2014 IL App (2d) 130858

No. 2-13-0858

Opinion filed May 29, 2014

______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

______________________________________________________________________________

BANK OF AMERICA, N.A., as Successor by ) Appeal from the Circuit Court

Merger to LaSalle Bank National Association, ) of Kendall County.

Individually and as Authorized Agent, )

)

 Plaintiff and Counterdefendant-Appellee, )

)

v. ) No. 10-CH-869

)

CANNONBALL LLC; DAVID BOSSY; )

TARGET CORPORATION; KOHL’S )

ILLINOIS, INC.; UNKNOWN OWNERS; and )

NONRECORD CLAIMANTS, )

) Honorable

 Defendants ) Alan W. Cargerman

) Timothy J. McCann and

(Home Depot U.S.A., Inc., Defendant and ) Bradley J. Waller,

Counterplaintiff-Appellant). ) Judges, Presiding.

______________________________________________________________________________

JUSTICE McLAREN delivered the judgment of the court, with opinion.

Presiding Justice Burke and Justice Hudson concurred in the judgment and opinion.

OPINION

¶ 1 Bank of America, as successor by merger to LaSalle Bank National Association (LaSalle 

Bank), filed a mortgage foreclosure complaint against Home Depot U.S.A. (Home Depot), et al., 

to enforce various lending agreements that Bank of America had with Cannonball LLC

(Cannonball), in connection with the development of the Kendall Marketplace shopping center 

(shopping center), a multibuilding, multitenant commercial development in Yorkville, Illinois. 
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Home Depot’s counterclaim sought, inter alia, a declaration that, pursuant to its agreements with 

Cannonball, it had certain covenants that ran with the land and were binding against Bank of 

America. Bank of America and Home Depot filed cross-motions for summary judgment. The 

trial court determined that the covenants at issue did not run with the land, granted summary 

judgment in favor of Bank of America, and denied Home Depot’s motion for summary judgment. 

Subsequently, the trial court entered an order confirming the sale of the property at issue. 

¶ 2 On appeal, Home Depot argues that summary judgment should have been granted in its 

favor and denied to Bank of America. Home Depot argues that the covenants run with the land 

and bind Bank of America pursuant to the explicit terms of the pertinent recorded documents and 

the sequence of recording those documents. We agree and reverse.

¶ 3 I. BACKGROUND

¶ 4 In the spring of 2007, Cannonball entered into various agreements leading to the 

development of the shopping center. LaSalle Bank and Cannonball entered into a construction 

loan agreement for the purpose of acquiring real property and constructing the shopping center. 

Around this time, Cannonball sold certain tracts (anchor tracts) within the shopping center to 

Home Depot, Target Corporation (Target), and Kohl’s Illinois, Inc. (Kohl’s) (collectively, the 

anchor stores). Cannonball retained the central and remaining outlying portions of the shopping 

center for sale or lease to other retailers, and it retained roads, driveways, sidewalks, and parking 

areas that were not part of the anchor tracts. The construction loan agreement was secured by a 

mortgage in favor of LaSalle Bank and granting a lien on Cannonball’s property (the mortgaged 

property), consisting of the shopping center except for the anchor tracts.

¶ 5 Also around this time, Cannonball and the anchor stores together entered into an operation 

and easement agreement (OEA) that granted nonexclusive easements to, inter alia, parking, 
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driveway, and sidewalk areas of each party’s tract and the “Common Drive.” Section 6.7 of the 

OEA provides:

“The terms of this OEA and all easements granted hereunder shall constitute covenants 

running with the land and shall bind the Parcels described therein and inure to the benefit of 

and be binding upon each Party.”

¶ 6 In addition, Yorkville issued and sold bonds to provide money to assist in the development 

of the shopping center with on- and off-site improvements. To recover the money, Yorkville 

imposed against all tracts within the shopping center a special tax that was called the “Special 

Service Area Tax” or the “SSA tax.” 

