Sen. John G. Mulroe

Filed: 3/21/2012





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2    AMENDMENT NO. ______. Amend Senate Bill 3810 by replacing
3everything after the enacting clause with the following:
4    "Section 1. Short title. This Act may be cited as the
5Uniform Assignment of Rents Act.
6    Section 2. Definitions. In this Act:
7    (1) "Assignee" means a person entitled to enforce an
8assignment of rents.
9    (2) "Assignment of rents" means a transfer of an interest
10in rents in connection with an obligation secured by real
11property located in this State and from which the rents arise.
12    (3) "Assignor" means a person that makes an assignment of
13rents or the successor owner of the real property from which
14the rents arise.
15    (4) "Cash proceeds" means proceeds that are money, as
16defined in Article 1 of the Uniform Commercial Code, whether in



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1the form of cash, checks, deposit accounts, or the like.
2    (5) "Day" means calendar day.
3    (6) "Deposit account" means a demand, time, savings,
4passbook, or similar account maintained with a bank, savings
5bank, savings and loan association, credit union, or trust
7    (7) "Document" means information that is inscribed on a
8tangible medium or that is stored on an electronic or other
9medium and is retrievable in perceivable form.
10    (8) "Notification" means a document containing information
11that this Act requires a person to provide to another, signed
12by the person required to provide the information.
13    (9) "Person" means an individual, corporation, business
14trust, estate, trust, partnership, limited liability company,
15association, joint venture, public corporation, government or
16governmental subdivision, agency, or instrumentality, or any
17other legal or commercial entity.
18    (10) "Proceeds" means personal property that is received or
19collected on account of a tenant's obligation to pay rents.
20    (11) "Purchase" means to take by sale, lease, discount,
21negotiation, mortgage, pledge, lien, security interest, issue
22or reissue, gift, or any other voluntary transaction creating
23an interest in property.
24    (12) "Rents" means:
25        (A) sums payable for the right to possess or occupy, or
26    for the actual possession or occupation of, real property



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1    of another person;
2        (B) sums payable to an assignor under a policy of
3    rental interruption insurance covering real property;
4        (C) claims arising out of a default in the payment of
5    sums payable for the right to possess or occupy real
6    property of another person;
7        (D) sums payable to terminate an agreement to possess
8    or occupy real property of another person;
9        (E) sums payable to an assignor for payment or
10    reimbursement of expenses incurred in owning, operating
11    and maintaining, or constructing or installing
12    improvements on, real property; or
13        (F) any other sums payable under an agreement relating
14    to the real property of another person that constitute
15    rents under law of this State other than this Act.
16    (13) "Secured obligation" means an obligation the
17performance of which is secured by an assignment of rents.
18    (14) "Security instrument" means a document, however
19denominated, that creates or provides for a security interest
20in real property, whether or not it also creates or provides
21for a security interest in personal property.
22    (15) "Security interest" means an interest in property that
23arises by agreement and secures performance of an obligation.
24    (16) "Sign" means, with present intent to authenticate or
25adopt a document:
26        (A) to execute or adopt a tangible symbol; or



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1        (B) to attach to or logically associate with the
2    document an electronic sound, symbol, or process.
3    (17) "State" means a state of the United States, the
4District of Columbia, Puerto Rico, the United States Virgin
5Islands, or any territory or insular possession subject to the
6jurisdiction of the United States.
7    (18) "Submit for recording" means to submit a document
8complying with applicable legal standards, with required fees
9and taxes, to the appropriate county clerk or recorder's office
10under the Conveyances Act.
11    (19) "Tenant" means a person that has an obligation to pay
12sums for the right to possess or occupy, or for possessing or
13occupying, the real property of another person.
14    Section 3. Manner of giving notification.
15    (a) Except as otherwise provided in subsections (c) and
16(d), a person gives a notification or a copy of a notification
17under this Act:
18        (1) by depositing it with the United States Postal
19    Service or with a commercially reasonable delivery
20    service, properly addressed to the intended recipient's
21    address as specified in subsection (b), with first-class
22    postage or cost of delivery provided for; or
23        (2) if the recipient agreed to receive notification by
24    facsimile transmission, electronic mail, or other
25    electronic transmission, by sending it to the recipient in



