Dickson Law Group, LLC

Divorce, Bankruptcy, and General Practice Lawyers

5415 Bull Valley Road
McHenry, Illinois 60050
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john@dicksonlawgroup.com

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Evictions in the time of COVID-19, an Illinois FAQ

July 6, 2020 By John P. Dickson

The purpose of this blog post is to answer the most frequently asked questions that I receive as an Illinois eviction attorney. Because the COVID-19 pandemic and our governments’ responses are changing daily, the information contained in this post is likely to change. This information, however, is current as of July 6, 2019.

I am unable to pay rent. Can my landlord evict me for non-payment of rent?

No, not until late July 2020 at the soonest. For regular tenants of residential property (i.e. you live in the property you rent), two sets of laws govern what your landlord can and cannot do right now if you cannot pay rent.

First, there are Illinois Executive Orders. Governor J.B. Pritzker issued the first statewide disaster proclamation on March 12, 2020. This disaster proclamation was limited by its own terms to only being in effect for 30 days. The disaster proclamation has been continuously renewed every time it has been about to expire, with the most recent proclamation, the Fifth Gubernatorial Disaster Proclamation, being made on June 26, 2020 and being set to expire at the end of the day on July 26, 2020. It may be extended one or more additional times.

While there is a gubernatorial disaster proclamation in effect, Executive Order 2020-30 provides that “A person or entity may not commence a residential eviction action pursuant to or arising under [the Eviction Act], unless a tenant poses a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation.”

For eviction cases relating to residential premises that are allowed to be in court, your landlord can proceed in court and obtain an eviction judgment against you. However, that eviction order cannot be executed. Executive Order 2020-10 provides that “all state, county, and local law enforcement officers in the State of Illinois are instructed to cease enforcement of orders of eviction for residential premises for the duration of the Gubernatorial Disaster Proclamation.” Therefore, until the Gubernatorial Disaster Proclamation is allowed to expire by the Governor, even if your landlord has an eviction order against you, the Sheriff cannot execute that order (i.e. show up at the house, force you to leave, and move your stuff to the curb).

So, unless your landlord started his eviction case against you prior to April 23, 2020, it is illegal for your landlord to file an eviction suit against you under state law now, and even if your landlord is allowed to be in court, you cannot be forced to move out of the property until the Governor says so.

Second, in addition to the state executive orders governing evictions in Illinois, there are federal laws at play. On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) (CARES Act) into law. Section 4024 of the CARES Act applies to tenant-occupied residential rental properties with a federally-secured loan (e.g. Fannie Mae, Freddie Mac, FHA, VA) and prohibits landlords from initiating eviction proceedings or “charg[ing] fees, penalties, or other charges” against a tenant for the nonpayment of rent until after August 24, 2020. Section 4024(c) of the CARES Act additionally requires a landlord of a property to which the CARES Act applies to serve a 30-day notice if seeking to evict the tenant for any reason, not just non-payment of rent, and that 30-day notice cannot be served until after August 24, 2020.

How do you know whether your landlord is restricted by the CARES Act? That is a difficult question to answer. Fannie Mae and Freddie Mac have loan look-up tools on their websites that allow you to check to see if the loan is insured by either of those entities, but they require the loan holder’s social security number–good luck getting that. For VA loans, there may be some indication from the mortgage recorded with the county recorder that it is a VA loan.

On May 22, 2020, the Illinois Supreme Court issued a rule requiring landlords to include a certification with their filings stating whether the CARES Act applies to them. If your landlord lies on that form, or if your landlord fills it out without understanding what he’s certifying, it will be very difficult to disprove this statement.

So, the short answer is that if the CARES Act applies, your lanldord will have to serve you with a 30-day notice after August 24, 2020, that notice cannot expire for 30 days after service, and the earliest we will see viable eviction cases filed for properties subject to the CARES Act will be late September 2020.

What about commercial property? Can my landlord evict me from my commercial space for non-payment of rent?

Yes and no. There is nothing prohibiting a commercial landlord from filing an eviction lawsuit right now. However, Executive Order 2020-30 provides that “All state, county, and local law enforcement officers in the State of Illinois are instructed to cease enforcement of orders of eviction for non-residential premises, unless the tenant has been found to pose a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation.” So, your landlord can file suit, litigate the case and win an order of eviction against you. However, until the gubernatorial disaster proclamation is lifted the Sheriff will not execute the eviction order. Because the sheriff is the only person entitled to execute eviction orders, you will be stuck in limbo until the disaster proclamations are lifted.

Do I still have to pay rent?

Yes. Both the Illinois executive orders relating to eviction and the federal CARES Act expressly state that nothing in those laws relieves you of the obligation to pay rent. It is just that your landlord cannot use the legal remedy of eviction if you fail to pay rent. It is in your best interest to attempt to pay rent. When the Gubernatorial Disaster Proclamations expire, you do not want to be faced with a bill for several months of rent and no way to pay it. You may be forced into bankruptcy if you are faced with such a large bill at the end of this pandemic.

I haven’t been paid rent in several months. What can I do?