¶ 7 Cannonball and the anchor stores entered into separate purchase agreements. In March

2007, Home Depot and Cannonball entered into a “Real Property Purchase Agreement” (purchase 

agreement) under which Home Depot purchased from Cannonball approximately 10 half-acres of 

land in the shopping center. Paragraph 20(l) of the purchase agreement provides:

“(l) Successors and Assigns. This Agreement shall be binding upon and shall inure 

to the benefit of the respective successors and assigns of the parties hereto (as permitted 

pursuant to the provisions of this Agreement).”

¶ 8 Pursuant to the purchase agreement, Cannonball agreed to reimburse Home Depot for part 

of the SSA tax Home Depot paid (reimbursement right). Paragraph 22(h) of the purchase 

agreement provides: 

“Seller hereby agrees that Seller shall be obligated to reimburse Purchaser for any 

portion of such SSA tax assessment which exceeds an amount equal to $0.50 per square 

foot of Purchaser’s Floor area (as defined in the OEA), exclusive of the garden center. If 

Seller fails to pay any such excess SSA tax assessment within thirty (30) days after 

Purchaser bills Seller therefore, then in addition to any other rights and remedies available 
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to Purchaser, Purchaser shall have lien rights against Seller’s land in the Shopping Center 

in accordance with the terms of the Development agreement. The terms of this Section 

22(h) shall survive the Closing and shall be included in a memorandum of agreement to be 

executed, delivered and recorded by Seller and Purchaser at Closing. The form of the 

memorandum of agreement shall be approved by Seller and Purchaser within the 

Inspection Period; provided, however, Purchaser agrees that the memorandum of 

agreement shall not specifically reference the economic terms of the foregoing 

reimbursement obligation from Seller to Purchaser pursuant to this Section 22(h) which 

shall be a covenant which shall run with the land and bind Seller’s grantees, successors 

and assigns including provisions regarding the SSA Tax.” (Emphasis added.)

¶ 9 Cannonball and Home Depot entered into a development agreement, dated May 15, 2007. 

Section 7.8(c) of the development agreement provides in relevant part:

“[P]ursuant to Section 22(h) of the Purchase Agreement, Developer is obligated to 

reimburse Home Depot for any portion of such [tax] assessment which exceeds, in 

aggregate, an amount equal to $.50 per square foot of Floor Area ***. If Developer fails 

to pay any such excess [tax] assessment within thirty (30) days after Home Depot bills 

Developer therefore [sic], then in addition to any other rights and remedies available to 

Home Depot, Home Depot shall have lien rights against Developer’s Property in 

accordance with the terms of this Agreement.”

The development agreement also provides:

“12.1 Grant of Lien. Developer hereby grants and conveys to Home Depot a lien on 

Developer’s Property to secure the performance by Developer of its obligations hereunder. 

Such lien shall be foreclosed in accordance with this Article 12.

* * *
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12.4 Priority. The priority of a lien created pursuant to this Article 12 shall be 

established solely by reference to the date of the recordation of the Memorandum of 

Development Agreement pursuant to Section 17.4 below; provided, however, such lien 

shall be subordinate to the lien of any first mortgage or deed of trust.

* * *

17.2 Binding Effect. Subject to any provision hereof restricting assignment, this

Agreement shall be binding upon and inure to the benefit of the executing parties and their 

respective successors, assigns, heirs, executors and administrators.”

¶ 10 Cannonball, Home Depot, and LaSalle Bank entered into a payment and priority 

agreement, dated May 15, 2007, that provides, in relevant part:

“Lender shall have no obligations to the City or any of the Anchors under the 

Development agreements unless Lender expressly assumes Developer’s obligations 

thereunder in writing.”