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1    the agreed manner at the address specified in the
2    agreement.
3    (b) The following rules determine the proper address for
4giving a notification under subsection (a):
5        (1) A person giving a notification to an assignee shall
6    use the address for notices to the assignee provided in the
7    document creating the assignment of rents, but, if the
8    assignee has provided the person giving the notification
9    with a more recent address for notices, the person giving
10    the notification shall use that address.
11        (2) A person giving a notification to an assignor shall
12    use the address for notices to the assignor provided in the
13    document creating the assignment of rents, but, if the
14    assignor has provided the person giving the notification
15    with a more recent address for notices, the person giving
16    the notification shall use that address.
17        (3) If a tenant's agreement with an assignor provides
18    an address for notices to the tenant and the person giving
19    notification has received a copy of the agreement or knows
20    the address for notices specified in the agreement, the
21    person giving the notification shall use that address in
22    giving a notification to the tenant. Otherwise, the person
23    shall use the address of the premises covered by the
24    agreement.
25    (c) If a person giving a notification pursuant to this Act
26and the recipient have agreed to the method for giving a



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1notification, any notification must be given by that method.
2    (d) If a notification is received by the recipient, it is
3effective even if it was not given in accordance with
4subsection (a) or (c).
5    Section 4. Security instrument creates assignment of
6rents; assignment of rents creates security interest.
7    (a) An enforceable security instrument creates an
8assignment of rents arising from the real property described in
9the security instrument, unless the security instrument
10provides otherwise.
11    (b) An assignment of rents creates a presently effective
12security interest in all accrued and unaccrued rents arising
13from the real property described in the document creating the
14assignment, regardless of whether the document is in the form
15of an absolute assignment, an absolute assignment conditioned
16upon default, an assignment as additional security, or any
17other form. The security interest in rents is separate and
18distinct from any security interest held by the assignee in the
19real property.
20    Section 5. Recordation; perfection of security interest in
21rents; priority of conflicting interests in rents.
22    (a) A document creating an assignment of rents may be
23submitted for recording in the county clerk or recorder's
24office in the same manner as any other document evidencing a



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1conveyance of an interest in real property.
2    (b) Upon recording, the security interest in rents created
3by an assignment of rents is fully perfected, even if a
4provision of the document creating the assignment or law of
5this State other than this Act would preclude or defer
6enforcement of the security interest until the occurrence of a
7subsequent event, including a subsequent default of the
8assignor, the assignee's obtaining possession of the real
9property, or the appointment of a receiver.
10    (c) Except as otherwise provided in subsection (d), a
11perfected security interest in rents takes priority over the
12rights of a person that, after the security interest is
14        (1) acquires a judicial lien against the rents or the
15    real property from which the rents arise; or
16        (2) purchases an interest in the rents or the real
17    property from which the rents arise.
18    (d) A perfected security interest in rents has priority
19over the rights of a person described in subsection (c) with
20respect to future advances to the same extent as the assignee's
21security interest in the real property has priority over the
22rights of that person with respect to future advances.
23    Section 6. Enforcement of security interest in rents.
24    (a) An assignee may enforce an assignment of rents using
25one or more of the methods specified in Sections 7, 8, and 9 or



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1any other method sufficient to enforce the assignment under law
2of this State other than this Act.
3    (b) From the date of enforcement, the assignee or, in the
4case of enforcement by appointment of a receiver under Section
57, the receiver, is entitled to collect all rents that:
6        (1) have accrued but remain unpaid on that date; and
7        (2) accrue on or after that date, as those rents
8    accrue.
9    Section 7. Enforcement by appointment of receiver.
10    (a) An assignee is entitled to the appointment of a
11receiver for the real property subject to the assignment of
12rents if:
13        (1) the assignor is in default and:
14            (A) the assignor has agreed in a signed document to
15        the appointment of a receiver in the event of the
16        assignor's default;
17            (B) it appears likely that the real property may
18        not be sufficient to satisfy the secured obligation;
19            (C) the assignor has failed to turn over to the
20        assignee proceeds that the assignee was entitled to
21        collect; or
22            (D) a subordinate assignee of rents obtains the
23        appointment of a receiver for the real property; or
24        (2) other circumstances exist that would justify the
25    appointment of a receiver under law of this State other