Most mortgage loans are offering the ability to place your mortgage into forbearance–you still owe the money and interest is still accruing, but your obligation to pay right now is suspended. You should immediately investigate whether your lender will grant you a forbearance.

Additionally, it may be in your best interest to work something out with our tenant. I have had success negotiating agreements between tenants and landlords where the tenant agrees to move out in exchange for something. Sometimes the landlord pays the tenant to leave. Sometimes the landlord agrees to waive past-due rent. This type of settlement negotiation will not make you whole, but it will stop the bleeding. As unfortunate and unfair as it sounds, walking away battered, bruised but still alive is better than financially bleeding to death.

One thing you definitely should not do is engage in self-help. I should not have to say this, but changing the locks and throwing all of your tenants’ stuff out on the curb is a bad idea. Threatening them with physical harm is a bad idea. Harassing them constantly is a bad idea. Don’t do it.

I would like to collect an old judgment against a former tenant. Can I do that right now?

No. Executive Order 2020-25 suspends basically all of the ways to collect a judgment for consumer debt, and rent for residential property is a consumer debt. You will have to wait until the gubernatorial disaster proclamations expire.

Filed Under: Uncategorized

What late fees can an Illinois landlord charge?

January 28, 2020 By John P. Dickson

If you are a landlord of either commercial or residential property in Illinois, you need to know what late fees you can charge your tenants. This blog post will shed some light on late fees in Illinois and helps you understand why you should hire an experienced eviction attorney.

Being a landlord is hard. Most things you need to know are not obvious.

The rule for late fees is not 20% or $20 in Illinois.

I am going to start this post with a cautionary tale. There is a shocking amount of really bad advice floating around the internet about what late fees an Illinois landlord can charge tenants. Landlords giving advice to each other on internet forums commonly cite 770 ILCS 95/7.10 for the proposition that “a late fee of $20 or 20% of the rental fee for each month an occupant does not pay rent, whichever is greater, is deemed reasonable.” Redditors pass around the same bad information. Non-attorney bloggers give the same bad advice. Property managers also seem to think this is the rule.

What all of these non-attorneys don’t get is that the 20% or $20 rule for late fees of 770 ILCS 95/7.10 only applies to self-storage units. That fact should be obvious to anyone who bothered to read the law they cite, which is the “Self-Service Storage Facility Act.” The 20% or $20 rule for late fees does not apply to residential leases. The 20% or $20 rule for late fees does not apply to commercial leases. It only applies to self-storage lockers.

This is why you should hire an experienced eviction attorney. An eviction attorney can help you understand what late fees you can charge your tenants. An eviction attorney can set you up with a solid, enforceable lease. Hiring an eviction attorney during the eviction process will give you the best chance to collect the late fees you’re owed. Doing it yourself and relying on Google to learn how to become a landlord is a bad strategy.

There is not a firm rule for what late fees you can charge your tenant in Illinois.

Illinois considers a lease to be like any other contract. The standard rules for contracts apply to leases. Illinois contract law considers late fees in contracts or leases to be a form of “liquidated damages.” Liquidated damages are disfavored under Illinois law, and our courts will not enforce them if given the chance.

To have a chance of a court awarding a landlord her late fees, the late fees (1) must have been intended to compensate the landlord for damages that might arise from the late payment, (2) the amount of late fees must be reasonable and bear some relationship to the damages incurred by the landlord due to late payment, and (3) the landlord’s actual damages from the late payment must be uncertain in amount and difficult to prove.

What this means is that a court will look at the late fees a landlord attempts to charge the tenant differently than the landlord looks at them. Landlords want to charge late fees to punish tenants for paying late. Courts are not supposed to care about that. Courts only care about whether the landlord was damaged by the late payment.

So, how much is reasonable to charge for a late fee? There is no hard and fast rule other than that smaller late fees are more likely to be enforced by courts than big ones. A 5% late fee charged once for each late payment (i.e. an $80 one-time late fee for a late $1,600 rent payment) is probably reasonable. There is no guarantee, but I have not seen judges balk at that. At the other end of the spectrum, a late fee of $30 per day (about $900 per month) is almost certainly too much and would likely not be enforced by a judge for residential leases.

A judge would be especially likely to enforce your late fee provision if you can link it to actual damages that you incur. If you rely on your tenant to pay her rent on time so that you can pay your mortgage on time, and if you suffer a late fee from your mortgage lender because you could not pay the mortgage for the rental unit, the judge would likely uphold a late fee charged to your tenant approximating your loss.

Do not ask for too much of a late fee. You won’t get it in court.

As I explained above, your late fees have to be reasonable. If they are not reasonable, a judge will not enforce them. If you ask for too high of a late fee, the judge will not do you the favor of reducing it to something the judge deems reasonable. The judge will just decline to give you your late fees in court. It’s all or nothing.

So, in setting late fees, landlords have to walk a fine line between setting late fees too low (which could encourage tenants to pay late) and setting late fees too high (which would not be enforced in court). You should talk to an eviction attorney before you sign a lease with your tenant to talk this issue over.

Chicago and Evanston are different. Talk to a local attorney.

