Real Estate Law & Practice MCLE Meeting

Attorney Resource Center

November 14, 2019 11:45 AM – Noon Welcome/Introductions

Christopher Iaria, Section Chair

Noon – 1:00 PM Program

Recent Case Law Update

Michael J. Rooney - Illinois Institute for Continuing Legal Education

(IICLE)

Speakers’ Bio are attached

Review and discussion of 12 recent cases from state and federal courts in Illinois concerning real property substantive law and principles.

Next Meeting: 1/9/2020 – TBD

DCBA Events: November 15th & 16th – GAL Training – 421 Building -Auditorium

November 21st – DCBA Unwind – Lynfred Winery, Roselle

December 12th - DCBA/DAWL/Justinians Inaugural Grand Holiday Gala - Harry Caray’s, Lombard

Earn CLE Online!

DCBA OnDemand CLE is Now Powered by IICLE The Illinois Institute for Continuing Legal Education (IICLE®) and the DuPage County Bar Association (DCBA) are excited to offer a new

IICLE®Share collaboration to provide DCBA members a high quality and reliable online learning experience. Members can find the link to The Illinois Institute for Continuing Legal Education (IICLE) on the DCBA website under “Legal Community”OnDemand CLE Online CLE Catalog

View & Print All CLE Certificates through the DCBA Website:

Manage Profile -> Professional Development (under content & features) and choose the icon to the left of each meeting to print your certificate directly or choose to have them emailed to you to save to your computer (you MUST be logged in to view this feature)

BIOGRAPHICAL INFORMATION FOR MICHAEL J. ROONEY

Currently the Executive Director of the Illinois Institute for Continuing Legal Education, Mr. Rooney (mrooney@iicle.com or mike@mjrooney.com) is a 1976 graduate of the University of Illinois College of Law. He received a B.S. in Ed. from Illinois State University in 1971 with a major in physical education. Between degrees, he spent two years in the United States Army and was honorably discharged in 1973.

He is the author of two single-author handbooks and numerous chapters in other books for the Institute and has spoken at many IICLE seminars over the years. He served on the Board of Directors from 1984-1993 and as Chairman of the Board, 1991-1992. He has served on planning committees for several programs and continues his active authorship and speaking today.

Prior to joining IICLE, Mr. Rooney spent over thirty-five years in the title insurance industry as an employee of title insurance companies, title insurance agencies, and as an expert witness and consultant. He also served as the title insurance regulator for the State of Illinois for two years. Having served in nearly every capacity within title companies in the Midwest and Southwest, he is familiar with title insurance underwriting, title searches and examinations, and closing and escrow procedures.

He is a member of the Chicago Bar Association, the Illinois State Bar Association and the Kane County Bar Association, where he serves on the Editorial Board and writes a monthly column in the Bar Briefs magazine. He is a former member of the American Bar Association. He has served in multiple capacities in all those organizations, including presenting at continuing legal education seminars and writing articles for their publications.

Mr. Rooney is a Life Fellow of the American Bar Foundation and a Pillar of the Foundation (Charter) Fellow of the Illinois Bar Foundation. He is a member of the American College of Real Estate Lawyers, having been elected in his first year of eligibility in 1987.

Mr. Rooney can be reached by telephone at 312-401-3454 or via email at mrooney@iicle.com.

$200 for DCBA Members $400 Non-MembersRegister online at: www.dcba.orgSend payments to: DuPage County Bar Association 126 S. County Farm Road, Wheaton, IL 60187

Session One: Friday November 15, 2019 from Noon - 5:30pm (Registration 11:30am) - GAL Appointment 101

- Substance Abuse/Mental Health Issues and Restrictions on Parenting Time

- Domestic Violence and Family Center Services

- DCFS/Children’s Advocacy Center/VSIs

- Special Needs Children

- 604 Evaluations

- Working with High Conflict Parents

Session Two: Saturday, November 16, 2019 from 8:00am-1:00pm (Registration 7:30am)- Children’s Panel

- Ethics-related Matters

- Gender Identity Issues

- Drafting Allocation Judgments/Facilitating Settlement

- Probate Matters

- Relocation

Program Location: DuPage County Administration Building Auditorium 421 N. County Farm Road in Wheaton, IL

By attending both sessions, you can earn up to 10 hours of CLE credit (PRMCLE awarded

based on final agenda). Attendance at both sessions is required to be placed or remain on

the approved GAL list used in 18th Circuit Domestic Relations Division.