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1    than this Act.
2    (b) An assignee may file a petition with the circuit court
3of as county in which any portion of the premises is located
4for the appointment of a receiver in connection with an action:
5        (1) to foreclose the security instrument;
6        (2) for specific performance of the assignment;
7        (3) seeking a remedy on account of waste or threatened
8    waste of the real property subject to the assignment; or
9        (4) otherwise to enforce the secured obligation or the
10    assignee's remedies arising from the assignment.
11    (c) An assignee that files a petition under subsection (b)
12shall also give a copy of the petition in the manner specified
13in Section 3 to any other person that, 10 days before the date
14the petition is filed, held a recorded assignment of rents
15arising from the real property.
16    (d) If an assignee enforces an assignment of rents under
17this Section, the date of enforcement is the date on which the
18court enters an order appointing a receiver for the real
19property subject to the assignment.
20    (e) From the date of its appointment, a receiver is
21entitled to collect rents as provided in Section 6(b). The
22receiver also has the authority provided in the order of
23appointment and law of this State other than this Act.
24    (f) The following rules govern priority among receivers:
25        (1) If more than one assignee qualifies under this
26    Section for the appointment of a receiver, a receivership



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1    requested by an assignee entitled to priority in rents
2    under this Act has priority over a receivership requested
3    by a subordinate assignee, even if a court has previously
4    appointed a receiver for the subordinate assignee.
5        (2) If a subordinate assignee obtains the appointment
6    of a receiver, the receiver may collect the rents and apply
7    the proceeds in the manner specified in the order
8    appointing the receiver until a receiver is appointed under
9    a senior assignment of rents.
10    Section 8. Enforcement by notification to assignor.
11    (a) Upon the assignor's default, or as otherwise agreed by
12the assignor, the assignee may give the assignor a notification
13demanding that the assignor pay over the proceeds of any rents
14that the assignee is entitled to collect under Section 6. The
15assignee shall also give a copy of the notification to any
16other person that, 10 days before the notification date, held a
17recorded assignment of rents arising from the real property.
18    (b) If an assignee enforces an assignment of rents under
19this Section, the date of enforcement is the date on which the
20assignor receives a notification under subsection (a).
21    (c) An assignee's failure to give a notification under
22subsection (a) to any person holding a recorded assignment of
23rents does not affect the effectiveness of the notification as
24to the assignor, but the other person is entitled to any relief
25permitted under law of this State other than this Act.



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1    (d) An assignee that holds a security interest in rents
2solely by virtue of Section 4(a) may not enforce the security
3interest under this Section while the assignor occupies the
4real property as the assignor's primary residence.
5    Section 9. Enforcement by notification to tenant.
6    (a) Upon the assignor's default, or as otherwise agreed by
7the assignor, the assignee may give to a tenant of the real
8property a notification demanding that the tenant pay to the
9assignee all unpaid accrued rents and all unaccrued rents as
10they accrue. The assignee shall give a copy of the notification
11to the assignor and to any other person that, 10 days before
12the notification date, held a recorded assignment of rents
13arising from the real property. The notification must be signed
14by assignee and:
15        (1) identify the tenant, assignor, assignee, premises
16    covered by the agreement between the tenant and the
17    assignor, and assignment of rents being enforced;
18        (2) provide the recording data for the document
19    creating the assignment or other reasonable proof that the
20    assignment was made;
21        (3) state that the assignee has the right to collect
22    rents in accordance with the assignment;
23        (4) direct the tenant to pay to the assignee all unpaid
24    accrued rents and all unaccrued rents as they accrue;
25        (5) describe the manner in which subsections (c) and



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1    (d) affect the tenant's payment obligations;
2        (6) provide the name and telephone number of a contact
3    person and an address to which the tenant can direct
4    payment of rents and any inquiry for additional information
5    about the assignment or the assignee's right to enforce the
6    assignment; and
7        (7) contain a statement that the tenant may consult a
8    lawyer if the tenant has questions about its rights and
9    obligations.
10    (b) If an assignee enforces an assignment of rents under
11this Section, the date of enforcement is the date on which the
12tenant receives a notification substantially complying with
13subsection (a).
14    (c) Subject to subsection (d) and any other claim or
15defense that a tenant has under law of this State other than
16this Act, following receipt of a notification substantially
17complying with subsection (a):
18        (1) a tenant is obligated to pay to the assignee all
19    unpaid accrued rents and all unaccrued rents as they
20    accrue, unless the tenant has previously received a
21    notification from another assignee of rents given by that
22    assignee in accordance with this Section and the other
23    assignee has not canceled that notification;
24        (2) unless the tenant occupies the premises as the
25    tenant's primary residence, a tenant that pays rents to the
26    assignor is not discharged from the obligation to pay rents



