Court Opinion

ID: 2709842
Source: CourtListenerOpinion
Date Created: 2014-08-05 19:24:29.015046+00
Date Added: 2024-06-11T09:18:52.640668
License: Public Domain

2014 IL App (2d) 130858
                                   No. 2-13-0858
                             Opinion filed May 29, 2014
                   Modified upon denial of rehearing August 5, 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.
2014 IL App (2d) 130858

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 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,

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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 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

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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.

¶ 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. 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” (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.”

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.            The cause is

remanded for further proceedings consistent with this opinion.

¶ 38   Reversed and remanded.

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