, and maintaining of abandoned residential property. Provides exceptions. Provides that the Department of Financial and Professional Regulation shall maintain a statewide abandoned property registry electronic database. Provides that the Department shall establish and maintain a toll-free hotline that neighbors of residential property that is, or appears to be, abandoned may use to report hazards, blights, or other concerns related to the property. Provides that violations of the provisions may be heard before a hearing officer or a court of competent jurisdiction and that the violations may be enforced by the Secretary of the Department or the municipality where the residential property is located. Provides that if the mortgagee violates the provisions, a civil penalty may be issued in the amount of up to $500 per day per property for each day the violation persisted. Provides rulemaking powers to the Division of Banking of the Department to implement the provisions. Limits home rule powers. Makes conforming changes.

HOME RULE NOTE ACT MAY APPLY

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 1. Short title. This Act may be cited as the Abandoned Residential Property Act.

Section 5. Definitions. As used in this Act:

"Abandoned residential property" means property that:

(1) has any of the following occur: overgrown or dead vegetation; accumulation of newspapers, circulars, flyers, or mail; past due utility notices, disconnected utilities, or utilities not in use; accumulation of trash, refuse, or other debris; absence of window coverings; one or more boarded, missing, or broken windows; the property is open to casual entry or trespass; or the property has a building or structure that is or appears structurally unsound or has any other condition that presents a potential hazard or danger to the safety of persons;

(2) a court or other appropriate State or local governmental entity has formally determined, following due notice to the borrower at the property address and any other known addresses, that such property is vacant and abandoned; or

(3) each borrower and owner has separately issued a sworn written statement, expressing his or her intent to vacate and abandon the property and an inspection of the property shows no evidence of occupancy to indicate that any person is residing there.

"Department" means the Department of Financial and Professional Regulation.

"Division of Banking" means the Division of Banking of the Department of Financial and Professional Regulation.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

Section 10. Application. Notwithstanding any other provision of law to the contrary, any duties and responsibilities prescribed by this Act apply only to the first lien mortgage holder.

This Act does not apply to State or federally chartered banks, savings banks, savings and loan associations, or credit unions that:

(1) originate, own, service, and maintain their mortgages or a portion thereof; and

(2) have less than three-tenths of 1% of the total loans in the State that they either originate, own, service, or maintain for the calendar year ending December 31 of the calendar year ending 2 years prior to the current calendar year.

For any State or federally chartered banks, savings banks, savings and loan associations, or credit unions that originate, own, service, and maintain between three-tenths of 1% and five-tenths of 1% of the total loans in the State that they either originate, own, service, or maintain for the calendar year ending December 31 of the calendar year ending 2 years prior to the current calendar year, the application of this Act shall be prospective only.

Section 15. Inspecting, securing, and maintaining abandoned residential property.

(a) Subject to bankruptcy filings, cease and desist orders, threats of violence, or active loss mitigation efforts, within 90 days of a borrower's delinquency, the lender, assignee, or mortgage loan servicer authorized to accept payment of the loan shall complete an exterior inspection of the subject property to determine occupancy. Thereafter, throughout the delinquency of the loan, the lender, assignee, or mortgage loan servicer shall conduct an exterior inspection of the property every 25 to 35 days, at different times of the day.

(b) If a borrower is delinquent and subject to property inspections pursuant to subsection (a), the lender, assignee, or mortgage loan servicer shall secure and maintain the residential property pursuant to subsections (c), (d), (e), (f), and (g) if the lender, assignee, or mortgage loan servicer has a reasonable basis to believe that the residential property is abandoned and the lender, assignee, or mortgage loan servicer is not otherwise restricted from accessing the property.

(c) Within 7 business days of determining that the property is abandoned based on the criteria set forth in subsection (b), the lender, assignee, or mortgage loan servicer shall post a notice on an easily accessible part of the property that is reasonably visible to the borrower, property owner, or occupant, and monitor the property (1) for any change in occupancy or contact with the borrower, property owner, or occupant, and (2) to ensure that the notice remains posted so long as the duty to maintain applies. The posted notice shall provide the lender's, assignee's, or mortgage loan servicer's toll-free number or similar contact information.

