Illinois state bar association
DecEMBER 2015
vol 61 no. 6
Real Property
The newsletter of the Illinois State Bar Association’s Section on Real Estate Law
Purchasers of properties that
have gone through judicial
sale should be cautious
By Adam M. Ansari
The Illinois Appellate Court in
Concord Air has increased the due
diligence necessary for properties that
have gone through a foreclosure sale.
Modified on the denial of rehearing,
on October 15, 2015, the Illinois Appellate
Court posted its ruling in Concord Air,
Inc. v. Malarz, 2015 IL App (2d) 140639.
The case arose after Harris Bank filed a
foreclosure action (Harris foreclosure)
against a home in Lake Forest, Illinois,
and named the borrower and Concord
Air, Inc. (Concord Air) as a defendant/
junior lienholder. Concord, at ¶ 1. Concord
Air defaulted, and Harris Bank was the
successful bidder at the judicial sale and
the trial court confirmed the sale. Id.
Thereafter, Chicago Title, as trustee for
a land trust (Chicago Title), relying on
a title report, which indicated Concord
Air’s interest had been extinguished by the
Pick your title: “Just Don’t
Do It!” ... “Ethical Common
Sense” ... “Everyone is
Tempted”
1
Mortgagors and mortgagees
in the pleading game
6
Upcoming CLE programs
7
Continued on next page
Pick your title: “Just Don’t
Do It!” ... “Ethical Common
Sense” ... “Everyone is
Tempted”
By Michael j. Maslanka
Many real estate practitioners also do
estate planning, and this commentary on
a Last Will and Testament matter applies
across the board to several areas of law
and, for that reason, will hopefully be
informative and useful.
Purchasers of properties that
have gone through judicial
sale should be cautious
1
Four years ago, an Illinois attorney
prepared a Last Will and Testament for
an elderly person. The signing was done
at a nursing home. There was only one
disinterested witness who signed the will.
Continued on page 4
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▼
Real Property
December 2015 / vol 61 / no. 6
Purchasers of properties... should be cautious
Real Property
Continued from page 1
Harris foreclosure, purchased the subject
property.
A little less than a year later, upon
learning of the foreclosure proceeding and
the default entered against it, Concord
Air moved to quash service for a lack
of personal jurisdiction. The trial court
vacated the judgment of foreclosure as to
Concord Air only and left intact the order
approving sale. Concord Air then initiated
its own foreclosure action (Concord
foreclosure) against the subject property.
Chicago Title responded with a Motion to
Dismiss arguing bona fide purchaser status.
The trial court agreed with Chicago Title
and additionally cited the public policy of
finality and stability of judicial sales as a
basis for its decision. Concord, at ¶ 48.
On appeal, Concord Air argued that
Chicago Title was on inquiry notice of the
lack of jurisdiction, because the affidavits
on the record at the time Chicago Title
purchased the property, indicated service
was attempted only once, at an address
other than the registered agent’s, and by
a different process server than the one
listed on the affidavit of due diligence.
Concord, at ¶ 40. Concord Air identified
potential noncompliance with Sec. 2-206
and Sec. 2-202 of the ILCS in support of its
argument. Concord, at ¶ 40. The Appellate
Court agreed with Concord Air concluding
that Chicago Title was on inquiry notice
of Concord Air’s potential outstanding
interest, as the defect in personal
jurisdiction over Concord Air was apparent
on the face of the Harris foreclosure record.
In addition to its bona fide purchaser
argument, Chicago Title argued that
because Concord Air was a junior
lienholder and not a prior borrower or
owner of the subject property, Concord Air
should not be allowed to pursue a claim
against the property itself, and Concord
Air’s requested relief should be limited
to the proceeds of the foreclosure sale.
Concord, at ¶ 49. In response, the Appellate
Court opinioned that the judicial sale did
not result in a surplus and therefore the
value of the property, roughly $1.7 million,
and the status of the Harris foreclosure
required a balancing of the equities on
remand. Concord, at ¶ 50.
Transactional Attorneys Beware
Although difficult to glean from the
Appellate Court’s opinion, the holding
places a significant burden on real estate
purchasers interested in properties that
have gone through a judicial sale.
Regardless of the number of years or
the number of times a piece of property
has exchanged hands, purchasers and
their attorneys are considered to be
on constructive notice of potential
jurisdictional defects in a foreclosure
record, irrespective of whether the defect
concerns a prior owner or a junior
lienholder. Now, beyond a review of the
title commitment, transactional attorneys
are expected to obtain and review the
foreclosure record before blessing the
purchase of an affected property. This is
especially onerous in light of the time,
money, and effort needed to acquire a
foreclosure record, not to mention the
expertise needed to actually identify the
potential jurisdictional defect once the
record is obtained.
Although the newly enacted Sec. 151603.5 may provide a statutory framework
for extinguishing a subordinate interest
when that interest was not named in the
original foreclosure action, it remains
to be seen whether the code section,
enacted August 26, 2014, will be applied
to situations where a junior lienholder was
named in the foreclosure, but jurisdiction
was nonetheless found to be improper.