As of the date this was posted, Chicago and Evanston have municipal ordinances that supersede generally applicable Illinois law. For example, in Chicago the maximum late fee for residential property is $10 on the first $500 monthly rent plus 5% an any additional monthly rent (e.g. the maximum late fee in Chicago on $2,000 in monthly rent is a one-time late fee of $85). Evanston has a similar law.

If you are a landlord in Chicago, Evanston, or any other municipality with a residential landlord-tenant ordinance, you really need to talk with an attorney before entering into a lease with a tenant because both ordinances have steep penalties for violating them. I am based out of McHenry County, Illinois. I do not regularly practice in Evanston or Chicago, so I am not the attorney to talk to for that. Talk to somebody who has experience down there.

That said, if you are not in Chicago or Evanston, I am happy to talk to any landlord or tenant for free, before signing your lease or after the lease is ready to end, to discuss your options. Give me a call at 815-317-5193 or drop me an email.

Filed Under: Uncategorized

Reaching out to veterans on Veterans Day

November 11, 2015 By John P. Dickson

As most of us enjoy a day off work to observe Veterans Day, it is important to take a moment to reflect about the reason why today is a national holiday. I encourage everyone reading this to take a moment to do something good for a veteran in your life, and at the end of this post there is a suggestion about how you can help.

I love America. America wouldn't exist if it weren't for the sacrifices of our veterans.

I love America. America wouldn’t exist if it weren’t for the sacrifices of our veterans.

Why do we observe Veterans Day on November 11?

It is no coincidence that Veterans Day is observed on November 11th each year. At 5:00 a.m. on November 11, 1918, an armistice was signed between the Allies and German Empire ending combat between the two forces with an effective time of eleven o’clock that day–the 11th hour of the 11th day of the 11th month of 1918. All other members of the Central Powers had agreed to separate armistices in the month prior (Bulgaria on September 29, Ottoman Empire on October 30, and Austro-Hungarian Empire on November 3), so the Armistice of November 11, 1918 was the true end of combat in World War I.

We began observing Armistice Day on November 11, 1919 as a sign of respect for the roughly 20 million people who died in World War I, and converted that holiday to Veterans Day in 1954 to honor all military veterans of the United States.

What should you do this Veterans Day?

I encourage you to do two brief things to honor or veterans today. First, observe a moment of silence and think about the sacrifices made by our military veterans to preserve our nation. Say a quick prayer asking for an end to war and suffering. Say a prayer to give thanks for the sacrifices made by our veterans.

Second, take a look at the brochure I have attached below which outlines the services provided by the McHenry County Veterans Assistance Commission. If you know a veteran or a veteran’s widow in need (financial assistance, medical assistance, application for military benefits), get that person in contact with the VAC. A surprising number of veterans in the area are unaware of the VAC and the services it provides to veterans and their widows at no cost. You can make an incredible difference in the life of a veteran or veteran’s widow just by making a couple of phone calls.

God bless America, and thanks for your time.

2015-11-11 McHenry County VAC Brochure

Filed Under: Uncategorized

Property tax appeals begin now in Nunda (McHenry County)

November 6, 2015 By John P. Dickson

As a friendly heads up, Nunda Township of McHenry County, Illinois published its property tax assessments for tax year 2015 (taxes payable in 2016) on Monday. If you believe your home or other property has been over assessed by the Nunda Township Assessor (look up your assessment at this link), the deadline to file an appeal is Wednesday, December 2, 2015. 

We will help you appeal your residential property taxes for a flat fee of $350. No gimmicks, no hidden charges, no bills years from now asking for part of your tax savings.

Many McHenry County properties are over assessed. Tax relief available for those who qualify.

Many McHenry County properties are over assessed. Tax relief available for those who qualify.

Property tax appeals: Not rocket science, but you probably need help.

If you believe your property has been over-assessed (meaning that the valuation of your property is greater than what you believe price the sale price would be), you need to act quickly. If you do not file a properly-formatted appeal with the McHenry County Board of Review before the deadline, you will be stuck paying too much in taxes for another year. Although appealing your property taxes is not rocket science, many appeals filed by homeowners are rejected because they are either improperly formatted or they do not allege adequate evidence to support an appeal. With thousands of dollars in taxes on the line, ask yourself whether it is worth it to take the chance that you can do it right and succeed.

Dickson Law Group makes the McHenry County property tax appeal process easy.

There could potentially be thousands of dollars of property taxes on the line if you attempt to appeal your taxes yourself and mess it up. We are experienced in appealing taxes and have a 100% success rate. We are able to boast a 100% success rate because if we believe that there is insufficient evidence to support an appeal, we won’t take your money to file it.

Dickson Law Group’s process for appealing taxes comes in two stages:

  1. For a flat, up front fee of $50, we will review comparable sales in your neighborhood to determine on a preliminary basis whether your property is over-assessed. If it doesn’t make sense to file a property tax appeal, we will let you know.
  2. For $300 more (for a total fee of $350) we will prepare your property tax appeal, make sure it is filed in a timely basis, and argue the property tax appeal before the Board of Review on your behalf. We may recommend that you purchase an appraisal of the property from a licensed appraiser (and the going rate at least as of a couple of weeks ago was $270, but that is your choice), but the attorney fee remains the same for this.
  3. We do not charge anything on the back end for residential property tax appeals. $350 is all you will have to pay us, and maybe $270 to an appraiser if it makes sense. There are no hidden fees, undisclosed costs, nothing.

