Author: Brian Covert

When Buying a Short Sale, What Should a Buyer Be Aware Of?

When we assist clients considering the purchase of a short sale property in Illinois, we always take the time to walk them through the unique legal and financial risks involved. Short sales appear attractive because of the potentially lower purchase price. However, there are significant legal implications that every buyer must understand before making a commitment.

This type of real estate transaction is more complex than a traditional home sale and often involves additional parties, including the mortgage lender and sometimes multiple lienholders. In Illinois, the foreclosure process is judicial. This means any delay or misstep can impact a buyer’s rights or expose them to unexpected liabilities. That’s why we pay close attention to the Illinois Mortgage Foreclosure Law (IMFL), codified at 735 ILCS 5/15-1101 et seq., to ensure our clients are protected at every step.

Short Sale Approval Is Not Guaranteed

First and foremost, it’s important for buyers to realize that a short sale is subject to lender approval. Even after you and the seller agree to terms, the seller’s lender must approve the sale price because it is less than what is owed on the mortgage. This approval process can be lengthy and unpredictable.

Delays of several weeks or even months are common, and there’s no guarantee of final approval. Our firm advises our clients not to make significant financial moves, such as terminating leases or selling their current home, until the lender’s short sale approval is in writing.

Title Defects And Foreclosure Proceedings Can Create Risk

Another critical consideration is title condition. Many short-sale properties are encumbered by liens, unpaid taxes, or other clouds on the title. Under Illinois law, the seller is not typically required to clear all title issues prior to closing in a short sale. That responsibility may fall on the buyer. This is why we always recommend a full title search and review of any pending foreclosure case in the circuit court.

Under Section 15-1504.5 of the IMFL, certain homeowners may file motions to stay or dismiss foreclosure proceedings. If there’s a pending foreclosure judgment, the property may go to a sheriff’s sale unless the short sale closes first, which creates additional pressure on the timeline.

Short Sale Properties Are Sold “As-Is”

We also remind clients that short-sale properties are sold “as-is.” In many cases, the seller is facing financial distress and may not have maintained the property. Lenders generally refuse to make repairs or give credit. Buyers should invest in a comprehensive inspection and be prepared to accept defects. While Illinois law under the Residential Real Property Disclosure Act (765 ILCS 77/1) requires certain seller disclosures, enforcement can be difficult if the seller is judgment-proof or absent.

Closing Delays Are Common In Short Sale Transactions

Finally, buyers need to account for potential delays at closing. Even if the short sale is approved, final HUD-1 approval by the lender is often required. This last step can cause sudden changes or rescheduling of the closing date. If the property is in active foreclosure, there is always a risk the court proceeds with a sheriff’s sale unless the lender halts the process.

Short sales can offer value, but they carry legal risks that require careful handling. With our legal team’s help, you can proceed with a clearer understanding of your rights and responsibilities under Illinois foreclosure law.

Illinois Short Sale Frequently Asked Questions

Can A Short Sale Be Stopped By A Foreclosure Sale?

Yes, if the lender does not formally approve the short sale in time, the foreclosure process may proceed to a judicial sale. In Illinois, under 735 ILCS 5/15-1507, the court can authorize a sheriff’s sale once a judgment of foreclosure is entered. This risk makes the timing of the transaction especially important.

Are There Risks If I Buy A Short Sale Property With Liens?

Yes. Many short-sale homes have unpaid real estate taxes, second mortgages, or judgment liens. These must be addressed prior to closing. If not resolved, you may acquire title subject to those debts. A full title search is essential to identify and address these issues before purchasing.

Is The Seller Required To Make Repairs In A Short Sale?

No. In most short sales, properties are sold “as-is.” Lenders typically do not pay for repairs or offer credits for damage. Buyers are encouraged to hire a licensed inspector before closing and be prepared for potential out-of-pocket repairs after the purchase.

Can I Use Traditional Financing For A Short Sale Property?

Yes, but your lender must be willing to work within the short sale timeline. Some short sales require quick closings, while others are delayed by months due to lender approval. Make sure your financing terms allow flexibility or consider a preapproval that accounts for timing uncertainty.

Does The Buyer Pay The Seller’s Legal Fees In A Short Sale?