(d) If the posted notice is not responded to or persists for 7 consecutive calendar days without contact with the borrower, property owner, or occupant indicating that the property is not abandoned, or if an emergent property condition that could reasonably damage, destroy, or harm the property arises, the lender, assignee, or mortgage loan servicer shall:

(1) if the property contains 2 or more points of ingress or egress, replace no more than one door lock to provide subsequent access to the property;

(2) secure, replace, or board up broken doors and windows;

(3) secure any part of the property that may be deemed an attractive nuisance, including, but not limited to, a water feature that could create a drowning risk, refrigerator or freezer units, outbuildings, wells, or septic tanks;

(4) respond to government inquiries regarding the condition of the property, subject to restrictions regarding financial privacy; and

(5) ensure that the notice required to be posted under subsection (c) remains posted on an easily accessible part of the property that is reasonably visible to the borrower, property owner, or occupant so long as the duty to maintain applies.

(e) At no time shall a lender, assignee, or mortgage loan servicer remove personal property from the property unless:

(1) the personal property poses a significant health and safety issue; or

(2) there is an uncontested order to do so by a governmental entity.

(f) A lender, assignee, or mortgage loan servicer who has determined a property to be abandoned and who has secured the same shall take reasonable and necessary actions to maintain the property until the earliest of the following events:

(1) an occupant of the property has asserted his or her right to occupy the property, or the lender, assignee, or mortgage loan servicer or its agents have received threats of violence;

(2) the borrower has filed for bankruptcy;

(3) a court has ordered the lender, assignee, or mortgage loan servicer to stop any maintenance of the property;

(4) a homeowners' association has prevented the lender, assignee, or mortgage loan servicer from gaining access to or maintaining the property;

(5) the property has been sold or transferred to a new owner;

(6) the lender, assignee, or mortgage loan servicer or investor subject to this Act has released the lien on the property; or

(7) the mortgage note has been assigned, transferred, or sold to another lender, assignee, or mortgage loan servicer.

(g) Reasonable and necessary actions to maintain the property include, but are not limited to:

(1) ensuring that the property remains secure pursuant to subsections (d), (e), and (f); and

(2) maintaining property in a manner consistent with the standards set forth in Section 15-1200.5 to the extent that the lender, assignee, or mortgage loan servicer is able to obtain necessary or required permits or approvals.

Section 20. Zip code database; toll-free number.

(a) The Department shall maintain a statewide abandoned residential property registry electronic database. The Department may retain a private contractor to administer the database for the purposes of satisfying this requirement.

The Department, upon written request, shall provide a public official of any State district, county, city, town, or village with access to information specific to the public official's district, county, city, town, or village maintained on the database. The Department shall make the database open to the public and available on the Department's website.

(b) A lender, assignee, or mortgage loan servicer shall submit to the Department by December 31, 2020 information required by the Secretary about any abandoned residential real property that is located in a zip code where there are prevalent abandoned residential properties.

The information shall, at a minimum, include: (1) the current name, address, and contact information for the lender, assignee, or mortgage loan servicer responsible for maintaining the vacant property; (2) whether a foreclosure action has been filed for the property in question, and, if so, the date on which the foreclosure action was commenced; and (3) the last known address and contact information for the mortgagor of record.

If any of the information contained in a lender's, assignee's, or mortgage loan servicer's initial submission to the registry has materially changed since submission, the lender, assignee, or mortgage loan servicer shall make an amended submission to the registry not later than 30 days after the lender, assignee, or mortgage loan servicer learns, or reasonably should have learned, of the new or changed information.

(c) The Department shall establish and maintain a toll-free hotline that a neighbor of residential property that is, or appears to be, abandoned residential property may use to report to the Department any hazards, blights, or other concerns related to the property. The Department shall include on its official public website information about the toll-free hotline.

Section 25. Violations; enforcement.

(a) An allegation of a violation of this Act may be heard before a hearing officer or a court of competent jurisdiction. If the mortgagee or agent of the mortgagee has violated this Act, a civil penalty may be imposed by the hearing officer or the court in the amount of up to $500 per day per property for each day the violation persisted.

The Secretary, or his or her designee, may, as appropriate and in his or her discretion, pursue any suspected violation of this Act. Before taking such action, the Secretary, or his or her designee, shall give the lender, assignee, or mortgage loan servicer at least 7 days' notice of the violation.

