Court Opinion

ID: 2716047
Source: CourtListenerOpinion
Date Created: 2014-08-07 18:02:42.613052+00
Date Added: 2024-06-11T09:53:11.643263
License: Public Domain

Illinois Official Reports

                                       Appellate Court

             Bank of America, N.A. v. Cannonball LLC, 2014 IL App (2d) 130858

Appellate Court           BANK OF AMERICA, N.A., as Successor by Merger to LaSalle
Caption                   Bank National Association, Individually and as Authorized Agent,
                          Plaintiff and Counterdefendant-Appellee, v. CANNONBALL LLC;
                          DAVID BOSSY; TARGET CORPORATION; KOHL’S ILLINOIS,
                          INC.; UNKNOWN OWNERS; and NONRECORD CLAIMANTS,
                          Defendants (Home Depot U.S.A., Inc., Defendant and
                          Counterplaintiff-Appellant).

District & No.            Second District
                          Docket No. 2-13-0858

Filed                     May 29, 2014
Modified upon
denial of rehearing       August 5, 2014

Held                       In an action to foreclose plaintiff’s mortgage on a shopping center, the
(Note: This syllabus trial court erred in entering summary judgment for plaintiff-
constitutes no part of the mortgagee, finding that the lending agreements between defendant, an
opinion of the court but anchor tenant, and the mortgagor, the developer of the center, under
has been prepared by the which the tenant had a lien on the developer’s mortgaged property that
Reporter of Decisions secured the tenant’s right to reimbursement from the developer for a
for the convenience of portion of the “Special Service Area Tax” imposed by the city in
the reader.)               which the center was located to repay bonds the city sold to pay for
                           various on- and off-site improvements did not run with the land and
                           were not binding on the mortgagee or its successors once the
                           developer’s property was foreclosed, since the developer and the
                           tenant intended the covenants in the lending agreements to run with
                           the land, the agreements touched and concerned that land, and privity
                           of estate existed between the tenant and the mortgagee based on their
                           mutual relationship.
     Decision Under          Appeal from the Circuit Court of Kendall County, No. 10-CH-869; the
     Review                  Hon. Alan W. Cargerman, the Hon. Timothy J. McCann, and the Hon.
                             Bradley J. Waller, Judges, presiding.

     Judgment                Reversed and remanded.

     Counsel on              John D. Silk and Michael J. Wall, both of Rothschild, Barry & Myers
     Appeal                  LLP, of Chicago, for appellant.

                             Jeffrey D. Ganz and Philip J. Block, both of Riemer & Braunstein,
                             LLP, of Chicago, for appellee.

     Panel                   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. 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
                                                 -2-
     documents and the sequence of recording those documents. We agree and reverse and
     remand.

¶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, 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)
                                                -3-
              days after Purchaser bills Seller therefore, then in addition to any other rights and
              remedies available 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.
                                                   ***
                  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”
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       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 ‘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 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.

                                                  -5-
¶ 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:
               “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

                                                  -6-
       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 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 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
                                                   -7-
       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.
¶ 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 allege[d]” 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 bridge ran with the land because it affected the enjoyment of and directly
       concerned the land. Id. at 930-31. 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.
               [Citations.]” Id. at 931.

                                                    -8-
¶ 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 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. 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,
                                                     -9-
       and the subsequent 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.
¶ 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” (see
       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.”
                                                   - 10 -
       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
¶ 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. The cause is
       remanded for further proceedings consistent with this opinion.

¶ 38      Reversed and remanded.

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