No, but some short sale approval letters include conditions that the buyer must agree to, such as covering certain closing costs. We carefully review every term in the approval letter to protect our clients from unexpected charges.

What If The Seller Files Bankruptcy During A Short Sale?

If the seller files for bankruptcy, the short sale process may pause or terminate depending on the stage of the bankruptcy and court approvals. In Illinois, an automatic stay under federal bankruptcy law can affect the foreclosure case and the seller’s ability to complete the sale.

Is There A Right To Cancel After Short Sale Approval?

In most cases, once the lender approves the short sale and both parties have signed the documents, cancellation rights are limited. Buyers should have legal counsel review the approval letter and sale contract before signing to ensure they understand all terms.

Can A Short Sale Affect My Property Taxes In Illinois?

The short sale price may impact your property’s assessed value in future tax years, but this is not automatic. You may need to appeal your property tax assessment if you believe it is too high based on the purchase price. Consult our real estate attorneys to evaluate your options.

Talk To Our Legal Team Today

At Covert Marrero Covert LLP, we help buyers understand the legal risks of purchasing a short sale in Illinois. Our attorneys stay current on Illinois foreclosure laws and lender practices, ensuring your transaction is handled with care.

If you’re thinking about buying a short-sale property, don’t move forward without qualified legal guidance. Contact our Illinois short-sale attorney at Covert Marrero Covert LLP by calling us at (630) 717-2783 to schedule your initial consultation. With offices in Warrenville, Schaumburg, Naperville, and Joliet, we proudly represent clients across the Chicagoland metro area.

What To Do If You Receive A Foreclosure Notice In Illinois

Receiving a foreclosure notice can be overwhelming, but it is important to act quickly to protect your rights. Illinois follows a judicial foreclosure process, which means that lenders must go through the court system to foreclose on a property. This process provides homeowners with opportunities to defend against foreclosure and explore alternatives. Ignoring the notice will not make it go away and may lead to losing your home sooner than necessary. Understanding your legal rights and options is the first step in determining how to proceed.

Understanding The Foreclosure Process In Illinois

Under 735 ILCS 5/15-1504, foreclosure proceedings in Illinois begin when the lender files a complaint in court. You will receive a Summons and Complaint, which officially notifies you of the foreclosure action. You have 30 days to file a response, and failing to do so may result in a default judgment against you.

If the foreclosure process moves forward, the lender must provide proper notice before a foreclosure sale can take place. Under 735 ILCS 5/15-1507, homeowners must receive at least 30 days’ notice before the sale. In many cases, homeowners can seek foreclosure mediation, loan modifications, or other alternatives to avoid losing their homes.

Steps To Take After Receiving A Foreclosure Notice

 

1. Read The Notice Carefully

The foreclosure notice will contain important details about the legal proceedings. Foreclosure notices include the deadlines for responding. Do not ignore this document, as failing to respond could result in an automatic judgment in favor of the lender.

2. Seek Legal Assistance

Illinois foreclosure law is complicated, and defending against foreclosure requires legal knowledge and strategic planning. Consulting with our foreclosure defense attorney can make sure that you understand your rights and legal options.

3. Respond To The Complaint

You have 30 days from the date you are served to file a response in court under 735 ILCS 5/15-1506. Your response can include defenses such as improper service, errors in the lender’s paperwork, or violations of Illinois foreclosure laws.

4. Explore Loan Modification Or Mediation

Many lenders are willing to negotiate alternatives to foreclosure. Under 735 ILCS 5/15-1508(d-5), courts may approve loan modifications or repayment plans that allow homeowners to stay in their homes. Seeking mediation can be an effective way to delay or prevent foreclosure.

5. Understand Redemption Rights

Illinois law provides homeowners with a redemption period to reclaim their property after foreclosure. Under 735 ILCS 5/15-1603, homeowners generally have 90 days from the date of the judgment to pay the total amount owed and stop the foreclosure.

6. Consider Filing For Bankruptcy

In some cases, filing for bankruptcy can stop a foreclosure through an automatic stay. Under 11 U.S.C. 362, bankruptcy temporarily halts foreclosure proceedings, giving homeowners time to reorganize their finances.

FAQs About Foreclosure In Illinois

Can A Lender Foreclose On My Home Without Going To Court?