Dickson Law Group has a proven track record winning property tax appeals.

Although every appeal is unique, and we can’t guarantee that your specific property tax appeal will be a success, but dozens of home and property owners around the northern suburbs trust us every year to appeal their taxes.

Here’s a recent success story: This Monday, John Dickson argued a property tax appeal before the Lake County Board of Review for a million-dollar home. The township assessor had steadily increased the home’s assessment every year over the past decade by tens of thousands of dollars. The homeowners filed their own appeal each of the past three years and lost every single time. This year the township assessor tried to raise their assessment to over $1,045,000, and my clients finally had enough of it.

The township was absolutely nasty to us and aggressively challenged our appeal. Township assessors hate to admit that they’re wrong. The township’s argument in response to our appeal mocked our appraiser’s estimate and talked about how the basis for the appeal was “ridiculous.” Don’t believe me? Here’s the cover sheet for the township assessor’s response, redacting my clients’ personal information:

Their response was just as mean throughout.

The rest of the township assessor’s response was just as mean throughout.

 

We won. We won because we were right. Childish name-calling doesn’t stand up to facts.

Our victory resulted in an over $95,000 reduction in the valuation of my clients’ home. That corresponds to about $12,000 in tax savings for my clients over the next four years. I am beyond happy with the result, and I am sure my clients are as well.

No pressure, but even though the Nunda Township property tax appeal deadline is December 2, you need to get started now.

We accept a limited number of property tax appeals each year on a first-come-first-served basis. This ensures that our property tax appeal clients receive top-notch customer service while maintaining our preexisting obligations to serve our other clients. Most appraisers get booked solid very quickly this time of year. If your property needs an appraiser to support the valuation of your property, we will probably not be able to find one at the last second.

Grafton Township and Algonquin Township have not published their assessments as of November 6, 2015.

Grafton and Algonquin home owners should monitor the Board of Review’s list of publication dates to figure out when their property tax assessments are published. I anticipate that one of the two townships property tax assessments will be published within a week, with the second of the two townships to be published the week after that (the Board of Review staggers the publication dates to avoid several hundred homeowners waiting in line on the final date). When Grafton and Algonquin publish, you should reach out to my office to discuss the feasibility of a property tax appeal.

Filed Under: Uncategorized

Can you buy a new home after foreclosure or bankruptcy?

August 20, 2015 By John P. Dickson

A lot of people going through foreclosure wonder if they will be able to buy a new home after the foreclosure case concludes. This blog post is designed to be a guide for when and how you can purchase your next home after a foreclosure and/or bankruptcy.

Buying your next home after a foreclosure or bankruptcy is a difficult process. This post explains how long you will have to wait to buy again.

Hoping to buy your next “Home, Sweet Home” after a foreclosure or bankruptcy? You may have to wait. Here’s how long you should expect to wait before you can qualify again.

Note: These guidelines change frequently. These guidelines are good as of the date this post is published, but you should double-check with your lender before assuming that you will qualify for a loan. 

 

Conventional Mortgage Guidelines

Conventional mortgages are insured by Fannie Mae. If Fannie Mae is unwilling to insure the risk that you will not repay your mortgage, then you likely will not qualify. You can reapply for a conventional Fannie-Mae-insured mortgage in the following circumstances:

  • 7 years after your foreclosure case is concluded, as is reported on your credit reports.
  • 4 years after a deed in lieu of foreclosure or short sale is completed.
  • 4 years after your Chapter 7 bankruptcy is discharged.
  • The shorter of 2 years after your Chapter 13 bankruptcy is discharged or 4 years after your Chapter 13 case is dismissed.

Fannie Mae’s guidelines are listed here. You also need good credit and a re-established payment history on your credit report.

 

FHA Guidelines

You can reapply for a FHA-insured mortgage in the following circumstances:

  • 3 years after FHA pays the claim for insurance to your previous lender as the result of a foreclosure, short sale, or deed in lieu of foreclosure.
  • 2 years after your Chapter 7 bankruptcy discharge (which is not the date you filed your petition).
  • 1 year after your Chapter 13 bankruptcy discharge (which is not the date you commenced the Chapter 13 case).

In addition to the waiting period, you need a good credit score and a re-established payment history. Here are the guidelines promulgated by the FHA. Review the following sections of the above link for more information: 4155.1 4.C.2.g (relating to Chapter 7 bankruptcies), 4155.1 4.C.2.h, (relating to Chapter 13 bankruptcies), and 4155.1 4.A.2.g (relating to foreclosures).

 

Your foreclosure defense attorney told you all of this, right?