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1    to the assignee;
2        (3) a tenant's payment to the assignee of rents then
3    due satisfies the tenant's obligation under the tenant's
4    agreement with the assignor to the extent of the payment
5    made; and
6        (4) a tenant's obligation to pay rents to the assignee
7    continues until the tenant receives a court order directing
8    the tenant to pay the rent in a different manner or a
9    signed document from the assignee canceling its
10    notification, whichever occurs first.
11    (d) A tenant that has received a notification under
12subsection (a) is not in default for nonpayment of rents
13accruing within 30 days after the date the notification is
14received before the earlier of:
15        (1) 10 days after the date the next regularly scheduled
16    rental payment would be due; or
17        (2) 30 days after the date the tenant receives the
18    notification.
19    (e) Upon receiving a notification from another creditor
20that is entitled to priority under Section 5(c) that the other
21creditor has enforced and is continuing to enforce its interest
22in rents, an assignee that has given a notification to a tenant
23under subsection (a) shall immediately give another
24notification to the tenant canceling the earlier notification.
25    (f) An assignee's failure to give a notification under
26subsection (a) to any person holding a recorded assignment of



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1rents does not affect the effectiveness of the notification as
2to the assignor and those tenants receiving the notification.
3However, the person entitled to the notification is entitled to
4any relief permitted by law of this State other than this Act.
5    (g) An assignee that holds a security interest in rents
6solely by virtue of Section 4(a) may not enforce the security
7interest under this Section while the assignor occupies the
8real property as the assignor's primary residence.
9    Section 10. Notification to tenant; form. No particular
10phrasing is required for the notification specified in Section
119. However, the following form of notification, when properly
12completed, is sufficient to satisfy the requirements of Section

15    Tenant: .................................................
Name of Tenant
17    Property Occupied by Tenant (the
18    "Premises"): ......................
20    Landlord: .........................
Name of Landlord



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1    Assignee: .........................
Name of Assignee
3    Address of Assignee and Telephone Number of Contact Person
4    Address of Assignee: ....................................
5    Telephone number of person to contact: ..................
6         1. The Assignee named above has become the person
7    entitled to collect your rents on the Premises listed above
8    under ...................................................
Name of document
10    (the "Assignment of Rents") dated ......................,
12    and recorded at .....................................
Recording data
14    with the County Clerk or Recorder of .............County.
County of Recording
16    You may obtain additional information about the Assignment
17    of Rents and the Assignee's right to enforce it at the



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1    address listed above.
2        2. The Landlord is in default under the Assignment of
3    Rents. Under the Assignment of Rents, the Assignee is
4    entitled to collect rents from the Premises.
5        3. This notification affects your rights and
6    obligations under the agreement under which you occupy the
7    Premises (your "Agreement"). In order to provide you with
8    an opportunity to consult with a lawyer, if your next
9    scheduled rental payment is due within 30 days after you
10    receive this notification, neither the Assignee nor the
11    Landlord can hold you in default under your Agreement for
12    nonpayment of that rental payment until 10 days after the
13    due date of that payment or 30 days following the date you
14    receive this notification, whichever occurs first. You may
15    consult a lawyer at your expense concerning your rights and
16    obligations under your Agreement and the effect of this
17    notification.
18         4. You must pay to the Assignee at the address listed
19    above all rents under your Agreement which are due and
20    payable on the date you receive this notification and all
21    rents accruing under your Agreement after you receive this
22    notification. If you pay rents to the Assignee after
23    receiving this notification, the payment will satisfy your
24    rental obligation to the extent of that payment.
25         5. Unless you occupy the Premises as your primary
26    residence, if you pay any rents to the Landlord after