The municipality in which the residential property is located may file an action to enforce the obligations described in this Act in any court of competent jurisdiction after at least 7 days' notice to the lender, assignee, or mortgage loan servicer, unless the property requires emergency repairs to address a threat to public health, safety, or welfare, in which case the municipality may enter and maintain the property to cure the emergency; however, notice shall be provided to the lender, assignee, or mortgage loan servicer as soon as practicable. Any municipality acting pursuant to this subsection may bring an action in any court of competent jurisdiction against the lender, assignee, or mortgage loan servicer to recover costs incurred as a result of maintaining the property. The municipality shall provide the Division of Banking with written notice at least 10 days prior to bringing an action pursuant to this subsection; however, failure to comply with this notice requirement shall not be a defense to an allegation in a proceeding brought pursuant to this subsection. The authority provided by this subsection is in addition to, and is not deemed to diminish or reduce, any rights of the parties described in this Act under existing law against the mortgagor of the property for failure to maintain the property. Any civil penalty imposed pursuant to this subsection in an action brought by a municipality shall be retained by the municipality.

(b) A lender, assignee, or mortgage loan servicer who peacefully enters an abandoned property in order to maintain it pursuant to this Act shall be immune from liability if the lender, assignee, or mortgage loan servicer is making reasonable efforts to comply with this Act.

(c) This Act is subject to federal laws, court orders, and investor and insurer guidelines.

(d) For all State or federally chartered banks, savings banks, savings and loan associations, credit unions, or servicers for which the provisions of this Act do not apply, any agreement between a State or federally chartered bank, savings bank, savings and loan association, credit union, or servicer and the Division of Banking that is associated with the maintenance and repair of abandoned property shall remain in full force and effect for so long as the terms and conditions of the agreement remain in effect.

(e) The Division of Banking shall adopt any rules necessary to implement the terms of this Act, including, but not limited to, rules pertaining to the reporting of financial information that State or federally chartered banks, savings banks, savings and loan associations, or credit unions must provide to implement this Act.

Section 30. Home rule limitations. A home rule unit shall not impose a duty to maintain abandoned property in a manner inconsistent with the provisions of this Act that are related to maintenance as provided under subsections (c), (d), (e), (f), and (g) of Section 15, or establish related penalties or other monetary obligations, with respect to a State or federally chartered bank, savings bank, savings and loan association, or credit union that originates, owns, services or maintains a mortgage related to the property. A home rule unit shall not impose a duty to maintain abandoned property upon any State or federally chartered bank, savings bank, savings and loan association, or credit union that is not subject to this Act. This subsection is a limitation under subsection (i) of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 35. The Code of Civil Procedure is amended by changing Sections 15-1701 and 15-1702 as follows:

(735 ILCS 5/15-1701) (from Ch. 110, par. 15-1701)

Sec. 15-1701. Right to possession.

(a) General. The provisions of this Article shall govern the right to possession of the mortgaged real estate during foreclosure. Possession under this Article includes physical possession of the mortgaged real estate to the same extent to which the mortgagor, absent the foreclosure, would have been entitled to physical possession. For the purposes of Part 17, real estate is residential real estate only if it is residential real estate at the time the foreclosure is commenced.

(b) Pre-Judgment. Prior to the entry of a judgment of foreclosure:

(1) In the case of residential real estate, the mortgagor shall be entitled to possession of the real estate except if (i) the mortgagee shall object and show good cause, (ii) the mortgagee is so authorized by the terms of the mortgage or other written instrument, and (iii) the court is satisfied that there is a reasonable probability that the mortgagee will prevail on a final hearing of the cause, the court shall upon request place the mortgagee in possession. If the residential real estate consists of more than one dwelling unit, then for the purpose of this Part residential real estate shall mean only that dwelling unit or units occupied by persons described in clauses (i), (ii) and (iii) of Section 15-1219.

(1.5) The mortgagor may take possession of the real estate for the purposes of compliance with the Abandoned Residential Property Act.

(2) In all other cases, if (i) the mortgagee is so authorized by the terms of the mortgage or other written instrument, and (ii) the court is satisfied that there is a reasonable probability that the mortgagee will prevail on a final hearing of the cause, the mortgagee shall upon request be placed in possession of the real estate, except that if the mortgagor shall object and show good cause, the court shall allow the mortgagor to remain in possession.