I prefer to give my clients as much information as possible so that they can determine whether defending a foreclosure, seeking loss mitigation, short selling the house, or pursuing alternative options is right for them. My primary goal with every foreclosure defense client is to help them get their life back on track. Let me help you get your life back on track. I offer a no-obligation-or-cost initial consultation for anyone in bankruptcy who thinks they may need an attorney’s assistance. Give Dickson Law Group a call at 815-317-5193 to set up an appointment.

Filed Under: Mortgage Foreclosure Defense, Uncategorized

Condo and Homeowners Assessments During Foreclosure

August 11, 2015 By John P. Dickson

If your home is in foreclosure, odds are you are having a difficult time paying all of your bills. The bills you receive for condo association assessments or homeowners’ association assessments can be very high, sometimes several hundred dollars per month. Many Illinois homeowners facing tough financial times wonder whether this is one of the bills they can safely stop paying. However, because Illinois law gives condominium associations and homeowners’ associations special remedies under the Forcible Entry and Detainer Act (which is the law we use to evict people from homes), your failure to pay your assessments could result in you being evicted from your home by your condo association or homeowners’ association. If you want to continue living in your home while you work things out with your mortgage company, you need to keep paying your assessments.

Don't lose your condo to your association over unpaid assessments. Even if your home is in foreclosure, it is important that you keep paying your association if you want to keep living in the property.

Don’t lose your condo to your association over unpaid assessments. Even if your home is in foreclosure, it is important that you keep paying your association if you want to keep living in the property.

The law says your association can evict you from the property to recover unpaid assessments.

The Illinois Condominium Property Act (765 ILCS 605/1, et seq.), which governs condominium associations, and the Illinois Common Interest Community Association Act (765 ILCS 160/1-1, et seq.), which governs homeowners’ associations and other forms of property associations, each give your association the power and obligation to assess to each property owner in the association the costs and expenses of maintaining the common areas of the community. These assessments are how, for example, they pay for the common areas to be mowed, landscaped, and plowed.

The obligation to pay these assessments attaches to the property and is a liability of the unit owner personally. So, for example, even if you lose the property in a foreclosure, you still would have liability for the assessments that went unpaid while you were the owner of the property.
Because the debt attaches to the property as well as to you personally, Illinois law gives your condominium or homeowner’s association the power to move against the property as well. Section 9-102 of the Code of Civil Procedure provides that:

[Your association is] entitled to the possession of lands or tenements may be restored thereto under any of the following circumstances:
(7) When any property is subject to the provisions of the Condominium Property Act, the owner of a unit fails or refuses to pay when due his or her proportionate share of the common expenses of such property, or of any other expenses lawfully agreed upon or any unpaid fine.

* * *

(8) When any property is subject to the provisions of a declaration establishing a common interest community and requiring the unit owner to pay regular or special assessments for the maintenance or repair of common areas owned in common by all of the owners of the common interest community or by the community association and maintained for the use of the unit owners or of any other expenses of the association lawfully agreed upon

735 ILCS 5/9-102.
What these two sections mean is that your condo association or homeowners’ association can evict you or anyone living in the property, take possession of the unit, and rent the unit to a third party to recover their past-due assessments. Moreover, because it is nearly impossible to find a short term month-to-month tenant, your association can lease out the property for as long as they need to (typically in increments of one year) to get paid in full.

 

Evictions proceed much quicker than foreclosure cases. Your association will be able to evict you before your foreclosure case concludes.

 

Many people believe that because their foreclosure case has been pending for months or even years that because an eviction suit is filed against them that the foreclosure will wrap up long before the eviction case concludes. It would be a mistake to believe this. The typical eviction case in McHenry County, Illinois takes about three weeks from the date the eviction case is filed until an eviction order is entered. Even if you show up to the first court date for the eviction case, the judge will grant you no more than two weeks to hire an attorney and will promptly set the case for trial after the next court date. You should not expect to be able to drag out an eviction case against you similarly to the way your foreclosure case has been dragging out.

 

How you should proceed if your home is in foreclosure and you have assessments to pay.

Some condo and homeowners’ associations are quick to use the eviction remedy to recover unpaid assessments. Others are extremely reluctant to use this remedy. If it is your intention to stay in your home while the foreclosure case is pending (so that you can, for example, buy some time to work on a loan modification or short sale), you should take the risk and need to keep paying your assessments. If your home is in foreclosure, you need to speak with an experienced foreclosure defense attorney. There are many other pitfalls other than the trap created by not paying your assessments. Some bills like assessments you need to pay, and other bills you can put off paying without jeopardizing your right to possess and occupy your home. I can help you make these decisions, and I offer a free initial consultation for clients whose homes are in foreclosure to help them work out these issues.

Filed Under: Mortgage Foreclosure Defense, Uncategorized

Will you owe after foreclosure? Deficiency judgment basics

July 20, 2015 By John P. Dickson

A common question that I am asked by foreclosure defense clients is whether they will face a money judgment after the foreclosure case is concluded. The answer to that question is probably, but not necessarily. Read on to try to ascertain whether you will owe money after the foreclosure.

It is easy when facing a big judgment from the foreclosure of your house to attempt to ignore it. Never ignore a deficiency judgment.