With the minimal fees, the time
constraints placed on attorney review, and
the prospect of more junior lienholders
filing similar actions as Concord, some
attorneys may begin thinking twice
about their willingness to be retained
on residential transactions with a prior
foreclosure. 
__________
Having particular knowledge of crosscollateralized properties and complex note
defaults, in 2015 Mr. Ansari successfully argued
two foreclosure related matters before the Illinois
Appellate Court.
2
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REAL ESTATE LAW SECTION COUNCIL
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▼
Real Property
December 2015 / vol 61 / no. 6
Pick your title...
Continued from page 1
The attorney, at some point, signed the
name of a second witness who was not
present when the testator signed the Last
Will. Now, the compounding of problems
begins. The attorney told his secretary to
notarize the Last Will, and she did so, even
though she did not see a witness sign or
put a witness under oath. The attorney
knew the will was invalid for the lack of
2 disinterested witnesses having signed,
but he did not have it re-executed. His
misfortune continued, as the testator
died 9 days later. In the end, the person
who the testator did not want to receive
her estate, received it. The truly intended
legatee was also nominated as the executor
and the same attorney filed a petition in
probate court to have the will admitted to
probate. The attorney mislead the executor
repeatedly, and it was not until months later
that the attorney told the court, the other
attorneys who were contesting the will, and
the ARDC, about what happened.
A malpractice action was filed by
the executor against the attorney, and a
judgment was entered against him for over
$590,000. As an aside, he was suspended
for 60 days by the Supreme Court.
So, why is this case relevant now? The
attorney filed a Chapter 7 bankruptcy
petition and the former client/executor,
who should have received the decedent's
estate's assets, filed an adversary complaint,
asking the bankruptcy court to hold the
debt and judgment against the attorney
to be non-dischargeable. On October
9, 2015, the U.S. Bankruptcy Court for
the Northern District of Illinois, Eastern
Division, agreed with the former client, and
held that the debt was non-dischargeable,
because it had been incurred through
fraud. A question for consideration is
whether or not your professional liability
insurance policy will pay that type of
judgment for you.
The bankruptcy court opinion discussed
Illinois law and highlighted the attorney's
duty to his or her client. In this scenario,
the duty was initially owed to the testator.
Additionally, however, the court recognized
that Illinois law finds that an attorney has
a fiduciary duty to intended third party
beneficiaries. Therefore, whoever the
testator wants to receive his or her estate
through a will or trust, is presently owed
a duty by the attorney, to get it right. By
analogy, the grantees under a deed or
the beneficiaries of a Transfer on Death
Instrument are owed a duty!
In the real estate world, we often deal
with forms and documents that need to be
notarized, witnessed, or both. Powers of
Attorney for Property, trust amendments,
TODI'S, deeds, statement of grantor
and grantee, and others. It could easily
happen that a transaction must close or is
ready to close and a particular signature
or notarization is missing. You need that
signature and/or notarization. What do
you do? The lesson from the bankruptcy
case just reviewed, helps me select the
best title for this article as: "JUST DON'T
DO IT!" Don't witness when you can't
be a witness. Don't notarize when the
signatory has not properly acknowledged
his or her signature, or taken any necessary
oath, and don't compound the problem.
If documents are inadvertently prepared
incorrectly, they oftentimes can be reexecuted and re-recorded. Finally, it was
interesting to note that the bankruptcy
court acknowledged that the attorney
charged 4.5% of the value of the gross
estate as attorney fees for representing the
executor before he was discharged as the
attorney in the case. Percentage fees in
probate cases still exist. The attorney fee
issue can be an article for another day. 
You’ve got
one shot.
Make it count.
Call Nancy to find out how
an ad in an ISBA
newsletter can make
the difference in
your business.
800-252-8908
217-747-1437
4
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▼
Real Property
December 2015 / vol 61 / no. 6
Mortgagors and mortgagees in the pleading game
By Michael j. Maslanka
Different foreclosure judges in
the same division or circuit may have
different opinions on the same issue, just
as bankruptcy judges in the same division
of a bankruptcy court may have. One
such foreclosure issue which I believe has
attracted differing opinions is whether a loan
modification agreement must be attached
to and pled in a foreclosure complaint.
To the best of my knowledge, through
current legal research, there is no published
appellate court decision on point. There is
an unpublished opinion, stating that a loan
modification does not need to be attached
to a foreclosure complaint, but what that
opinion is worth is subject to argument. In
any event, I recently argued under Code
of Civil Procedure Section 2-606, that a
loan modification agreement, in and of
itself, sets forth new terms of the parties’
agreement and the court cannot know what
those terms are unless the modification
agreement is pled in the complaint and
attached as an exhibit to the complaint.
I argued the mortgagor’s position, citing
2-606 in response to the mortgagee’s Motion
for Summary Judgment. This particular
judge agreed that the loan modification
agreement should have been pled and
attached to the complaint. The mortgagee
now has time to file an amended complaint.