¶ 11 On May 24, 2007, and in the following order, the following documents were recorded with 

the office of the Kendall County recorder: the OEA; a “Memorandum of Agreement” regarding 

the purchase agreement between Cannonball and Home Depot; a “Memorandum of Development 

Agreement” regarding the development agreement between Cannonball and Home Depot; and the 

LaSalle Bank mortgage. The recorded memorandum regarding the purchase agreement provides, 

in part:

“Notice is hereby given of the execution and delivery by the parties of the Purchase 

Agreement (which Purchase Agreement is hereby incorporated herein by reference). 

Notice is specifically provided that Developer has certain reimbursement obligations under 

Section 22(h) of the Purchase Agreement and that if Developer fails to comply with such 

obligations, the Purchase Agreement creates a lien on the property described on Exhibit 
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‘B’ in accordance with lien provisions contained in the Development Agreement. 

Developer’s obligations under Section 22(h) of the Purchase Agreement shall be a 

covenant which shall run with the land and shall be binding upon Seller’s grantees, 

successors, and assigns.”

¶ 12 After Cannonball defaulted under the construction loan agreement, Bank of America filed 

a four-count amended complaint. Counts I through III, against Cannonball and David Bossy 

(Cannonball’s loan guarantor), alleged breach of contract and sought money damages. Count IV,

against Cannonball, Bossy, Home Depot, Target, and Kohl’s, sought the foreclosure of the 

mortgaged property. Regarding Home Depot, Bank of America alleged only the following:

“The recorded and unrecorded claims and interests of this Defendant, if any, including but 

not limited to any actual or potential rights to record liens or exercise any other rights 

against the Property, pursuant to the Home Depot Purchase Agreement, the Home Depot 

[development agreement] or any other agreements, are subordinate and inferior to the lien 

and interest of Agent.”

¶ 13 Home Depot filed an answer to Bank of America’s amended complaint, denying that its 

rights were inferior to those of Bank of America. Home Depot also asserted affirmative defenses 

alleging that the terms of its agreements with Cannonball “affected” Cannonball’s land. In 

addition, with its answer, Home Depot filed a counterclaim against Cannonball, seeking 

$50,395.50, plus attorney fees and costs, and alleging that Cannonball breached the purchase and 

development agreements by failing to reimburse Home Depot for SSA taxes it had paid. This 

claim was later voluntarily dismissed without prejudice.

¶ 14 On February 28, 2011, Bank of America filed motions for default judgment, summary 

judgment, and judgment of foreclosure. Bank of America’s summary judgment motion sought to 
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foreclose and terminate Home Depot’s tax reimbursement rights and lien rights as against any 

purchaser of the mortgaged property following the foreclosure sale. 

¶ 15 Home Depot filed a counterclaim against Bank of America, seeking a declaration that 

Home Depot’s rights under the purchase agreement, the development agreement, and the OEA ran 

with the land and were binding on the grantees, successors, and assigns of Cannonball, including 

Bank of America. Home Depot also filed a motion for summary judgment.

¶ 16 On October 9, 2012, after hearing argument from counsel, the trial court, Judge Alan W. 

Cargerman presiding, granted summary judgment in favor of Bank of America and against Home 

Depot. On May 1, 2012, the trial court, Judge Timothy J. McCann presiding, issued a written 

order of default judgment, summary judgment, and judgment of foreclosure and sale. The trial 

court stated:

“Bank of America’s Motion for Summary Judgment against Home Depot, as it relates to 

Home Depot’s Reimbursement Rights and Home Depot’s SSA Tax Lien Rights is granted 

pursuant to 735 ILCS 5/2-1005. Home Depot’s Reimbursement Rights and Home 

Depot’s SSA Tax Lien Rights are personal between Cannonball and Home Depot and do 

not run with the Mortgaged Property. Upon entry of the final order in this case, Home 

Depot’s Reimbursement Rights and Home Depot’s SSA Tax Lien Rights and Home 

Depot[’s] Claim of Lien are foreclosed and terminated pursuant to 735 ILCS 5/15-1506(c), 

provided, however, that Home Depot’s Reimbursement Rights against Cannonball are not 

affected. The purchaser of the Mortgaged Property at foreclosure sale, as well as its 

grantees, successors and assigns, shall have no obligation to reimburse Home Depot, or 

any person(s) claiming by, through or under it, for any portion of the SSA Tax assessed 

against the Home Depot Tract.”