No. Illinois follows a judicial foreclosure process, meaning that lenders must file a lawsuit and obtain a court order before foreclosing on a property. This process provides homeowners with legal protections and opportunities to challenge the foreclosure.

What Happens If I Ignore A Foreclosure Notice?

Ignoring a foreclosure notice can lead to a default judgment, allowing the lender to proceed with the foreclosure sale. Once a judgment is entered, homeowners lose many legal defenses that could have been used to delay or stop the process.

Can I Sell My Home To Avoid Foreclosure?

Yes. Homeowners can sell their property through a short sale or a traditional sale to avoid foreclosure. If the home’s value is less than the amount owed, the lender may agree to a short sale, forgiving the remaining debt in some cases.

What Is A Deficiency Judgment, And Can The Lender Come After Me For More Money?

A deficiency judgment occurs when the foreclosure sale does not cover the full mortgage balance. Under 735 ILCS 5/15-1508(e), lenders in Illinois can seek a deficiency judgment against homeowners for the remaining debt, but this can sometimes be negotiated or discharged in bankruptcy.

Can Foreclosure Be Stopped After A Sale Date Is Set?

Yes. Even after a foreclosure sale date is scheduled, homeowners may still have legal options, such as loan modifications, bankruptcy, or redemption rights under 735 ILCS 5/15-1603. Acting quickly is crucial to exploring these alternatives.

Contact Our Illinois Foreclosure Attorney For Legal Guidance

At Covert Marrero Covert LLP, we understand the stress and uncertainty that come with facing foreclosure. Our team of experienced Illinois foreclosure defense attorneys is dedicated to protecting your rights and helping you explore every available option to save your home. Whether you need assistance responding to a foreclosure notice, negotiating with lenders, or considering bankruptcy, we can provide the legal guidance you need.

Contact our Illinois foreclosure attorney at Covert Marrero Covert LLP by calling us at (630) 717-2783 to schedule your initial consultation. Our offices are located in Warrenville, Schaumburg, Naperville, and Joliet, and we serve clients throughout the entire Chicagoland metro area. Let us help you take control of your situation and fight for your home.

Dealing with Unpaid Property Taxes: Protecting Your Home from Foreclosure in Chicago

Falling behind on property taxes will put homeowners at risk of losing their homes. In Illinois, unpaid property taxes can result in a tax sale or foreclosure proceedings. These situations can force homeowners out of their properties if they fail to take action. Under 35 ILCS 200/21-90, county governments have the right to sell delinquent property taxes to investors, who may eventually obtain ownership of the home if the homeowner does not redeem the debt. Homeowners facing tax delinquency in Chicago and across Illinois need to understand their legal rights and the steps available to protect their property.

At Covert Marrero Covert LLP, we assist homeowners in resolving unpaid property tax issues, fighting foreclosure proceedings, and reclaiming their financial stability. Illinois law offers multiple ways to prevent foreclosure and protect a home, including installment payment plans, tax exemptions, and redemption rights. Taking action quickly can mean the difference between saving your home and losing it to foreclosure.

How Unpaid Property Taxes Lead To Foreclosure

Tax Sale Process In Illinois

Under 35 ILCS 200/21-110, if property taxes remain unpaid for a specified period, the county will conduct a tax sale, allowing private investors to purchase the delinquent taxes. The property owner must then redeem the taxes by paying the amount owed plus penalties and interest.

Redemption Period And Its Importance

Illinois law provides a redemption period for homeowners to pay off the delinquent taxes before losing ownership of the property. The length of this period depends on the type of tax sale conducted:

  • Tax lien sale – Homeowners typically have 2.5 years to redeem the property.
  • Tax deed sale – If the property is not redeemed, the tax buyer can obtain a tax deed under 35 ILCS 200/22-40, leading to permanent loss of ownership.

Options To Protect Your Home From Foreclosure

Setting Up A Payment Plan

Many counties, including Cook County, offer installment payment plans to help homeowners catch up on unpaid property taxes. These payment plans allow homeowners to spread out payments over a set period, preventing a tax sale.

Applying For Tax Exemptions

Some homeowners may qualify for property tax exemptions that can lower the total amount owed. These include:

  • Senior Citizen Exemption
  • Homestead Exemption
  • Disabled Persons Exemption

Filing For Bankruptcy To Halt Tax Foreclosure

Under 11 U.S.C. § 362, filing for bankruptcy can temporarily stop foreclosure proceedings, allowing homeowners to reorganize their finances. A Chapter 13 bankruptcy may provide a repayment plan that includes overdue property taxes.

