Protecting Tenants at Foreclosure Act Protects Bona Fide Tenant If Not A Party To the Foreclosure

In Fifth Third Mortgage v. Foster, 2013 IL App (1st) 121361, the plaintiff lender filed a foreclosure suit after obtaining ownership rights to the property, served a 90-day notice under the federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) on the defendant (a tenant on the property) to either vacate the property or provide proof of an unexpired lease for the property.  When the tenant failed to respond within the 90 day time period, Fifth Third filed a forcible action to evict her in Cook County forcible court. When Fifth Third moved for summary judgment the tenant provided a copy of her unexpired lease. The eviction court granted Fifth Third’s motion on the basis that the tenant did not provide her lease within the 90-day notice period. The court entered a possession order and later denied the tenant’s motion to reconsider since by that time, the lease had expired.  The tenant appealed.

The First District reversed. The Court held that the lender’s eviction suit was premature because the tenant had a bona fide lease that was in force prior to the lender’s foreclosure suit and it was not expired when Fifth Third filed its eviction action. The Court reasoned that since Fifth Third’s eviction or forcible action was premature, the eviction court lacked jurisdiction to remove the tenant.

The Court noted that a final foreclosure order does not automatically terminate a subordinate lease (unless the tenant is named as a defendant in the foreclosure action).  Since the tenant in this case was not named as a defendant in the foreclosure suit, a foreclosing lender must still file an eviction under the Illinois Forcible Entry and Detainer Act (FED) to evict the tenant.  FED permits an eviction action when a tenant remains in possession after a lease expires or is terminated, but since the tenant in this case still had an unexpired lease the eviction court lacked jurisdiction to enter a possession order.

The Court also noted that the PTFA is silent as to whether a plaintiff must wait until a lease expires before filing for eviction and declined to read that requirement into the statute. Instead, the Court found that the FED requires a lender to wait until the tenant’s lease expires before suing to evict the tenant.

This case illustrates the competing interests at play with foreclosing and evicting mortgage lenders and tenants in possession of foreclosed properties and how a court must harmonize state and federal laws that apply to foreclosures and landlord tenant situations.

Evictions can be complex and may deal with other areas of law. Contact us if you need help with an eviction.