Regarding Home Depot’s counterclaim against Bank of America, the trial court stated:
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“Home Depot’s Reimbursement Rights and Home Depot’s SSA Tax Lien Rights are 

personal between Cannonball and Home Depot, do not run with the Mortgaged Property, 

and are not binding against Bank of America or any purchaser of the Mortgaged Property at 

this foreclosure sale, and Home Depot’s Motion for Summary Judgment is denied as it 

relates to such rights. Home Depot’s Motion for Summary Judgment is granted in regard 

to all other rights and obligations in the Home Depot Purchase Agreement, Home Depot 

Development Agreement and the OEA, which rights and obligations run with the 

Mortgaged Property and are binding on the purchaser of the Mortgaged Property at this 

foreclosure sale and its grantees, successors and assigns.”

¶ 17 On April 1, 2013, Home Depot filed a motion to reconsider which the trial court denied on 

May 23. On June 17, 2013, a judicial sale of the mortgaged property was conducted by the 

Kendall County sheriff’s department, and Bank of America was the successful bidder. On July 

17, 2013, the trial court, Judge Bradley J. Waller presiding, entered an order confirming the sale. 

On August 15, 2013, a sheriff’s deed was executed conveying the mortgaged property to Bank of 

America. On the same day, Home Depot filed its notice of appeal. Home Depot filed an 

amended notice of appeal on August 23, 2013. 

¶ 18 II. ANALYSIS

¶ 19 Home Depot argues that summary judgment should have been granted to it and denied to 

Bank of America because the covenants run with the land. Summary judgment is appropriate 

only where the pleadings, depositions, admissions, and affidavits, viewed in the light most 

favorable to the nonmovant, show that no genuine issue of material fact exists and that the moving 

party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2010). “By filing 

cross-motions for summary judgment, the parties agree that no factual issues exist and this case 
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turns solely on legal issues subject to de novo review.” Gaffney v. Board of Trustees of the 

Orland Fire Protection District, 2012 IL 110012, ¶ 73. 

¶ 20 The threshold issue in this case is whether the trial court properly “foreclosed and 

terminated” Home Depot’s tax reimbursement and lien rights based on its determination that such 

rights “are personal between Cannonball and Home Depot and do not run with the Mortgaged 

Property.” Home Depot argues that the purchase and development agreements are binding on 

Cannonball’s successors and that the covenants granting Home Depot tax reimbursement and lien 

rights run with the land. Bank of America essentially argues that the agreements are personal 

agreements binding only Home Depot and Cannonball. 

¶ 21 Initially, we note that, during oral argument, Home Depot conceded that any lien it had 

against the mortgaged property for tax reimbursement payments that came due and owing before

Bank of America obtained title to the property could not be enforced against Bank of America. 

See Pembrook Condominium Ass’n-One v. North Shore Trust & Savings, 2013 IL App (2d) 

130288, ¶ 14. Thus, this case involves only whether Home Depot will be able to enforce its tax 

reimbursement and lien rights against Bank of America and its successors and assigns in the 

future. Therefore, we must determine whether the covenants at issue run with the land.

¶ 22 To determine whether a covenant runs with the land, a court looks to whether: (1) the 

grantee and the grantor intended the covenant to run with the land; (2) the covenant touches and 

concerns the land; and (3) there is privity of estate between the party claiming the benefit and the 

party resting under the burden of the covenant. Streams Sports Club, Ltd. v. Richmond, 99 Ill. 2d 

182, 188 (1983). 