Facing a personal deficiency judgment from your foreclosure case? Don’t be like this guy and bury your head in the sand.

Basics of deficiency judgments.

A common misunderstanding among Illinois homeowners is that their liability for a mortgage is limited to losing the house. That is not usually true. Your traditional mortgage has two components: (1) a promissory note by which you promise to repay the money loaned to you by the bank, and (2) a mortgage permitting the bank to foreclose your house if you fail to make your payments.

If your house is sold at a foreclosure sale, it might sell for 80-cents on the dollar of what it is worth today. So, if the house you purchased for $250,000 in 2005 is worth $150,000 today, then you can expect the house to sell at the foreclosure sale for less than $150,000 and probably around $120,000. The bank will apply the proceeds of the foreclosure sale (the $120,000 the purchaser pays at the foreclosure sale) to the loan balance. If you owe more than the money paid at the foreclosure sale, then the bank will obtain a personal judgment against you for the balance. This is called a “deficiency judgment” because it represents the deficiency between what you owe and what the house sold for.

 

Not everyone receives a deficiency judgment.

If you filed bankruptcy after you took out the mortgage loan, and if you received a discharge in your bankruptcy, and if you did not “reaffirm” the mortgage loan in the bankruptcy case, then your personal liability for the deficiency (if any) has been discharged. You should speak with the attorney that assisted you with your bankruptcy to confirm that this is correct.

Also, sometimes banks do not seek deficiency judgments from homeowners. There is no rhyme or reason to whether or not the bank will seek to obtain a personal judgment against you. If you are lucky enough that the bank did not obtain a judgment against you at the end of your foreclosure case, congratulations.

Even if the bank did receive a personal judgment against you for the deficiency in your foreclosure case, there is also the possibility that the bank will not attempt to collect it from you. Again, there is no clear rhyme or reason as to whether the bank will seek to collect against you. You could get lucky and the bank will never try to collect. However, because there is a judgment against you for a significant amount of money, your credit score will likely be ruined until you pay the judgment off or file bankruptcy to discharge the judgment debt.

 

Be proactive about your deficiency judgment.

All judgments in Illinois accrue interest at the rate of 9% per year (see 735 ILCS 5/2-1303). 9% per year adds up quickly. If the bank sits on a $100,000 judgment for five years, you would owe $145,000 at that time. If the bank sits on it for ten years, you would owe $190,000. A mid-sized judgment can become a very large judgment in only a few years.

Because of the incredible rate that judgment debts accrue interest, you should think about resolving this sooner rather than later. Bankruptcy is an option for many. Attempting to negotiate with the bank to take less money is also an option. Sticking your head in the sand like an ostrich and hoping that the problem goes away is not an option.

I help debtors with all types of debt defend attempts to collect and to negotiate a reasonable payment of that debt. Although I cannot guarantee that my efforts will succeed (because the court case conclusively proved that you owe the money), I have had success in assisting debtors deal with problem judgments. Give me a call at 815-317-5193 to discuss your options. There is no obligation or fee for the first time we talk.

Filed Under: Mortgage Foreclosure Defense, Uncategorized

Is the Illinois deed in lieu of foreclosure a false hope?

June 20, 2015 By John P. Dickson

This post talks about the Illinois-specific solution to foreclosures called the “deed in lieu.” If you are reading this for advice for a property not located in Illinois, this probably will not be relevant to your case.

When people are deeply underwater on their home and are in (or about to be) in foreclosure, most do some internet research and learn of the possibility of a “deed in lieu” of foreclosure. The mechanics of a deed in lieu are simple in theory. Section 15-1401 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1401) sets forth a process by which (1) you offer to give the foreclosing bank the deed to your house, and (2) in exchange for the deed, you get to walk away from the home with no personal liability. It sounds like a good deal, and for the homeowners who want this solution and succeed at obtaining it, it is in fact a very good deal.

The possibility of a deed in lieu of foreclosure can give Illinois homeowners hope. Don't let that hope be a false hope.

Turning over the keys to your house with an Illinois deed in lieu seems like the best solution to your financial problems. This blog post outlines some issues with the deed in lieu process.

Why you should not think that a deed in lieu will solve your problems.

What’s the catch then? Well, the catch is that banks hate giving you a deed in lieu of foreclosure for several reasons. First, a deed in lieu is only an option when it makes financial sense to the bank. You wouldn’t leave a $100 bill on the ground, and banks won’t give up the opportunity to collect against you unless it is sure that it would be financially worse off by attempting to collect against you. That means that you have to provide income and other financial disclosures to the bank so that the bank knows for sure that they have little chance of ever collecting a dime against you. If you have income or assets that the bank can collect, it will probably desire to attempt to collect it.

Second, banks dislike the deed in lieu process because they get cleaner title to the property following a foreclosure sale. Upon confirmation of the foreclosure judgment and sale, all regular liens on the property (including your second mortgage, any liens recorded on the property from past lawsuits, etc.) are eliminated, giving the bank squeaky-clean title to the property. When you purchased the home, hopefully your real estate attorney explained to you the importance of having clear title lest a previous lienholder seeks to sell the house out from under you because the previous owner did not pay. This process of lien elimination does not result from accepting a deed in lieu. Because the title to the property that the bank receives after the foreclosure sale is cleaner, it is worth more to prospective buyers and therefore a completed foreclosure is more valuable to the bank.

