Court Opinion

ID: 9713651
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:19:36.650599+00
Date Added: 2024-06-11T18:23:19.749885
License: Public Domain

JUSTICE HUTCHINSON, dissenting: The majority concludes that the trial court was correct in confirming a judicial foreclosure sale to Jaster, the owner of redemption who admittedly accepted a deed to his property encumbered with a $33,000 lien, later determined that he would prefer not to have such a lien encumbering his property, voluntarily allowed his property to lapse into foreclosure proceedings for the admitted purpose of removing the lien, waited for the statutory period of redemption to expire, then bid a price exceeding the redemption amount at the sale, resulting in the removal of Krueger’s lien. The majority finds no evidence of fraud or collusive activity by Jaster. For the following reasons, I respectfully dissent. Pursuant to section 15 — 1508(b) of the Illinois Mortgage Foreclosure Law (Mortgage Foreclosure Law) (735 ILCS 5/15 — 1508(b) (West 1996)), the trial court shall conduct a hearing to confirm the sheriffs sale of a foreclosed property and shall enter an order confirming the sale unless it finds, inter alia, “that justice was otherwise not done.” 735 ILCS 5/15 — 1508(b)(iv) (West 1996). After reviewing the record, statutory authority, and appropriate case law, I believe that justice was not otherwise done and that the trial court abused its discretion in confirming the sale. The majority determines that, once Jaster’s statutory period of redemption expired, he stepped into the shoes of a common purchaser. Although the Mortgage Foreclosure Law does not expressly prohibit owners from repurchasing their property at a judicial foreclosure sale, it does not expressly allow it either. Hence, we have an issue of first impression. I do, however, believe that, when read in their entirety, the redemption and foreclosure statutes imply that owners of redemption may not transform themselves into purchasers by virtue of an expiration date. By definition, Jaster is clearly an “owner of redemption.” See 735 ILCS 5/15 — 1212 (West 1996) (defining “owner of redemption” as a “mortgagor, or other owner or co-owner of the mortgaged real estate”). By statute, a “purchaser” at a judicial foreclosure sale receives a receipt and a certificate of sale. 735 ILCS 5/15 — 1507(e), (f) (West 1996). All claims are thereafter barred once title is passed and vested to the purchaser. 735 ILCS 5/15 — 1509(b), (c) (West 1996). However, the Mortgage Foreclosure Law fails to define “purchaser.” The Uniform Commercial Code (810 ILCS 5/1 — 101 et seq. (West 1996)) generally defines “purchaser” as “a person who takes by purchase.” 810 ILCS 5/1 — 201(33) (West 1996). Jaster certainly falls within this general definition. Our supreme court has had occasion to offer a more precise and applicable definition: “[A] person who takes title to real property in good faith for value without notice of outstanding rights or interests of others. A bona fide purchaser takes such title free of any interests of third persons, except such interests of which [she or] he has notice.” Daniels v. Anderson, 162 Ill. 2d 47, 57 (1994). In Kling v. Ghilarducci, 3 Ill. 2d 454 (1954), our supreme court specifically excluded “owners” when discussing the rights of bona fide purchasers. The Kling court stated: “A bona-fide purchaser, other than the owner, on an unconditional sale of real property pursuant to a regular foreclosure acquires a clear and absolute title as against all parties to the suit and their privies which relates back to the mortgage so as to cut off all intervening rights and equities.” (Emphasis added). Kling, 3 Ill. 2d at 462. See also State Life Insurance Co. v. Freeman, 308 Ill. App. 127, 140 (1941). Under our supreme court’s rationale, only a purchaser who is bona fide may acquire property free and clear of third-party interests. Not doing so would render the statutes that define and distinguish those terms meaningless. Here, the record reflects that Jaster acknowledges receiving a quitclaim deed from his former spouse in November 1995 which transferred any interest she had in the property to him at that time. The property interest that Jaster received included Krueger’s lien. Jaster admitted his knowledge of Krueger’s lien when he attempted to clear title to the property, sometime prior to the judicial foreclosure sale. During the pendency of these proceedings, Jaster filed his appearance and a pleading titled “counterclaim,” which acknowledged Krueger’s judgment lien on the property and requested an adjudication of the lien. The trial court, in an agreed order, set arguments on Jaster’s pleading and Krueger’s motion to strike on January 21, 1997. However, once Jaster became