Right to Redemption in an Arlington Heights Foreclosure

The state of Illinois is a judicial foreclosure state, meaning the lender must avail itself of the court system in order to reclaim a property upon which debt is owed. On average, the entire foreclosure process – from the initial filing of the complaint to eviction by the sheriff - can take approximately nine months, however, foreclosure defense may prolong the foreclosure process as much as 24 months. A owner facing foreclosure of their residence or commercial property may face not only the loss of the property but also personal liability for any amount owed above and beyond the foreclosure sale price, loss of any equity built in the property over the years, and a negative impact on the owner’s credit history.

Right of Redemption

Illinois state law provides the owner of a foreclosed property the right to redeem even after the bank has obtained a judgment against the owner. In order to exercise the right of redemption a homeowner must pay all the fees relating to the subject property, which often includes the principal and interest owed to the lender as well as any amounts relating to court costs, attorney’s fees, and collections. State law affords a homeowner the opportunity to exercise the right of redemption, known as the redemption period. These statutory time limitations depend on whether or not the real estate is residential and the redemption period can be shortened under certain circumstances, such as when the property is deemed abandoned or when the value of the property on the date of judgment is less than 90 percent of the redemption amount and the lender has waived any and all rights to a deficiency judgment.

For residential property, the right of redemption may be exercised by the borrower within three months after the date of the entry of judgment by the court or within seven months of service with summons or by publication, whichever is later.

For non-residential property, the right of redemption may be exercised by the borrower within three months after the date of entry of judgment by the court or within six months of service with summons or by publication, whichever is later.

State law guarantees the right of redemption for residential properties – meaning any attempt to waive the right by contract is deemed null and void. Owners of non-residential, or commercial, properties do not have this protection and mortgages on these types of properties often have an express provision waiving the right of redemption. If the home has not yet gone into foreclosure, it is best to contact the lender immediately and attempt to negotiate a way to become up to date on the loan. Once the foreclosure process has been initiated, it is imperative for the homeowner to decide whether or not keeping the property is a viable option based on a pragmatic assessment of current finances. Options available may include redemption, short sale, deed in lieu of foreclosure, loan modification or bankruptcy, among others.

Contact an Experienced Foreclosure Attorney

An experienced Illinois foreclosure attorney can provide a homeowner with legal advice on rights and obligations relating to the property and may be able to exercise the right of redemption on an owner’s behalf, if it’s still available under the law. Contact the Law Offices of Gilbert C. Schumm at (847) 559-9109 to schedule your initial consultation. With over 35 years of experience, our firm’s foreclosure attorneys will be adamant in protecting homeowners’ rights during the foreclosure process. Our firm services clients in Arlington Heights, Mt. Prospect, Hoffman Estates, and Hanover Park areas. 

Contingencies in an Illinois Home Purchase Real Estate Contract

Buying and selling real estate, especially a home, has always been a big purchase for most Americans. This is especially true with Illinois home prices rising and inventory tightening. A properly drafted real estate purchase contract and proper legal representation can protect both the home buyer and seller.

Chicagoland Residential Real Estate Offers To Purchase

Recent reports indicate that Illinois home prices are continuing to increase but home sales are down almost 11 percent compared to a year ago. In the nine-county Chicagoland area, home sales were down almost 10 percent due to low inventory.  In Illinois, buyers who wish to purchase real estate make a written offer using a real estate purchase contract. The real estate purchase contract must include a description of the property, all of the fixtures and personal property included with the sale, any warranties, and the purchase price.

The real estate offer to purchase also may include contingency clauses (or contingencies for short), which outline actions must be met in order for a real estate contract to be binding. If contingency conditions are not satisfied within the time frame specified, then the sale becomes void, unless the contingency is waived by the party who benefits from the contingency.

Purchase Contract Contingencies

Purchase contract contingencies must be satisfied within certain time frames in order for the sale to go through. Contingencies protect a buyer from major issues or concerns. However, the seller can require that the contingencies be completed or dealt with within certain time parameters. Therefore, assuming both the buyer and the seller are interested in completing the sale, it is important to keep track of when and how any contingencies must be satisfied.

Four of the most common contingencies include—

Financing

The most common contingency clause is a financing clause. The clause makes the offer conditional on the buyer being able to secure a mortgage for the amount and terms specified in the offer, including interest rate, as well as the type and duration of loan (i.e., 30 year fixed).

Appraisal

An appraisal contingency is used to make sure that the real estate property appraises, or is valued at, a minimum, specified amount. If the property appraises at an amount less than the specified amount, the buyer can terminate the real estate purchase contract. Typically, the buyer may waive the contingency if he or she wishes to proceed with the sale despite a low appraisal value. Generally, if a buyer fails to notify the seller that the property did not appraise at the required value by the time specified, the contingency is deemed satisfied and the buyer cannot use the appraisal to back out of the deal.