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1    receiving this notification, your payment to the Landlord
2    will not discharge your rental obligation, and the Assignee
3    may hold you liable for that rental obligation,
4    notwithstanding your payment to the Landlord.
5         6. If you have previously received a notification from
6    another person that also holds an assignment of the rents
7    due under your Agreement, you should continue paying your
8    rents to the person that sent that notification until that
9    person cancels that notification. Once that notification
10    is canceled, you must begin paying rents to the Assignee in
11    accordance with this notification.
12         7. Your obligation to pay rents to the Assignee will
13    continue until you receive either:
14            (a) a written order from a court directing you to
15        pay the rent in a manner specified in that order; or
16            (b) written instructions from the Assignee
17        canceling this notification.
18    Assignee: .........................
Name of Assignee
20    By: ................
Officer/authorized agent of Assignee
22    Section 11. Effect of enforcement. The enforcement of an
23assignment of rents by one or more of the methods identified in



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1Sections 7, 8, and 9, the application of proceeds by the
2assignee under Section 12 after enforcement, the payment of
3expenses under Section 13, or an action under Section 14(d)
4does not:
5        (1) make the assignee a mortgagee in possession of the
6    real property;
7        (2) make the assignee an agent of the assignor;
8        (3) constitute an election of remedies that precludes a
9    later action to enforce the secured obligation;
10        (4) make the secured obligation unenforceable; or
11        (5) limit any right available to the assignee with
12    respect to the secured obligation.
13    Section 12. Application of proceeds. Unless otherwise
14agreed, an assignee that collects rents under this Act or
15collects upon a judgment in an action under Section 14(d) shall
16apply the sums collected in the following order to:
17        (1) the assignee's reasonable expenses of enforcing
18    its assignment of rents, including, to the extent provided
19    for by agreement and not prohibited by law of this State
20    other than this Act, reasonable attorney's fees and costs
21    incurred by the assignee;
22        (2) reimbursement of any expenses incurred by the
23    assignee to protect or maintain the real property subject
24    to the assignment;
25        (3) payment of the secured obligation;



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1        (4) payment of any obligation secured by a subordinate
2    security interest or other lien on the rents if, before
3    distribution of the proceeds, the assignor and assignee
4    receive a notification from the holder of the interest or
5    lien demanding payment of the proceeds; and
6        (5) the assignor.
7    Section 13. Application of proceeds to expenses of
8protecting real property; claims and defenses of tenant.
9    (a) Unless otherwise agreed by the assignee, and subject to
10subsection (c), an assignee that collects rents following
11enforcement under Section 8 or 9 need not apply them to the
12payment of expenses of protecting or maintaining the real
13property subject to the assignment.
14    (b) Unless a tenant has made an enforceable agreement not
15to assert claims or defenses, the right of the assignee to
16collect rents from the tenant is subject to the terms of the
17agreement between the assignor and tenant and any claim or
18defense arising from the assignor's nonperformance of that
20    (c) This Act does not limit the standing or right of a
21tenant to request a court to appoint a receiver for the real
22property subject to the assignment or to seek other relief on
23the ground that the assignee's nonpayment of expenses of
24protecting or maintaining the real property has caused or
25threatened harm to the tenant's interest in the property.



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1Whether the tenant is entitled to the appointment of a receiver
2or other relief is governed by law of this State other than
3this Act.
4    Section 14. Turnover of rents; commingling and
5identifiability of rents; liability of assignor.
6    (a) In this Section, "good faith" means honesty in fact and
7the observance of reasonable commercial standards of fair
9    (b) If an assignor collects rents that the assignee is
10entitled to collect under this Act:
11        (1) the assignor shall turn over the proceeds to the
12    assignee, less any amount representing payment of expenses
13    authorized by the assignee; and
14        (2) the assignee continues to have a security interest
15    in the proceeds so long as they are identifiable.
16    (c) For purposes of this Act, cash proceeds are
17identifiable if they are maintained in a segregated account or,
18if commingled with other funds, to the extent the assignee can
19identify them by a method of tracing, including application of
20equitable principles, that is permitted under law of this State
21other than this Act with respect to commingled funds.
22    (d) In addition to any other remedy available to the
23assignee under law of this State other than this Act, if an
24assignor fails to turn over proceeds to the assignee as
25required by subsection (b), the assignee may recover from the



