11-Dec-15 – A foreclosure does not necessarily erase unpaid condominium association assessments, the Illinois Supreme Court has ruled, but all a new owner has to do is start paying new assessments on the unit.

The high court was called on to interpret the Illinois Condominium Property Act over a June 2010 transaction in which Deutsche Bank National Trust Company purchased at a foreclosure sale a unit at 1000 North Lake Shore Drive. The previous owner had racked up more than $43,000 in unpaid assessments, which the new owner did not pay – nor did it start paying any new assessments.

The condo association, 1010 Lake Shore Drive Association, sued the bank in spring 2012 for possession of the unit and for more than $62,000 in unpaid assessments, as well as legal costs. The bank said it was not liable for the previous owner’s assessments because the Illinois Condominium Property Act says such unpaid assessments are extinguished when the unit is bought through foreclosure.

As for the assessments that accrued after the purchase, the bank said that amount was in dispute.

After a hearing, a judge ruled in favor of the condo association, awarding $70,018. The bank appealed but lost. The Illinois Supreme Court then weighed in on the suit.

Justice Thomas Kilbride (left) delivered the decision last Thursday, saying pre-existing, overdue assessments are eradicated when a new owner of a condo unit makes the first payment of new assessments after the foreclosure sale.

Not all the justices agreed. Laura Liu (right) said the Illinois Mortgage Foreclosure Law says pre-existing assessments are quashed only when a condo association is a party to the foreclosure action.