Challenging The Tax Sale

Homeowners who believe their tax sale was conducted improperly may be able to challenge the sale in court under 35 ILCS 200/21-175. Errors in notification, calculation, or process may invalidate the sale.

Frequently Asked Questions

What Happens If I Miss My Property Tax Payment Deadline?

If you miss a property tax payment, the county will impose penalties and interest on the overdue amount. Continued non-payment may result in a tax lien sale, where your unpaid taxes are sold to a third party.

How Long Do I Have To Pay Off My Delinquent Property Taxes?

Illinois law provides a redemption period that typically lasts 2.5 years for most tax sales. If the taxes are not paid within that period, the tax buyer can apply for a tax deed, which results in the loss of homeownership.

Can I Stop A Tax Sale Once My Property Is Listed?

Yes, homeowners can prevent a tax sale by paying the outstanding balance or setting up a payment plan with the county before the sale date. If the tax sale has already occurred, homeowners may still redeem the property within the legal timeframe.

What Is A Tax Lien, And How Does It Affect My Home?

A tax lien is a legal claim placed on a property due to unpaid taxes. The county may sell this lien to an investor, giving them the right to collect payments with interest. If the homeowner fails to repay the lien within the redemption period, the investor may take ownership of the home.

What If I Cannot Afford To Pay My Property Taxes?

Homeowners facing financial hardship may be eligible for property tax relief programs or payment plans. Seniors, disabled individuals, and veterans may also qualify for tax exemptions that reduce the amount owed.

Can Bankruptcy Help Me Stop A Tax Foreclosure?

Yes, filing for Chapter 13 bankruptcy can temporarily stop tax foreclosure and provide a structured repayment plan that includes property taxes. However, property taxes must eventually be paid to avoid foreclosure.

What Should I Do If I Receive A Tax Sale Notice?

If you receive a tax sale notice, contact an attorney immediately to explore your options. Paying the delinquent amount, negotiating a payment plan, or challenging the tax sale process may help protect your home.

How Can I Challenge An Improper Tax Sale?

If there were errors in notification, calculation, or legal procedures, homeowners could file a court challenge under 35 ILCS 200/21-175. Successfully challenging a tax sale may allow homeowners to reclaim their property.

Call Our Chicago Property Foreclosure Defense Attorney For A Free Consultation

If you are facing unpaid property taxes and the risk of foreclosure, you do not have to go through this process alone. At Covert Marrero Covert LLP, we help homeowners fight foreclosure, set up payment plans, and explore legal options to protect their homes. The sooner you act, the more options you will have to avoid losing your property.

Contact our Naperville foreclosure defense attorney at Covert Marrero Covert, LLP by calling (630) 717-2783 to schedule a consultation. Our offices in Warrenville, Schaumburg, Naperville, and Joliet serve homeowners across Chicago and the entire Chicagoland metro area. Let us help you keep your home.

Common Mistakes to Avoid When Pursuing a Short Sale in Illinois

Pursuing a short sale in Illinois can be a practical solution for homeowners struggling to keep up with their mortgage payments. A short sale permits you to sell your home for less than the remaining balance on your loan, potentially avoiding foreclosure and the lasting impact it can have on your credit. While this process may seem straightforward, it is filled with legal and financial complexities. Making mistakes along the way can delay the process or even jeopardize your ability to complete the sale successfully.

At Covert Marrero Covert LLP, we have seen how common errors can derail a short sale. Failing to understand your lender’s requirements or not addressing any tax implications can lead to costly consequences. By seeking legal guidance from a licensed attorney, you can avoid these mistakes.

Not Understanding Your Lender’s Requirements

Every lender has its own short sale process. Failing to meet your lender’s specific requirements can cause delays or lead to outright denial. Most lenders require detailed documentation, including a hardship letter, proof of income, and a current valuation of your property.

Under Illinois foreclosure law (735 ILCS 5/15-1404 et seq.), lenders must act in good faith during the foreclosure and short sale process, but that doesn’t mean they will make it easy for you. Missing a single document can halt progress, so working with an experienced attorney can help you stay organized and meet these requirements.

