The Bankruptcy Court’s conversion of Section 11 of the Illinois Conveyance Act from a safe harbor provision to a mandatory checklist that must be satisfied to survive avoidance challenges has been reversed (Crane Bankruptcy – D Ct decision). The Central District of Illinois holds compliance with the statute is permissive. While the statute provides that mortgages containing the enumerated terms, including the interest rate and matu
Recently, on the eve of closing a large mortgage loan for a regional mall intended for a single asset securitization, it was determined that there was an extremely remote risk that the mortgage might not be foreclosable due to a peculiarity of the improvements on the real property and local foreclosure practices.
In a ruling on February 28, 2013, the U.S. District Court for the Central District of Illinois reversed the February 29, 2012 order of the U.S. Bankruptcy Court for the Central District of Illinois allowing a bankruptcy trustee to avoid an Illinois mortgage as to unsecured creditors for lack of “constructive notice” because the mortgage did not expressly state the maturity date of and interest rate on the underlying debt (In Re Crane, Case 12-2146, U.S. Dist. Ct., C.D. IL, February 28, 2013).
The United States District Court for the Central District of Illinois has arguably driven the last nail into the coffin of In re Crane, the much criticized decision of the United States Bankruptcy Court for the Central District of Illinois. The coffin was already set in place after the Illinois legislature passed S.B.0016 late last year, which was signed into law by Gov.
Custom and practice in Illinois with respect to mortgages has been to incorporate the note or other debt instrument by reference, rather than to disclose all of the financial terms of a loan transaction in the mortgage.
Since theIn re Crane decision was handed down by the Bankruptcy Court for the Central District of Illinois in April 2012, all eyes in the mortgage banking industry have been focused on the appeal of the decision pending in the U.S. District Court, in the hopes that the widely criticized ruling of the Bankruptcy Court would be overruled.
The Illinois legislature has passed and sent to the Governor an amendment to the Illinois Conveyances Act to address the decision in Crane v. The Gifford State Bank (2012 WL 669595 (Bkrtcy.C.D. Il). The Crane decision was rendered on February 29, 2012, and held that a mortgage could be avoided by a trustee in bankruptcy because it failed to include the interest rate and maturity date of the indebtedness secured by the mortgage.
In a previous Alert that we published in July 2012 entitled “Michigan Court Authorizes Receiver Sale of Real Property Free and Clear of Redemption Rights,” we reported on a decision of a Michigan trial court in Ottawa County, Michigan permitting a state-court receiver to sell real property free and clear of a mortgagor’s redemption rights.
The New Jersey Appellate Court has recently ruled that a receiver can be sued for injuries sustained in a building under the receiver’s control. The case involved a dilapidated apartment building in Passaic and injuries sustained thirteen months after the receiver was appointed by judge overseeing the foreclosure case of the first mortgage holder. The receiver was charged with responsibility to collect rent; manage, insure and repair the premises; pay taxes and assessments; and “do all things necessary for the due care and proper management of the mortgaged premises.” Acco