Law

New ALTA Survey Standards Effective February 23, 2016

Changes to the American Land Title Association/American Congress on Surveying and Mapping survey (commonly referred to as an ALTA/ACSM Survey in contracts) standard details requirements go into effect on February 23, 2016. This is an important change that individuals and businesses involved in commercial real estate transactions must be aware of.

ALTA Surveys are important to commercial real estate transactions because they will be required by title companies to insure title to land without exception to the extent such is possible. ALTA Surveys assist in discovering matters that might not be evidenced by the public records.

Parties to a commercial real estate contract should make sure that the contract language refers to the proper survey. Under the 2016 standards, the survey is now referred to as an “ALTA/NSPS Land Title Survey.” NSPS (National Society of Professional Surveyors) is the legal successor organization to the ACSM. Thus, contract language should make certain to correctly reference the required survey. Likewise, the contract should specify that the 2016 minimum standard detail requirements are required to avoid any confusion or room for contradicting interpretations.

Drafting and negotiating your commercial real estate contract to accommodate this change will help avoid potential misunderstandings or errors due to vagueness in contract language. Doing so may prevent costly mistakes such as ordering an incorrect initial survey and then being forced to order a second, more expensive ALTA Survey. Such an error could also impact contract deadlines and raise the risk of a contractual default.

Chicago Debt Amnesty Program Goes Into Effect on November 15, 2015.

Fresh off his historical property tax increase, Mayor Rahm Emanuel is instituting an amnesty program for people with unpaid tickets, back taxes and other fees owed to the City of Chicago. The plan is part of a concerted effort on the Mayor’s part to prove that he is not intending to increase the cost of living in Chicago for all residents.[i] The program will begin on Sunday, November 15, 2015 and run through December 31, 2015.

Debts eligible for the amnesty program include “unpaid parking and red light camera violations, fines imposed by the Department of Administrative Hearings (e.g., building code violations, drinking on the public way), and taxes (both non-filers and tax assessments) incurred prior to January 1, 2012.[ii] “Penalties, interest and collection costs associated with the eligible debt will be waived during the [amnesty program], reducing the amount of due to the original fine or tax amount.”[iii]

Violations and tax obligations that are currently in a payment plan or have pending legal activity with the City do not apply. Further, “tow fees, storage fees, administrative fees, court costs, and other charges are not subject to the [amnesty program].”

Specific information for relief under the amnesty program may be found at the following links:

Amnesty Program General Information: http://www.cityofchicago.org/city/en/depts/fin/provdrs/accounts_receivabledivision/news/2015/october/DebtReliefProgram.html

Parking & Red Light Tickets: http://www.cityofchicago.org/content/dam/city/depts/fin/supp_info/Revenue/Amnesty_FAQ_Parking_Red_Light.pdf

Administrative Hearings Fines: http://www.cityofchicago.org/content/dam/city/depts/fin/supp_info/Revenue/Amnesty_FAQ_AH_Fines.pdf

Tax Debt: http://www.cityofchicago.org/content/dam/city/depts/fin/supp_info/Revenue/Amnesty_FAQ_TAX.pdf

Ansari & Shapiro is a full service law firm specializing in the areas of real estate, business and special needs planning.

[i]  Kate Shepherd, Unpaid Tickets And Taxes? Emanuel Launches An Amnesty Program, http://chicagoist.com/2015/09/04/emanuel_to_offer_amnesty_program_fo.php

[ii] City of Chicago Debt Relief Program Frequently Asked Questions, http://www.cityofchicago.org/city/en/depts/fin/provdrs/accounts_receivabledivision/news/2015/october/DebtReliefProgram.html

[iii] Id.

New Procedure to Extinguish an Omitted Subordinate Interest

Effective as of August 26, 2014, Public Act 98-1099 provides a new statutory framework for extinguishing a subordinate interest on a foreclosed property when that interest was not named in the original foreclosure action (see 735 ILCS 5/15-1603.5). The new procedure applies only in circumstances where: (1) the property is the subject of a foreclosure action; (2) a motion to confirm the judicial sale is pending or has been granted; (3) the interest attached prior to filing or recording the notice of foreclosure; and (4) the person with the interest was not named in the foreclosure complaint.

If the above requirements are met, then the holder of the certificate of sale or purchaser of the foreclosed property may file a strict foreclosure action naming the omitted subordinate interest as defendant. The court will then enter a judgment to extinguish the omitted subordinate interest, subject to the objection of the defendant. If the defendant objects to the judgment, their only available recourse is redemption of the property within the statutory redemption period of 30 days. The redemption shall be the sum bid at the prior foreclosure sale plus costs and fees incurred subsequent to the sale for the payment of taxes, preservation of the property, or any other actions taken by the holder of the certificate of sale to protect its interest in the property. This enactment denies a person whose omitted subordinate interest was not terminated by a prior foreclosure action the right to file a strict foreclosure action, though they are still entitled to make a claim for the surplus in the proceeds from the sale of the property.

Generally, plaintiffs include subordinate lienholders as parties in a foreclosure action in order to extinguish the subordinate interest. Accordingly, an unnamed subordinate interest's claim would not be extinguished by the confirmation of the judicial sale. Therefore, this procedure provides plaintiffs with an opportunity to extinguish the interest of a subordinate lienholder who was not named in the original foreclosure complaint while at the same time giving the omitted lienholder an opportunity to redeem the property.