Waiting Too Long To Start The Process

Timing is critical when pursuing a short sale. If you wait until the foreclosure process is well underway, your window for completing the short sale may be limited. Illinois law allows lenders to proceed with foreclosure even if you are in discussions for a short sale (735 ILCS 5/15-1401 et seq.). Starting the process early gives you more control and a better chance of reaching an agreement with your lender.

Overlooking Tax Implications

Many homeowners are unaware of the potential tax consequences of a short sale. The forgiven portion of your mortgage may be considered taxable income unless you qualify for an exemption under the Mortgage Forgiveness Debt Relief Actor other applicable tax laws. Failing to address this issue can lead to unexpected financial burdens after the sale. Consulting with a foreclosure defense attorney or tax professional can help you understand your obligations.

Failing To Work With A Qualified Team

Attempting to handle a short sale without an attorney is one of the most consequential mistakes homeowners can make. The process involves legal contracts, negotiations with lenders, and potential tax consequences. Without a knowledgeable attorney, you may miss important details that could impact your financial future.

Neglecting To Communicate With All Parties

A successful short sale requires clear communication between you, your lender, second lienholders, and any other parties involved. Overlooking these stakeholders can create complications that delay or prevent the sale from closing. Ensuring all parties are informed and involved is crucial to avoid misunderstandings and roadblocks.

Illinois Short Sale Frequently Asked Questions

What Is A Short Sale, And How Does It Work In Illinois?

A short sale allows a homeowner to sell their property for less than the remaining mortgage balance with the lender’s approval. In Illinois, this process requires negotiation with the lender to agree on the sale terms and release the homeowner from further financial obligations. The lender must approve the sale and agree to accept the reduced amount as full satisfaction of the debt.

Can A Lender Foreclose During A Short Sale In Illinois?

Yes, under 735 ILCS 5/15-1401 et seq., lenders can continue with foreclosure proceedings even while negotiating a short sale. This is why it’s critical to start the short sale process early and work closely with your attorney to coordinate efforts and avoid foreclosure.

Will I Still Owe Money To The Lender After A Short Sale?

In some cases, lenders may require you to pay the remaining balance of the mortgage, known as a deficiency. However, many short sale agreements include a deficiency waiver, which releases the homeowner from further financial obligations. It’s essential to have your attorney review the agreement to ensure the waiver is included.

Are There Tax Consequences For A Short Sale In Illinois?

The forgiven portion of your mortgage may be considered taxable income unless you qualify for an exemption, such as the Mortgage Forgiveness Debt Relief Act. Consulting with a tax professional or attorney can help you understand and address any tax implications.

Do I Need An Attorney For A Short Sale?

While not legally required, having an attorney is highly recommended. An experienced foreclosure defense attorney can guide you through the process, negotiate with lenders, ensure all legal requirements are met, and protect your financial interests.

Contact Our Chicago Short Sale Attorney For Your Free Consultation

Pursuing a short sale in Illinois requires careful planning and legal expertise to avoid common mistakes and protect your financial future. At Covert Marrero Covert LLP, we are here to help you navigate the complexities of the short sale process and ensure that your rights are protected every step of the way.

Contact our Naperville short sale attorney at Covert Marrero Covert, LLP by calling (630) 717-2783 to schedule a consultation. With offices in Warrenville, Schaumburg, Naperville, and Joliet, we proudly serve clients throughout the Chicagoland metro area. Let us help you take the next step toward financial relief with confidence.

How A Deed-In-Lieu Of Foreclosure Can Help You Avoid Long-Term Credit Damage

Facing foreclosure is an overwhelming experience, especially when the future of your financial stability is at stake. Many Illinois homeowners feel trapped between their inability to keep up with mortgage payments and the damage a foreclosure can do to their credit score. However, a deed-in-lieu of foreclosure offers a potential solution to avoid the lasting harm foreclosure can cause. This process allows homeowners to transfer ownership of their property to the lender voluntarily, effectively resolving the mortgage debt. While it’s not the right solution for everyone, a deed-in-lieu of foreclosure can be a viable option for many Illinois homeowners looking to protect their credit and move forward.