 

You still should ask the bank for a deed in lieu despite what I just told you.

Don’t let this dissuade you from asking for a deed in lieu from the bank if you want it. You might get lucky and find that the bank is willing to accept a deed in lieu. That said, luck is what you are going to need because having a bank accept a deed in lieu of foreclosure is an uphill battle.

 

Hope for a deed in lieu, prepare yourself in case it is rejected.

Owners of underwater homes have many other and more realistic options than the deed in lieu of foreclosure. Bankruptcy is an option if you qualify. Forms of loss mitigation such as the short sale and loan modification are options. Defending the foreclosure case if you have a good faith defense to the case is an option. Even walking away and giving the keys to the bank is an option.

If you are facing foreclosure, I encourage you to give me a call to discuss these options. There is no obligation or fee for the first time we talk. I can review the documents you have received from the bank or court and let you know where you stand. I will also let you know what help I can give to you. You shouldn’t face your foreclosure alone, and even if you walk out of our meeting with a better understanding of the process, you will sleep better at night.

Filed Under: Mortgage Foreclosure Defense, Uncategorized

McHenry County Criminal Expungement Basics

June 2, 2015 By John P. Dickson

I was just hanging around the Courthouse, and I came upon the attached pamphlet published by the State Appellate Defender and the Clerk of Courts for the 22nd Judicial Circuit. It provides some very basic answers to common questions of persons who would like to have their criminal history expunged (e.g. how to file, who is eligible, where to file, how much it will cost). I hope this is helpful. And if you have any questions about the process, do not hesitate to give me a call at 815-317-5193 to chat.

 

2015-05-28 Clerk of Courts State Defender Expungement Packet

Filed Under: Uncategorized

Stopping foreclosure in Illinois in 2015

May 20, 2015 By John P. Dickson

Looking over my recent blog posts and the traffic generated by my past posts on stopping foreclosures in Illinois, it would seem that more people than ever facing foreclosure have questions relating to the process. I primarily practice foreclosure defense and debt relief in McHenry County, Lake County, Kane County, and DuPage County, but this advice may be relevant in other counties and judicial circuits.

When you have kids, stopping your foreclosure is one of the most important things you can do.

Your home is in foreclosure. You can stop your foreclosure and save your family’s home.

Basics of a residential mortgage loans in Illinois.

You have a mortgage, a second mortgage, and/or a home equity line of credit. The loan itself is documented by a promissory note by which you personally promise to repay the loan in a certain time period with certain finance charges (usually fixed or variable interest over the life of the loan with the occasional up-front finance charge). This loan must be repaid by making minimum timely payments. The failure to make the payments as called for by the terms of the note is an event of “default,” meaning that you breached the contract (and a promissory note is nothing more than a special type of contract). Although rare, the defense of payment—i.e. that you actually performed your payment obligations pursuant to the terms of the promissory note—occasionally comes up. If you actually have made all of your payments, that is the most effective defense to stop a foreclosure in Illinois. The burden is on you to prove that you actually made these payments (you can’t just walk in to court and prove that the bank did not receive your payments), so you will need some evidence other than your word to succeed on this defense.

The promise to repay the loan is secured by a mortgage. A mortgage is a document that grants the lender a lien on your real estate property. When it is alleged that you have failed to pay on your loan as called for in the promissory note, the mortgage will also grant the lender the right to foreclose on your property. Mortgages are fairly standardized across the country (Fannie Mae publishes forms that are used in 99.9% of mortgages), and defects in the drafting of these documents are rare. However, if you are interested in stopping your foreclosure, reviewing the mortgage attached to the foreclosure complaint is worth a shot.

If the promissory note and mortgage are in line, there are still defenses to your foreclosure case.

 

Notice requirements prior to filing a foreclosure complaint in Illinois.

Illinois has generous protections for home owners that must be completed before your lender can file a foreclosure suit against you. One of these protections is the obligation of your lender to give you a significant amount of advance notice prior to filing suit.

The first type of these notices is probably set forth in the promissory note (which will be attached to the complaint). Most promissory notes give the lender the right to “accelerate” the balance due on the note in the event of a default, which basically means that if you miss payments, instead of only being able to demand the past-due payments, the lender can demand that you pay the entire thing. Most promissory notes contain a provision that requires that the lender send you one or more written notices that your account is past due and that the lender will consider the balance to be accelerated if you do not bring the loan current within a certain number of days. If your promissory note contains this language (and it probably does) and if you did not receive such a notice from the bank in the manner set forth in the note, this is a potent defense to a foreclosure lawsuit. The argument is basically that the lender had an obligation under the contract created by the promissory note to give you notice, and the lender cannot strictly enforce the contract if it did not strictly adhere to the obligations imposed upon it by the contract.

