Illinois Appellate Court Holds When More Than Two Years Have Passed After Decedent’s Death, Mortgagee May Not Initiate a Foreclosure

Thomas Topal owned real estate in Benld, Ill., when he died on March 15, 2017.  The mortgage on the property was held by First National Bank in Staunton, Ill.

In February 2020, Associated Bank N.A. (Associated) acquired First National Bank and succeeded it as mortgagee.

On Oct. 22, 2020, just over 2 ½ years after Topal passed away, his heir, Catherine Petrak, filed a petition seeking to admit his will to probate. Petrak died on Dec. 5, 2020. Attorney Robert Smith was named executor for her estate in a separate probate case and as independent administrator of Topal’s estate.

One month later, Topal’s estate filed a petition to bar any claim by Associated, the lender bank, against the estate, asserting it was time-barred as Associated had not filed any claims within two years of Topal’s death as required by section 18-12(b) of the Illinois Probate Act of 1975.

Associated argued that it retained a right to do so as foreclosure was an in rem action and not required to be settled in the probate action. The trial judge issued an order holding that any claims by Associated were time-barred and ordered Associated to execute a release of its lien. Associated appealed.

On appeal, Associated argued the trial court erred and it was not bound by the two-year filing limitation of the act, and that it may pursue a separate foreclosure action based on the mortgage.

The appellate court first considered the extent to which Associated was bound by the Probate Act.  The appeals panel noted a claimant may either file a claim in the probate court or seek the appointment of a special representative of the estate, but in either case, the claim must be filed within two years of decedent’s death.

The appellate court emphasized that this is not a period of limitations, but a jurisdictional requirement, as beyond that a court has no jurisdiction to adjudicate a claim against the estate, making the trial court’s determination proper.

Because the trial judge ordered Associated to release its mortgage, which would bar any future action for foreclosure, the appellate court also had to address the issue of whether a foreclosure action could later be initiated.  The appeals panel acknowledged that precedent was ambiguous as the Illinois Supreme Court has expressly held that foreclosure actions are quasi in rem proceedings in which the mortgagor is also a defendant.

However, the appellate court found the personal liability of the decedent “diverges” from the mortgagee’s right to enforce the lien securing its debt.”

In conclusion, the appellate court found that the trial court erred in compelling Associated to issue a release of its mortgage and that this order must be reversed. The appellate court further affirmed in part, and reversed in part, and remanded the case for further proceedings.

In re Estate of Thomas F. Topal, 2022 IL App (4th) 210613, October 24, 2022.

Kreisman Law Offices has been handling probate litigation, commercial litigation, medical malpractice lawsuits, and Illinois appellate cases for individuals, families and businesses for more than 45 years in and around Chicago, Cook County and its surrounding areas, including Calumet City, Inverness, Joliet, University Park, Lisle, Waukegan, Wheaton, Hinsdale, Aurora, Chicago (Rogers Park, Roscoe Village, North Lawndale, Austin, Garfield Park, Bronzeville, South Shore, Hegewisch, Back of the Yard, Pilsen, Pullman), Mundelein, Niles, Des Plaines, Wilmette and South Holland, Ill.

Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.

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