¶ 23 In the case at bar, Bank of America does not contest that Cannonball and Home Depot 

intended the covenants to run with the land and there is no doubt that they intended such. Section 

22(h) of the purchase agreement provides that the tax reimbursement and lien rights “shall be a 
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covenant which shall run with the land and bind [Cannonball’s] grantees, successors and assigns.” 

In addition, section 20(l) of the purchase agreement provides that the purchase agreement “shall be 

binding upon *** the respective successors and assigns of the parties.” Further, section 17.2 of 

the development agreement provides that Cannonball’s obligations are binding on its successors 

and assigns. Moreover, the recorded memorandum of the purchase agreement states that

Cannonball’s obligations under section 22(h) of the purchase agreement are a covenant to run with 

the land and “shall be binding on Seller’s grantees, successors, and assigns.” A covenant should 

be interpreted to give effect to the parties’ intent when the covenant was made, as determined by its

express provisions. Id. Accordingly, we conclude that Cannonball and Home Depot intended 

the tax reimbursement and lien rights to run with the land.

¶ 24 Regarding the second part of the test, a covenant touches and concerns the land if it affects 

the use, value, and enjoyment of the property. Home Depot argues that this case is like other 

cases that have held that covenants to pay money, taxes, or fees affect the use, value, and 

enjoyment of property. Bank of America argues that Home Depot’s tax reimbursement and lien 

rights do not touch and concern the land, because these rights are “purely financial covenants” that 

do not affect the property’s use or enjoyment, increase or decrease its value, or affect any action to 

be done or allowed on the property. Bank of America’s labeling of the covenant at issue here as 

“purely financial” is unpersuasive. 

¶ 25 In Streams Sports Club, our supreme court held that an agreement to pay fees for a 

recreational facility, which was adjacent to a condominium complex and part of a common 

building plan, touched and concerned the land. The court explained:

“The sports club is part of a common building plan that the defendant was aware of at the 

time she purchased her unit. Condominium owners can enjoy the benefits of convenient 

sports facilities and also have the burden of furnishing the $216 annual fee.” Id. at 189.
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¶ 26 In United States Fidelity & Guaranty Co. v. Old Orchard Plaza, Ltd. Partnership, 284 Ill. 

App. 3d 765 (1996), the plaintiff leased property from an owner that later defaulted on its 

mortgage. Id. at 767. Prior to default, the plaintiff exercised its right under the lease to vacate 

the premises and receive a “termination payment.” Id. The defendant bank foreclosed on the 

property, and the plaintiff filed an intervenor’s complaint seeking a declaratory judgment that one 

or more of the defendants were liable for the termination payment. Id. at 768. The trial court 

dismissed the plaintiff’s complaint. Id. at 771. On appeal, the plaintiff argued that the 

termination payment provision was a covenant running with the land. Id. at 777. The appellate 

court determined that the plaintiff “adequately alleged” that the covenant touched and concerned 

the land. Id. The court reasoned:

“Here, the covenant requiring the landlord to pay the tenant $2 million if the tenant does 

not exercise an option to extend the term of the lease directly affects the value of both the 

leasehold and of the property. Clearly, without such a provision, the leasehold is worth 

less, and the fee simple is worth more.” Id.

¶ 27 In C-B Realty & Trading Corp. v. Chicago & North Western Ry. Co., 198 Ill. App. 3d 926 

(1990), the plaintiffs, successors in title to a freight warehouse property, filed suit against the 

defendants, successors in interest to a railway. Id. at 929. The parties’ predecessors in interest 

entered into a contract allowing for the building of a railway bridge over the warehouse, and the 

defendants’ predecessors promised to pay three-fourths of all taxes levied against the 

warehouse property. Id. The contract provided that the parties agreed that the contract would 

be binding upon, and inure to the benefit of, the parties to the agreement and their respective 

successors and assigns. Id. at 932. After trial, the trial court entered judgment in favor of the 

plaintiffs, and the appellate court held that the defendants’ promise to maintain a watertight 
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bridge ran with the land because it affected the enjoyment of and directly concerned the land. 