(c) Judgment Through 30 Days After Sale Confirmation. After the entry of a judgment of foreclosure and through the 30th day after a foreclosure sale is confirmed:

(1) Subsection (b) of Section 15-1701 shall be applicable, regardless of the provisions of the mortgage or other instrument, except that after a sale pursuant to the judgment the holder of the certificate of sale (or, if none, the purchaser at the sale) shall have the mortgagee's right to be placed in possession, with all rights and duties of a mortgagee in possession under this Article.

(2) Notwithstanding paragraph (1) of subsection (b) and paragraph (1) of subsection (c) of Section 15-1701, upon request of the mortgagee, a mortgagor of residential real estate shall not be allowed to remain in possession between the expiration of the redemption period and through the 30th day after sale confirmation unless (i) the mortgagor pays to the mortgagee or such holder or purchaser, whichever is applicable, monthly the lesser of the interest due under the mortgage calculated at the mortgage rate of interest applicable as if no default had occurred or the fair rental value of the real estate, or (ii) the mortgagor otherwise shows good cause. Any amounts paid by the mortgagor pursuant to this subsection shall be credited against the amounts due from the mortgagor.

(d) After 30 Days After Sale Confirmation. The holder of the certificate of sale or deed issued pursuant to that certificate or, if no certificate or deed was issued, the purchaser, except to the extent the holder or purchaser may consent otherwise, shall be entitled to possession of the mortgaged real estate, as of the date 30 days after the order confirming the sale is entered, against those parties to the foreclosure whose interests the court has ordered terminated, without further notice to any party, further order of the court, or resort to proceedings under any other statute other than this Article. This right to possession shall be limited by the provisions governing entering and enforcing orders of possession under subsection (g) of Section 15-1508. If the holder or purchaser determines that there are occupants of the mortgaged real estate who have not been made parties to the foreclosure and had their interests terminated therein, the holder or purchaser may bring an eviction proceeding under subsection (h) of this Section, if applicable, or under Article IX of this Code to terminate the rights of possession of any such occupants. The holder or purchaser shall not be entitled to proceed against any such occupant under Article IX of this Code until after 30 days after the order confirming the sale is entered.

(e) Termination of Leases. A lease of all or any part of the mortgaged real estate shall not be terminated automatically solely by virtue of the entry into possession by (i) a mortgagee or receiver prior to the entry of an order confirming the sale, (ii) the holder of the certificate of sale, (iii) the holder of the deed issued pursuant to that certificate, or (iv) if no certificate or deed was issued, the purchaser at the sale.

(f) Other Statutes; Instruments. The provisions of this Article providing for possession of mortgaged real estate shall supersede any other inconsistent statutory provisions. In particular, and without limitation, whenever a receiver is sought to be appointed in any action in which a foreclosure is also pending, a receiver shall be appointed only in accordance with this Article. Except as may be authorized by this Article, no mortgage or other instrument may modify or supersede the provisions of this Article.

(g) Certain Leases. Leases of the mortgaged real estate entered into by a mortgagee in possession or a receiver and approved by the court in a foreclosure shall be binding on all parties, including the mortgagor after redemption, the purchaser at a sale pursuant to a judgment of foreclosure and any person acquiring an interest in the mortgaged real estate after entry of a judgment of foreclosure in accordance with Sections 15-1402 and 15-1403.

(h) Proceedings Against Certain Occupants.

(1) The mortgagee-in-possession of the mortgaged real estate under Section 15-1703, a receiver appointed under Section 15-1704, a holder of the certificate of sale or deed, or the purchaser may, at any time during the pendency of the foreclosure and up to 90 days after the date of the order confirming the sale, file a supplemental eviction petition against a person not personally named as a party to the foreclosure. This subsection (h) does not apply to any lessee with a bona fide lease of a dwelling unit in residential real estate in foreclosure.

(2) The supplemental eviction petition shall name each such occupant against whom an eviction order is sought and state the facts upon which the claim for relief is premised.

(3) The petitioner shall serve upon each named occupant the petition, a notice of hearing on the petition, and, if any, a copy of the certificate of sale or deed. The eviction proceeding, including service of the notice of the hearing and the petition, shall in all respects comport with the requirements of Article IX of this Code, except as otherwise specified in this Section. The hearing shall be no less than 21 days from the date of service of the notice.

