Illinois Foreclosure Laws
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Illinois is referred to as a lien theory state wherein the title of the property stays as security for the loan in question. A mortgage is the document through which the lien is placed on properties. Illinois does not permit power of sale foreclosures.
The final ruling on a foreclosure is issued through a court, because lenders in Illinois have to go through a judicial foreclosure procedure through a court. The sale of the property is through a sale that has been publicly notified. A Circuit Court is one which has jurisdiction over foreclosures in Illinois. Circuit Courts in Illinois are broken down according to Counties, and it is these Chancery Divisions that handle foreclosures. A complaint, alongside a lis pendens (a recorded document used to provide public notice about the foreclosure on the property) needs to be filed in the Circuit Court.
A party, in the State of Illinois, may offer a Deed in lieu of foreclosure, which in effect has the lender holding the deed on the property. In cases where a lender ends up accepting the Deed in lieu of foreclosure, no deficiency judgment is provided.
In cases where legal action has begun, a Consent Foreclosure can be requested by the owner of the property which can prevent a deficiency judgment, based on the discretion of the judiciary. The owner of the property, though, can be held liable for the incurred attorney fees and court costs.
The documents are called the mortgage or the note, and a security agreement in cases of commercial transactions. Occasionally the security agreement is fused with the mortgage document. In order to confirm the loan and its repayment terms, which are included in the note, a mortgage needs to be filed.
It can take about 215 days for a foreclosure that is uncontested to take effect; this does depend on the schedule of the court. The process can be stalled if the action is contested in the court by the borrower, if delays are sought, if an adjournment of the hearing is sought or if the borrower files for bankruptcy. Owners of property in Illinois have the right to re-establish mortgages in default within a ninety day period of the foreclosure complaint’s personal service. They also have a thirty day period after the confirmation of the foreclosure sale in which they can continue to possess and occupy the property, at the expiry of this period the property must be vacated.
Illinois has no post-foreclosure sale statutory right of redemption through which a foreclosed property can be reclaimed by the owner upon payment of the unpaid loan and costs. In cases of residential properties, there exists a seven month redemption right from when the filing of the foreclosure complaint takes place and a three month redemption period from when the final judgment on the foreclosure is entered. Until the end of these time periods, the foreclosure sale cannot take place. Redemption and reinstatement rights can be exercised only once in a five year period.
In cases where a property sells for less than the amount outstanding on the said loan at the public auction sale the lender may obtain a deficiency judgment. This results in the borrower owing to the lender the difference of what the property was sold for and the loan amount. However, in cases on Deed in lieu of foreclosure and Consent Foreclosure, deficiency judgments are not allowed.
Foreclosures in Illinois are governed by the laws that are incorporated in 735 ILCS 5/Art XV.