the successful bidder at the sale conducted on January 14, 1997, Jaster prepared an order, which the trial court entered on January 21, 1997, allowing Jaster to “voluntarily withdraw” his “[mjotion to Adjudicate the Lien of *** Krueger.” Jaster clearly failed to establish that he had no actual or constructive notice of Krueger’s lien interest in the property. Based on Jaster’s knowledge of Krueger’s lien interest, which, as the record reflects, predates the date of the judicial foreclosure sale, Jaster did not take title without notice of outstanding rights or interests of others. Therefore, Jaster should not be considered a bona fide purchaser. As such, he should not be allowed to take title to his property free of any interests of third persons or parties, including Krueger. The record also reflects that Jaster did not take title in good faith. The record reflects that Jaster’s admitted motivation was to clear title to the property by dissolving Krueger’s lien. The purpose of a mortgage foreclosure is to enforce the payment of a mortgagor’s debt. Skach v. Sykora, 6 Ill. 2d 215, 221 (1955). The redemption statute permits a debtor the opportunity to avoid forfeiting the property to creditors as well as allowing creditors the opportunity to recoup their losses incurred by the mortgage debt. Skach, 6 Ill. 2d at 221. It is doubtful that the legislature contemplated that an owner of redemption or mortgagor might, after the redemption period provided for her or his benefit had expired, enter into some scheme to realize something to the mortgagor’s benefit out of the mortgaged premises. See Gilbert v. Smith, 167 Ill. App. 255, 261 (1912). To allow an owner or mortgagor to do so otherwise would be tantamount to fraud. This court should be unwilling to adopt such an interpretation of the foreclosure and redemption statutes. See Holland v. Fulbert, Inc., 49 A.D.2d 86, 371 N.Y.S.2d 509 (1975) (refusing to allow an owner of the equity of redemption to cut off the junior mortgagee by purchasing the senior mortgage at a foreclosure sale). I believe that Jaster’s conduct regarding the circumstances surrounding the foreclosure and subsequent repurchase of his own property, coupled with his motion practice concerning the adjudication of Krueger’s lien, clearly reflects a showing of fraudulent conduct that the majority fails to acknowledge. The majority states that no redemption may occur after the statutory time to redeem has expired. I disagree. Cases abound in which owners of redemption are allowed to redeem their property despite the statutory expiration date. See Commercial Credit Loans, Inc. v. Espinoza, 293 Ill. App. 3d 923 (1997); Citicorp Savings v. First Chicago Trust Co., 269 Ill. App. 3d 293, 300-01 (1995); see also, e.g., People v. Meyers, 158 Ill. 2d 46, 60 (1994) (stating that “the law favors redemption of *** property by its owner”). Therefore, the expiration of the statutory redemption period does not serve as an absolute bar to redemption. I firmly believe that an owner of redemption, or mortgagor, does not morph into a bona fide purchaser upon the expiration of the redemption period. In the present case, had Jaster wished to redeem after January 11, 1997, and expressed his desire to BCGS, then it was likely, in the interests of justice, that BCGS would have accepted the amount needed to pay off the mortgage plus its costs. In doing so, it is also likely that Jaster could have even redeemed his property at a lesser amount than for what he bid on it at the judicial foreclosure sale. The majority also commented on Krueger’s efforts to protect its interest in the property pursuant to its lien. I feel compelled to note that Krueger made every effort to protect its interest during the pendency of the foreclosure suit, including an attempt to bid at the judicial foreclosure sale, but was unable to do so because of a lack of communication regarding the location of the sale. In any event, I find these efforts unimportant when justice is the paramount issue. The majority would remand this case to allow Krueger to “demonstrate its right to the surplus” to the trial court. Although I am assuaged by the majority’s remand of this issue, I am concerned that it. is “too little, too late.” Future implications of this decision are horrific and likely contrary to legislative intent. The majority’s decision means that mortgagors, when faced with an unwanted lien on their property, should simply stop paying on their mortgage, allow the property to fall into foreclosure, allow the redemption period to pass, and then successfully bid on the property to retake title free and clear of all junior liens. Because I believe that justice was otherwise not done (see 735 ILCS 5/15 — 1508(b)(iv) (West 1996)), I respectfully dissent.