(4) The supplemental petition shall be heard as part of the foreclosure proceeding and without the payment of additional filing fees. An eviction order obtained under this Section shall name each occupant whose interest has been terminated, shall recite that it is only effective as to the occupant so named and those holding under them, and shall be enforceable for no more than 120 days after its entry, except that the 120-day period may be extended to the extent and in the manner provided in Section 9-117 of Article IX and except as provided in item (5) of this subsection (h).

(5) In a case of foreclosure where the occupant 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 occupant, or where the occupant has made good-faith efforts to make rental payments in order to keep current, any eviction order must allow the occupant 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 occupant, or (ii) through the duration of his or her lease, whichever is shorter, provided that if the duration of his or her lease is less than 30 days from the date of the order, the order shall allow the occupant to retain possession for 30 days from the date of the order. A mortgagee in possession, receiver, holder of a certificate of sale or deed, or purchaser at the judicial sale, who asserts that the occupant is not current in rent, shall file an affidavit to that effect in the supplemental petition proceeding. If the occupant has been given timely written notice of to whom and where the rent is to be paid, this item (5) shall only apply if the occupant 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.

(6) The court records relating to a supplemental eviction petition filed under this subsection (h) against an occupant who is entitled to notice under item (5) of this subsection (h), or relating to an eviction action brought against an occupant 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.

(i) Termination of bona fide leases. The holder of the certificate of sale, the holder of the deed issued pursuant to that certificate, or, if no certificate or deed was issued, the purchaser at the sale shall not terminate a bona fide lease of a dwelling unit in residential real estate in foreclosure except pursuant to Article IX of this Code.

(Source: P.A. 100-173, eff. 1-1-18.)

(735 ILCS 5/15-1702) (from Ch. 110, par. 15-1702)

Sec. 15-1702. Specific Rules of Possession. (a) Mortgagee's Rights. Except as necessary to comply with the Abandoned Residential Property Act, no No mortgagee shall be required to take possession of the mortgaged real estate, whether upon application made by any other party or otherwise. Whenever a mortgagee entitled to possession so requests, the court shall appoint a receiver. The failure of a mortgagee to request possession or appointment of a receiver shall not preclude a mortgagee otherwise entitled to possession from making such a request at any future time. The appointment of a receiver shall not preclude a mortgagee from thereafter seeking to exercise such mortgagee's right to be placed in possession.

(b) Designation of Receivers. Whenever a receiver is to be appointed, the mortgagee shall be entitled to designate the receiver. If the mortgagor or any other party to the foreclosure objects to any such designation or designations and shows good cause, or the court disapproves the designee, the mortgagee in such instance shall be entitled to make another designation.

(c) Rights of Mortgagee Having Priority. If a mortgagee having priority objects to the proposed possession by a subordinate mortgagee or by a receiver designated by the subordinate mortgagee, upon entry of a finding in accordance with subsection (d) of Section 15-1702 the court shall instead place that objecting mortgagee in possession or, if a receiver is to be designated in accordance with subsection (b) of Section 15-1702, allow the designation of the receiver to be made by that objecting mortgagee.

(d) Removal of Mortgagee in Possession. A mortgagee placed in possession shall not be removed from possession, and no receiver or other mortgagee shall be placed in possession except upon (i) the mortgagee's misconduct, death, legal disability or other inability to act, (ii) appointment of a receiver in accordance with subsection (a) of Section 15-1704 or (iii) a showing of good cause by a mortgagee having priority. A receiver shall not be removed solely on account of being designated by a mortgagee later determined not to have priority.

(e) Determination of Priority. If the court is required to determine priority for the purposes of subsection (c) of Section 15-1702, a new determination shall be made each time a mortgagee is to be placed in possession or a receiver is to be appointed and shall be an interim determination which shall not preclude the court from making a contrary determination later in the foreclosure. If the court subsequently shall make such a contrary determination, a mortgagee in possession or acting receiver shall not be removed except in accordance with Part 17 of this Article.

(f) Rights to Crops. With respect to any crops growing or to be grown on the mortgaged real estate, the rights of a holder of any obligation secured by a collateral assignment of beneficial interest in a land trust, the rights of a mortgagee in possession, or the rights of a receiver, including rights by virtue of an equitable lien, shall be subject to a security interest properly perfected pursuant to Article 9 of the Uniform Commercial Code, where the holder of a collateral assignment, mortgagee in possession, or receiver becomes entitled to crops by obtaining possession on or after the effective date of this Amendatory Act of 1988.

(Source: P.A. 85-1427.)