How Long Does Lis Pendens Last In Illinois

Real Estate Roundup

SharpThinking

No. 180 Perspectives on Developments in the Law from Sharp-Hundley, P.C. Apr 2020

Court Bug Primer On Lis Pendens

By John T. Hundley, 618-242-0200, john@sharp-hundley.com

The Appellate Court'southward Third District has issued a valuable primer on the theory and utilise of the doctrine of lis pendens in real estate matters.

Hundley

In Chung five. Pham, 2020 IL App (3d) 190218, defendant agreed to sell property to plaintiff, and so backed out when it came time to close. Plaintiff sued for specific functioning and eventually recorded a observe of lis pendens, only to learn that days earlier defendant had mortgaged the property to a third party. The mortgagee had actual knowledge of the suit when she recorded the mortgage.

The Appellate Court noted that lis pendens began as an equitable remedy that bound all subsequent purchasers or encumbrancers to the outcome of a awaiting lawsuit affecting the title to or lien on the property. It worked on the theory that the existence of a lawsuit triggered "effective detect to the globe." That theory presumed everyone was knowledgeable of what was going on in the courts.

Every bit society grew, that presumption became less valid and the legislature adopted what now is 735 ILCS 5/ii-1901. "The mere existence of a pending lawsuit is no longer treated as constructive find for purposes of lis pendens," the courtroom noted. At present § 2-1901 "requires a political party to the lawsuit to affirmatively provide formal constructive 'notice to the world' of their pending lawsuit" by recording a lis pendens notice with the canton recorder.

"Merely stated, if a lis pendens observe is not filed in the recorder'due south office, as required by § two-1901, then a subsequent tertiary party purchaser or encumbrancer…will non be bound by the outcome" of a pending lawsuit under § 2-1901, the court said.

Even so, the court ruled that § two-1901 "does not alter the harshness of the common law doctrine of lis pendens for third party purchasers or encumbrancers of property who have directly noesis, i.e., actual notice, of a pending lawsuit . . . . Parties with actual notice of a pending lawsuit remain bailiwick to the common law doctrine of lis pendens, even if there is noncompliance with § 2-1901."

Because the 3rd political party in Chung had bodily knowledge of the underlying suit, she took subject to that suit, the court ruled.

The court noted that historically to invoke common police lis pendens, three requirements had to be met: "(1) the property must exist of a character as to be bailiwick to the dominion, (two) the excursion courtroom must take jurisdiction over 'the person and of the res', and (three) the property must be sufficiently described in the excursion courtroom pleadings." In Chung, the third party argued these requirements weren't met because the court hadn't acquired jurisdiction over the defendant when she recorded her mortgage.

The courtroom rejected that argument. It said the "subsequent timing of personal service is irrelevant when (1) the tertiary party trying to evade the reach of lis pendens has actual find and (2) the circuit court eventually obtains personal jurisdiction over the accused in the pending lawsuit." Because those requirements were met, common constabulary lis pendens applied.

Rights Of First Refusal Explained By Appellate Court

The holder of a right of first refusal who refuses to friction match the terms of the third-political party offering, merely instead proposes a transaction with variant terms, essentially makes a counteroffer and declines to exercise her right of kickoff refusal, a panel of the Appellate Courtroom'south Third Commune has held.

Ruling in Rex v. Rossi, 2020 IL App (3d) 190086, the panel dealt with a state of affairs where an possessor owned two lots of a subdivision, continued at their rear. The owner received a third-party offer to buy both lots for $146,000. The owner side by side to ane of the field of study lots declined her right of commencement refusal, but the owner next to the back lot was not consulted before the sale closed. That owner and then brought her refusal rights to the parties' attention, only when given the chance to match the 3rd-party offer she simply offered to buy 1 of the two lots for "fair market value." The trial court ruled she waived her rights and she appealed.

First the appellate panel dealt with event of whether the endmost was preclusive. The courtroom said it was not. "A right of kickoff refusal is a preemptive right in that information technology is a status precedent to the sale of the holding," it said.

Next the console dealt with whether the holder of the right of first refusal had had a meaningful offer to match. She complained she was non given a copy of the contract to be matched, simply only the identity of the properties and the price. "A right of commencement refusal need not specify every term," the panel said. "It is sufficient as long equally the terms tin can exist determined so that the holder of the right has the opportunity to meet the material terms and weather condition of the third-party offer."

It said that providing the description of the property and the price was sufficient.

Finally, the panel dealt with whether the neighboring owner'southward partial acceptance was sufficient. The court said it was not. "Male monarch very clearly indicated that she was not interested in meeting the material terms of the [3rd-political party] offer. By refusing the offer, and proposing different terms, King was substantially making a counteroffer and declining to exercise her correct of first refusal."

Source: https://sharp-hundley.com/2020/05/01/court-issues-primer-on-lis-pendens/

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