Sale Of Buyer’s Property

Buyers sometimes make the purchase of a new real estate property contingent on the sale the buyer’s current residence. This contingency is often used if the buyer needs proceeds from the sale of his or her current residence in order to have sufficient funds to close on the new property.

An offer to purchase that is based on the sale of the buyer’s property is a weaker offer to the seller and may cause the seller to reject an offer to purchase, especially when housing inventories are low. A seller may also counter with a “kick-out” clause, which allows the seller to accept the buyer’s offer but also continue to market the property. If the seller finds another qualified buyer, the seller can then give the first buyer a specified amount of time to remove the contingency clause in order to keep the original purchase contract alive, otherwise the seller can sell to the new buyer.

Inspection

An inspection contingency gives the buyer the right to have the real estate inspected within a certain period of time after the offer is accepted. Depending on the terms of the condition, the buyer typically has two options in the event of an unsatisfactory inspection: (1) cancel the contract and demand that the earnest money deposit be returned; or (2) notify the seller within a specified amount of time regarding the concerns revealed in the inspection and give the seller the option of making repairs or offering to reduce the purchase price, depending on the issues and wording of the contingency.

Buying and selling a home is a big deal. It is important to make sure that you have someone on your side, representing your interests. At the Law Offices of Gilbert C. Schumm, we have over 35 years of experience representing clients in Schaumburg, Illinois and the surrounding area, including Chicago, Arlington Heights and Palatine.  If you are in Cook, Du Page or Will County please call us for a free consultation at (847) 559-9109.

Facing Foreclosure in the Schaumburg Area? A Short Sale May Provide Alternative Relief

Acquiring your Chicago dream home has finally happened. But so have life’s surprises. Now you are behind on your payments; you may even be underwater and catching up, but even selling the home to pay off your debt seems impossible. You are not alone. According to Market Watch, Illinois ranks in the top five states in the country with the highest foreclosure rates. But you may have another, less painful, option: a short sale.

Foreclosure versus Short Sale

A foreclosure is a legal proceeding initiated by a mortgage lender when a borrower defaults, or gets behind, on payments. It is the legal right of the lender to gain ownership of the property or sell it and use the proceeds to pay off the defaulted mortgage. A short sale is when a homeowner owes more money on the home than what it will likely sell for in the real estate market, and the lender agrees to take less than what is owed to them to avoid the foreclosure process. Where previously the requirements to qualify for a short sale were more stringent - including owing more on the mortgage than the home was worth and proving financial hardship such as job loss, divorce or decreased wages of the primary provider of the mortgage payments - as of November, 2012, homeowners whose loans are serviced by Fannie or Freddie Mac may be eligible for a short sale if they are not behind on payments and are experiencing financial hardship. Similarly, the federal government passed the Home Affordable Foreclosure Alternatives (HAFA) program, streamlining the short sale process, which used to take months and, unfortunately, sometimes still ended in foreclosure.

Two Short Sale Destroyers

Unfortunately, not all situations will allow for a short sale of the home. In particular, there are two circumstances in which short sale approval is extremely difficult and will most likely be unsuccessful. First, if your loan is not in default a lender will likely not accept a short sale offer or request. In other words, you need to fall behind on your payments or receive a notice of default before your lender will even consider a short sale. Second, if a person seeking a short sale has filed for bankruptcy, a mortgage lender will likely not consider a short sale of the property. The reason for this is because negotiating a short sale is considered a collection activity, which is prohibited by law in bankruptcies.

What’s in It for the Lender?

Forgiving a shortfall on a mortgage seems counterintuitive, however, as a consequence of the real estate housing crash banks still have homes on their books affecting their profits. Avoiding foreclosure is beneficial for the lender as well as the homeowner because the foreclosure process is expensive, time-consuming, and complicated. Approving a short sale will keep the property from becoming the bank’s liability and keep the parties out of court.

Obtaining a short sale approval from your lender, however, is not guaranteed. You will need to provide specific documentation to prove your hardship including: 1) an authorization letter giving the lender permission to discuss the short sale with a buyer or agent; 2) a hardship letter, evidencing your dire financial situation and your inability to bring mortgage payments up to date; 3) an assessment of the property in question, in the form of an appraisal or a broker’s opinion; 4) a purchase offer or contract, showing the lender you have a ready buyer; and 5) a settlement statement, often prepared by a real estate lawyer, detailing what the lender’s net proceeds will be. Experienced legal, real estate and tax professionals should work together to help your case and provide assistance through every step of the short sale process.

Sometimes life’s circumstances happen, causing late or missed mortgage payments on a home. If you are at risk of losing your home you may be eligible for a short sale, which will avoid the foreclosure process. The short sale process is complicated and an experienced attorney can help you every step of the way. The Law Offices of Gilbert C. Schumm has over 35 years of experience in helping homeowners find relief and services the Schaumburg, Arlington Heights, Palatine and Des Plaines areas, among others. Contact an Illinois foreclosure defense attorney today for a free initial consultation.