Another notice is required by the Illinois Mortgage Foreclosure Law. Section 15-1502.5 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1502.5) imposes an obligation on lenders to send you a “Grace Period Notice” alerting you of your right to seek housing counseling and forbidding the lender from initiating a foreclosure suit until that grace period has expired. Lenders occasionally forget to send the Grace Period Notice out, and if you did not receive such a notice that is another defense to your foreclosure case. As of the date of this blog post, this is still good law in Illinois, but it is currently scheduled for repeal on July 1, 2016. If you are reading this blog post after that date, you should check the statute to see if it is still good law.

A third notice is set forth in the Code of Federal Regulations and applies only to federally-insured mortgages. Title 24, Part 203.604 of the Code of Federal regulations (24 CFR 203.604) imposes an obligation on the lender for a federally-insured mortgage to have a face-to-face meeting with the borrower before initiating foreclosure proceedings. I have never defended a foreclosure case where the lender has actually complied with this obligation. Illinois courts will dismiss foreclosure cases based upon the failure of the lender to comply with this federal obligation. See, e.g., Bankers Life Co. v. Denton, 458 N.E.2d 203 (3d Dist. 1983). If you have a mortgage insured by HUD, and if your lender did not attempt to have a face-to-face meeting with you, you have a good chance to stop your foreclosure case.

 

Does the entity suing you have the legal right to?

The ability of a company or person to sue you is called “standing.” Even if you have in fact defaulted on your obligation to pay your mortgage, few entities have the right to drag you into court to obtain a judgment against you.

Standing (or, more importantly, the lack of it for the company suing you) used to be a much bigger issue in the heyday of residential mortgage foreclosures from about 2008 until 2014. Today? Not so much.

There used to be a big problem with lenders receiving the rights to a mortgage loan and executing the documents necessary to effectuate that transfer after the fact. In response to this issue, Illinois Supreme Court Rule 113 was added to our laws to govern the handling of foreclosure complaints. Effective as of May 1, 2013, all foreclosing lenders have to attach a copy of the promissory note as it exists at the time to their complaint. If the promissory note is not endorsed in blank or endorsed to the company suing you, it is readily apparent on the first reading of the complaint. As a result, pretty much every foreclosure case filed in Illinois since May 1, 2013 has included a properly-endorsed promissory note to the complaint.

The company suing you may make a mistake, so it is worth it to review the promissory note to determine whether the company suing you has the right to sue you. If this is the case, the company’s lack of standing to prosecute the lawsuit is another potent way to stop your foreclosure.

 

Can the company prove that you actually defaulted on your obligation to repay the loan?

If the upfront defenses of the lack of notice or standing are not present in your case, not all is lost. You can still force the company suing you to prove their case. The way to accomplish this is more technical than the other defenses, and I will not begin to explain it here. It usually involves some combination of written discovery (interrogatories, requests to admit, and requests for production of documents), oral discovery (depositions of bank officers), and the presentation of evidence in response to summary judgment. In the hands of experienced mortgage foreclosure defense attorneys, many cases can be won at this stage.

 

Is bankruptcy an option?

You have rights under the federal bankruptcy laws. If you are a good candidate for a Chapter 7 or Chapter 13 bankruptcy, you can either propose a plan to bring the mortgage current or discharge the debt you owe before or after the foreclosure case concludes. Bankruptcy is strong medicine that should not be taken lightly. If you are interested in talking about bankruptcy, give me a call to set up an appointment to chat about whether it is a good fit for you. Bankruptcy will temporarily stop a foreclosure case with the automatic stay set forth in the bankruptcy laws, and if your Chapter 13 plan is successful, it can end the entire case.

 

How I can help.

I have experience successfully defending residential and commercial foreclosure cases. In addition to the common defenses I have sketched out in this blog post, I have other tricks up my sleeve that I would not post publicly because the attorneys working for the banks can read this, too. I can help you short sell your house, apply for a loan modification, seek a deed in lieu of foreclosure, or present you other options that would enable you to stop your foreclosure case. In most cases, I can work out a predictable monthly payment plan with my foreclosure defense clients that will avoid you being sideswiped with a $2,000 bill after I need to do a lot of work for you in that month. If we can work out a monthly payment arrangement, it will almost certainly be less than the amount you were paying on your mortgage.

I am happy to sit down and speak with you at no cost or obligation to discuss whether we are a right fit for to help you stop your foreclosure. Give me a call at 815-317-5193 to set up an appointment.

Filed Under: Mortgage Foreclosure Defense, Uncategorized

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Dickson Law Group, LLC is a McHenry County, Illinois law firm authorized to practice in the courts of Illinois and Wisconsin. We provide legal services for individuals and small businesses in the areas of bankruptcy, business law, criminal defense, divorce, family law, personal injury, probate law, real estate law, traffic tickets and DUI defense, estate planning, and litigation.

If you are looking for a McHenry County lawyer or attorney serving Crystal Lake, Lake in the Hills, Cary, Algonquin, Carpentersville, Barrington Hills, Barrington, Lake Barrington, Lakewood, Huntley, Gilberts, Woodstock, Dundee, Island Lake, and McHenry, please contact us to arrange a free, no-obligation consultation.

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