Id. at 930, 931. The court stated:

“Similarly, in regard to the [payment of] taxes, such a promise relates directly to the land 

itself, and the use thereof. Payments made in connection with the use or ownership of 

land have been found to be covenants running with the land. [Citation.]” Id. at 931. 

¶ 28 In McAnelly v. Graves, 126 Ill. App. 3d 528 (1984), the plaintiff entered into a coal lease 

and made an advance royalty payment to the original lessors, who then sold the leased property to 

the defendants. Id. at 530. One of the defendants terminated the lease without refunding to the 

plaintiff the advance royalty payment as provided by the lease, and the plaintiff sought recovery 

against the defendants and the original lessors. Id. The trial court dismissed the plaintiff’s claim 

against the defendants. Id. On appeal, the plaintiff argued that the original lessors’ promise to 

refund part of the advance royalty payment upon termination of the lease was a covenant running 

with the land. Id. at 532. The defendants argued that the obligation was personal only to the 

original lessors, who had received the advance payment from the plaintiff. Id. The appellate 

court reversed the trial court’s dismissal of the plaintiff’s claim. Id. at 536. The appellate court 

explained:

“While a grantee will not be bound by a covenant in the lease that is merely personal and 

collateral to the leased property, both the grantee and the lessee will be bound as against 

each other by covenants affecting the use, value and enjoyment of the property in 

question.” Id. at 535.

The court further explained that both the benefit of the right of early termination and the burden to 

repay advanced royalties ran with the land. Id. at 535-36. 

¶ 29 In this case, there is no doubt that the covenants at issue touch and concern the property 

as a matter of law. Home Depot’s tax reimbursement and lien rights are part of agreements that 
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Bank of America’s predecessor was aware of when it entered into the construction loan agreement 

with Cannonball. See Streams Sports Club, 99 Ill. 2d at 189. Home Depot’s tax reimbursement 

and lien rights directly affect the value of both the mortgaged property and Home Depot’s 

property. It is axiomatic that, without such benefits, Home Depot’s property is worth less and 

that, without such burdens, the mortgaged property is worth more. See United States Fidelity, 

284 Ill. App. 3d at 777. Cannonball’s promise to pay part of Home Depot’s taxes “relates directly 

to the land itself, and the use thereof” (C-B Realty & Trading, 198 Ill. App. 3d at 931) and is not 

simply a personal financial obligation between the parties. See McAnelly, 126 Ill. App. 3d at 

535-36. Therefore, Home Depot’s tax reimbursement and lien rights touch and concern the 

property.

¶ 30 Regarding the third part of the test:

“Privity of contract or estate has been defined as ‘mutual or successive relationship 

to the same rights of property.’ (Emphasis added.) [Citations.] The relationship may 

be by operation of law, by descent, or by voluntary or involuntary transfer. [Citation.] 

Privity of contract is ‘[t]hat connection or relationship which exists between two or more 

contracting parties.’ [Citation.]” Collins Co., Ltd. v. Carboline Co., 125 Ill. 2d 498, 511 

(1988). 

Bank of America does not contest that there is privity of estate between Home Depot and Bank of 

America. We determine that Bank of America and Home Depot share a mutual relationship to the 

shopping center’s common areas by virtue of the purchase agreement, the OEA, and the 

development agreement and that, thus, privity of estate exists. See also St. Paul Federal Bank for 

Savings v. Wesby, 149 Ill. App. 3d 1059, 1064 (1986) (“[T]here is privity of estate in this 

case—that is, a chain of privity between the original covenantee, covenantor and the subsequent 
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parties to be bound by the covenant.”). Therefore, in sum, Home Depot’s tax reimbursement and 

lien rights are covenants that run with the land. 