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1assignor in a civil action:
2        (1) the proceeds, or an amount equal to the proceeds,
3    that the assignor was obligated to turn over under
4    subsection (b); and
5        (2) reasonable attorney's fees and costs incurred by
6    the assignee to the extent provided for by agreement and
7    not prohibited by law of this State other than this Act.
8    (e) The assignee may maintain an action under subsection
9(d) without bringing an action to foreclose any security
10interest that it may have in the real property. Any sums
11recovered in the action must be applied in the manner specified
12in Section 12.
13    (f) Unless otherwise agreed, if an assignee entitled to
14priority under Section 5(c) enforces its interest in rents
15after another creditor holding a subordinate security interest
16in rents has enforced its interest under Section 8 or 9, the
17creditor holding the subordinate security interest in rents is
18not obligated to turn over any proceeds that it collects in
19good faith before the creditor receives notification that the
20senior assignee has enforced its interest in rents. The
21creditor shall turn over to the senior assignee any proceeds
22that it collects after it receives the notification.
23    Section 15. Perfection and priority of assignee's security
24interest in proceeds.
25    (a) In this Section:



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1        (1) "Article 9" means Article 9 of the Uniform
2    Commercial Code or, to the extent applicable to any
3    particular issue, Article 9 of the Uniform Commercial Code
4    as adopted by the state whose laws govern that issue under
5    the choice-of-laws rules contained in Article 9 as adopted
6    by this State.
7        (2) "Conflicting interest" means an interest in
8    proceeds, held by a person other than an assignee, that is:
9            (A) a security interest arising under Article 9; or
10            (B) any other interest if Article 9 resolves the
11        priority conflict between that person and a secured
12        party with a conflicting security interest in the
13        proceeds.
14    (b) An assignee's security interest in identifiable cash
15proceeds is perfected if its security interest in rents is
16perfected. An assignee's security interest in identifiable
17noncash proceeds is perfected only if the assignee perfects
18that interest in accordance with Article 9.
19    (c) Except as otherwise provided in subsection (d),
20priority between an assignee's security interest in
21identifiable proceeds and a conflicting interest is governed by
22the priority rules in Article 9.
23    (d) An assignee's perfected security interest in
24identifiable cash proceeds is subordinate to a conflicting
25interest that is perfected by control under Article 9 but has
26priority over a conflicting interest that is perfected other



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1than by control.
2    Section 16. Priority subject to subordination. This Act
3does not preclude subordination by agreement as to rents or
5    Section 17. Uniformity of application and construction. In
6applying and construing this Uniform Act, consideration must be
7given to the need to promote uniformity of the law with respect
8to its subject matter among states that enact it.
9    Section 18. Relation to Electronic Signatures in Global and
10National Commerce Act. This Act modifies, limits, and
11supersedes the federal Electronic Signatures in Global and
12National Commerce Act (15 U.S.C. Section 7001, et seq.) but
13does not modify, limit, or supersede Section 101(c) of that Act
14(15 U.S.C. Section 7001(c)) or authorize electronic delivery of
15any of the notices described in Section 103(b) of that Act (15
16U.S.C. Section 7003(b)).
17    Section 19. Application to existing relationships.
18    (a) Except as otherwise provided in this Section, this Act
19governs the enforcement of an assignment of rents and the
20perfection and priority of a security interest in rents, even
21if the document creating the assignment was signed and
22delivered before the effective date of this Act.



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1    (b) This Act does not affect an action or proceeding
2commenced before the effective date of this Act.
3    (c) Section 4(a) of this Act does not apply to any security
4instrument signed and delivered before the effective date of
5this Act.
6    (d) This Act does not affect:
7        (1) the enforceability of an assignee's security
8    interest in rents or proceeds if, immediately before the
9    effective date of this Act, that security interest was
10    enforceable;
11        (2) the perfection of an assignee's security interest
12    in rents or proceeds if, immediately before the effective
13    date of this Act, that security interest was perfected; or
14        (3) the priority of an assignee's security interest in
15    rents or proceeds with respect to the interest of another
16    person if, immediately before the effective date of this
17    Act, the interest of the other person was enforceable and
18    perfected, and that priority was established.
19    Section 20. (Blank).
20    (765 ILCS 5/31.5 rep.)
21    Section 21. Repeal. The Conveyances Act is amended by
22repealing Section 31.5.".