Under Illinois foreclosure laws, lenders are required to follow specific procedures outlined in the Illinois Mortgage Foreclosure Law (IMFL), 735 ILCS 5/15-1101 et seq. This statute governs foreclosure actions, including alternatives such as deeds-in-lieu. Unlike a traditional foreclosure, a deed-in-lieu often avoids the public auction process and the accompanying stigma. This alternative resolution helps both lenders and borrowers reach an agreement that satisfies the debt without prolonged legal proceedings. It’s important to understand your rights under the IMFL and ensure the lender agrees to release you from further financial obligations related to the mortgage.

Benefits Of A Deed-In-Lieu Of Foreclosure

One of the major benefits of a deed-in-lieu of foreclosure is the reduced impact on your credit score. While this process will still negatively affect your credit, the damage is typically less severe than that caused by a foreclosure. Additionally, since the process is voluntary and avoids legal judgments, it minimizes the risk of a deficiency judgment—where the lender seeks repayment for the remaining loan balance if the property’s value doesn’t cover the debt.

It’s also crucial to consider potential tax implications. Forgiveness of the debt through a deed-in-lieu may be treated as taxable income under federal and Illinois tax laws unless you qualify for exemptions. This is why consulting a legal professional to address these concerns is essential before committing to this option. Properly negotiating the terms of the agreement with the lender can help eliminate future liability and provide a clean slate.

If you’re considering a deed-in-lieu of foreclosure, we encourage you to explore all your options carefully. This decision involves significant legal and financial ramifications that require a clear understanding of Illinois foreclosure laws and the terms of the lender’s agreement. Our team is here to guide you through the process and protect your interests.

Deed-In-Lieu Of Foreclosure Frequently Asked Questions

What Is A Deed-In-Lieu Of Foreclosure?

A deed-in-lieu of foreclosure is an agreement where a homeowner voluntarily transfers ownership of their property to the lender to satisfy the mortgage debt. This process is an alternative to foreclosure and may help avoid the long-term credit damage and public proceedings associated with traditional foreclosure actions.

Can A Deed-In-Lieu Of Foreclosure Completely Eliminate My Debt?

In many cases, a deed-in-lieu of foreclosure resolves the mortgage debt, but it’s essential to ensure the lender agrees in writing to waive their right to pursue a deficiency judgment. Without this waiver, you could still be held responsible for the remaining loan balance if the property’s value is less than the outstanding debt.

How Does A Deed-In-Lieu Of Foreclosure Impact My Credit?

While a deed-in-lieu of foreclosure does affect your credit score, the impact is typically less severe than a foreclosure. It is recorded as a settled debt rather than a forced sale, which can make it easier to rebuild your credit over time.

Am I Eligible For A Deed-In-Lieu Of Foreclosure?

Eligibility depends on the lender’s requirements and the specific circumstances of your mortgage. Generally, lenders will consider this option if the property has no other liens and if the homeowner cannot make payments due to financial hardship.

Will I Owe Taxes On Forgiven Mortgage Debt In Illinois?

Mortgage debt forgiven through a deed-in-lieu may be considered taxable income under federal and Illinois tax laws. However, certain exemptions may apply, such as those provided under the Mortgage Forgiveness Debt Relief Act. Consulting with a legal or tax professional is important to address this issue.

Can I Use A Deed-In-Lieu Of Foreclosure For Investment Properties?

Deeds-in-lieu are generally used for primary residences, but some lenders may allow this process for investment properties depending on the circumstances. Negotiating this type of arrangement requires legal assistance to ensure you meet all conditions.

Contact Our Chicago Business Property Foreclosure Defense Attorney For Your Free Consultation

If you’re facing foreclosure, you don’t have to face these challenges alone. At Covert Marrero Covert LLP, we provide personalized legal support to help Illinois homeowners understand their options under state foreclosure laws. Our experienced attorneys are dedicated to protecting your rights and helping you pursue alternatives like a deed-in-lieu of foreclosure to avoid long-term credit damage.

Contact our Naperville foreclosure defense attorney at Covert Marrero Covert, LLP by calling (630) 717-2783 to schedule a consultation. Our offices are conveniently located in Warrenville, Schaumburg, Naperville, and Joliet, Illinois, and we proudly serve clients throughout the Chicagoland metro area. Take the first step toward resolving your mortgage challenges with skilled legal guidance.