¶ 31 Bank of America argues that, assuming arguendo that Home Depot’s tax reimbursement 

and lien rights run with the land, those rights were properly terminated because they are inferior 

and subordinate to Bank of America’s mortgage. More specifically, Bank of America argues that 

all inferior and subordinate liens are extinguished by foreclosure, even if they run with the land. 

Bank of America cites State Life Insurance Co. v. Freeman, 308 Ill. App. 127 (1941), to support its 

argument. In Freeman, the appellate court held that a restrictive agreement that the defendant 

claimed to run with the land did not bind the mortgagee upon foreclosure. Id. at 144. The court 

reasoned that the restrictive agreement was recorded subsequent to the recording of the mortgage 

and that the mortgagee had not assented to the restrictive agreement. Id. In this case, the LaSalle 

Bank mortgage was recorded on the same day, but after, Home Depot’s memorandum of the 

purchase agreement and memorandum of the development agreement were recorded. Further, 

LaSalle Bank had actual knowledge of the documents containing Home Depot’s tax 

reimbursement and lien rights before it recorded its mortgage, because the purchase and 

development agreements were part of the closing documents. The effective date of a mortgage is 

the date of its recording. Aames Capital Corp. v. Interstate Bank of Oak Forest, 315 Ill. App. 3d 

700, 703 (2000). Thus, Home Depot’s tax reimbursement and lien rights, being in effect before 

the mortgage and running with the land, were not extinguished by foreclosure.

¶ 32 Next, Bank of America argues that Home Depot’s tax reimbursement and lien rights were

extinguished pursuant to the language in section 12.4 of the development agreement, which

provides: “such lien shall be subordinate to the lien of any first mortgage or deed of trust.” Home 

Depot argues that the meaning of the language is that the construction loan was to be paid before 

Home Depot’s lien could be enforced.
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¶ 33 The intent of the parties is our primary objective when construing a contract. Gallagher v. 

Lenart, 226 Ill. 2d 208, 232 (2007). The best indication of the parties’ intent is found in the plain 

and ordinary meaning of the language of the contract. Id. at 233. We will not “alter, change or 

modify existing terms of a contract, or add new terms or conditions to which the parties do not 

appear to have assented.” Thompson v. Gordon, 241 Ill. 2d 428, 449 (2011). Nothing in the 

provision at issue indicates the parties’ intent to extinguish Home Depot’s tax reimbursement and 

lien rights. Neither the word “extinguish” nor any word with a similar meaning is contained in the 

provision. Rather, the plain and ordinary meaning of the language indicates only that Home 

Depot’s lien was “assign[ed] a lower priority” (Black’s Law Dictionary 1467 (8th ed. 2004)) than 

Bank of America’s first mortgage lien. Therefore, Home Depot’s tax reimbursement and lien 

rights were not extinguished by section 12.4 of the development agreement. 

¶ 34 Bank of America also asserts that Home Depot’s rights were extinguished by a provision of 

the payment and priority agreement:

“Lender shall have no obligations to the City or any of the Anchors under any 

Development Agreements unless lender expressly assumes Developer’s obligations 

thereunder in writing.”

Bank of America ignores that this provision does not exclude obligations under the purchase 

agreement and that it is the purchase agreement that grants Home Depot tax reimbursement and 

lien rights. Thus, the provision has no effect on the covenants at issue. 

¶ 35 Accordingly, Home Depot’s tax reimbursement and lien rights are covenants that run with 

the land and bind Bank of America. Thus, the trial court erred by granting summary judgment in 

favor of Bank of America and denying Home Depot’s motion for summary judgment.

¶ 36 III. CONCLUSION
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¶ 37 For the reasons stated, we reverse the trial court’s order granting summary judgment in 

favor of Bank of America and denying Home Depot’s motion for summary judgment. We enter 

summary judgment in favor of Home Depot and against Bank of America. 

¶ 38 Reversed.