If mortgagees plead and attach the loan
modification agreement to their initial
complaint for foreclosure, this particular
issue would not arise. It may be that this
issue will go on appeal in the near future,
but it appears to be almost too simple an
issue that should not even be appealed. The
basic questions is, how can the court grant
the Motion for Summary Judgment based
on an allegation that there are no material
facts in issue, when the plaintiff sets forth
the mortgage and note, and the mortgagor
alleges the existence of a modified mortgage
and note? Those positions clearly set forth
that there are different terms of the parties’
agreement which, at that very point, should
preclude summary judgment. I have used
this argument before and counsel for the
mortgagees quickly relented and asked for
time to file an amended complaint. In this
recent case of mine, the plaintiff mortgagee
wished to persist in its position, which is
its right to do, to seek summary judgment.
So, if mortgagees attach and plead the loan
modification agreement, or all of them, if
there were more than one, then there will be
one less issue that can delay the prosecution
of the foreclosure complaint. 
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January
Monday, 01/04/16- Teleseminar- Live
Replay—Planning with Life Insurance
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Monday, 01/04/16- Webcast Replay—
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the Illinois Marriage and Dissolution of
Marriage Act effective January 1, 2016.
Presented by the ISBA Family Law Section
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Tuesday, 01/05/16- Teleseminar—
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Monday, 1/11/16—Presented by
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Monday, 01/11/16- Webcast Replay—
Overview of the Revisions to the Parentage
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12:00- TBD End time.
Tuesday, 01/12/16- Teleseminar—
Structuring an Equity Investment in Real
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Wednesday, 01/13/16- Teleseminar—
Employees v. Independent Contractors:
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Thursday, 01/14/16- Teleseminar—
Asset Protection Planning in Estate
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Friday, 01/15/16- Teleseminar—Ethics
of Preparing Witnesses. Presented by the
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Tuesday, 01/19/16- Webinar—Fight the
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Wednesday, 1/20/16- Webcast
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Presented by the ISBA Family Law Section
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Thursday, 01/21/16- Teleseminar—
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by the ISBA. 12-1 pm.
Friday, 01/22/16- Teleseminar—
Lawyer Ethics When a Client Won’t Pay
Your Fees. Presented by the ISBA. 12-1 pm.
Monday, 01/25/16- Webcast Replay—
Property and Maintenance. Presented by
the ISBA Family Law Section Council.
12:00- TBD End time.
Tuesday, 01/26/16- Webinar—
Presented by the ISBA Standing
Committee on Law Office Management
and Economics. Practice Succession and
Transition: Part I: Ideas for Getting Started.
12:00-1:00 pm.
Tuesday, 01/26/16- Teleseminar—
Estate Planning in 2016: A Look Forward
to Issues in the New Year. Presented by the
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Wednesday, 01/27/16- Live Webcast—
Legislative Changes Affecting Juvenile
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Child Law Section Council. 12:00-1:00 pm.
Thursday, 1/28/16- Teleseminar—
Drafting Material Adverse Change (MAC)
Clauses. Presented by the ISBA. 12-1 pm.
7
Friday, 01/29/16- Teleseminar—
Professionalism for the Ethical Lawyer.
Presented by the ISBA. 12-1 pm.
February
Monday, 02/01/16- Webcast Replay
—Attorney’s Fees and 750 ILCS 5/513.
Presented by the ISBA Family Law Section
Council. 12:00- TBD End time.
Monday, 02/01/16- Teleseminar- Live
Replay—Estate Planning with Annuities &
Financial Products. Presented by the ISBA.
12-1 pm.
Tuesday, 02/02/16- Webinar—Trial
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Thursday, 02/04/16- Teleseminar—
Choice of Entity for Service Businesses.
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Friday, 2/05/16—CRO—Federal Tax
Conference 2016. Presented by the Federal
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Friday, 2/05/16—Bloomington Normal
Marriott Conference Center—Hot Topics
in Agricultural Law 2016. Presented by the
Agricultural Law Section Council. ALL
DAY.
Monday, 02/08/16- Webcast Replay—
Civil Procedure and the Revised Statues.
Presented by the ISBA Family Law Section
Council. 12:00- TBD End time
Monday, 02/08/16—Presented by
the WBAI, co-sponsored by the ISBA
Women and the Law Committee and the
Coalition of Women’s Initiatives in the Law.
Community Involvement, Board Service,
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Tuesday, 02/09/16- Teleseminar—
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Real Property
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Illinois Bar Center
Springfield, Illinois 62701-1779
December 2015
Vol. 61 No. 6
THE ONLY BAR ASSOCIATION
REPRESENTING THE INTERESTS
SOLELY OF REAL ESTATE
ATTORNEYS IN ILLINOIS
ILLINOIS REAL ESTATE
LAWYERS ASSOCIATION
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Schaumburg, Illinois 60173
847.273.8700 | 847.273.8701 Fax
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