The DuPage County Bar Association and the 18th Judicial Circuit Domestic Relations Division

Guardian Ad Litem Training Program

RECENT CASE LAW UPDATE DuPage County Bar Association

November 14, 2019 United States v. Z Investment Properties, 921 F.3d 696 (7th Cir., 2019); Tax lien recorded against “Carrol V. Raines” instead of the correct spelling of “Carroll V. Raines” was upheld as enforceable despite the argument that a computerized title search returned no result due to the incorrect spelling. In fact, Chicago Title Insurance Company did discover the lien because its employees knew the proper way to construct a search in a computerized name index. PRACTICE POINTER: Make sure when using a computerized search process you understand how the indexing system works and input the least amount of information so that the system returns the most accurate information. Also, read my article in the May 2019 IICLE electronic newsletter called FLASHPOINTS – free subscription available on the IICLE website: www.iicle.com.

In re: Scott N. Jaffe, 932 F.3d 602 (7th Cir., 2019); A bankrupt may not list as exempt property his interest in real estate he owned with his wife as tenants by the entirety where the wife died during the pendency of the bankruptcy case. Once the wife died, the bankrupt owned fee simple absolute title to the real estate as the survivor tenant by the entirety and Illinois law does not protect the contingent future interest of the two tenants by the entirety. PRACTICE POINTER: Indiana law is different and the Indiana tenant by the entirety statute does specifically protect the parties’ contingent future interest. In Illinois, however, because the it is no longer necessary to protect the interests of the non-debtor spouse once he or she dies, the legislature has decided not to protect that interest.

Fifth Third Mortgage Company v. Ira Kaufman, 934 F.3d 585 (7th Cir., 2019); An attorney who owned a title insurance agency and closed a number of transactions as the attorney for the seller ignores the lender’s closing instructions given to the title insurance agency he owned at his own peril. Here, the lender suffered substantial monetary losses due to mortgage fraud and the attorney was found to have actively participated in the fraud, despite his denials. Judgment against both the attorney personally and the title insurance agency he owned was affirmed by the Seventh Circuit on appeal. PRACTICE POINTER: The lender’s closing instructions provided the title insurance agent was not to proceed with closings if it had reason to suspect a purchaser/borrower was not going to occupy the premises as the principal residence. Where multiple straw buyers purchased condo units on the same day and their loan applications all said each unit was to be occupied as a principal residence, the title insurance agent and the attorney owner should have refused to close those transactions. Lawyers who also serve as title insurance agents in transactions where they represent clients must recognize the potential liability they face if they fail to act correctly in the role as a title insurance agent.

JCRE Holdings v. GLK Land Trust, 2019 IL App (3d) 180766 (August 30, 2019); A license is merely a temporary personal property interest that can affect real estate. An easement is a permanent interest in a parcel of real property. A license terminates upon the death of either the licensor or licensee or the sale by either of his or her real property that is affected by the license. PRACTICE POINTER: Do you as a lawyer use a license agreement to “resolve” an encroachment issue at closing? If so, recognize that your client, or the other side, will face the exact same issue again in the future because at some point it is guaranteed that both the licensor and licensee will die. Or they may sell their interest in the affected real estate before dying. In either event, the license terminates and further steps must be taken to “resolve” the problem.

Estate of Jezewski v. Jaworski, 2019 IL App (1st) 170100 (September 30, 2019); A deed from the record owner of “An undivided one half interest to Aniela Jezewski and an additional undivided one half interest to Kazimierz Jaworski and Elizabeth Jaworski as Joint Tenants and not as tenants in common” created a joint tenancy between the latter two grantees in an undivided half of the property in question, but only created a tenancy in common between the former grantee and the latter grantees in the whole. Upon the death of the former, her undivided one-half interest passed to her estate, which could maintain an action for partition against the two grantees. PRACTICE POINTER: The language of the conveyance is very clear about the estates created. Be sure your draftsmanship is equally clear.

Alward v. Jacob Holding of Ontario, 2019 IL App (5th) 180332 (September 13, 2019); A deed from the owner of a beneficial interest in an Illinois land trust, without more, conveys nothing, was a cloud on title, but not constructive notice to subsequent purchasers. In a remarkable case of “you get what you pay for – or don’t pay for” the beneficiary of the Illinois land trust apparently chose to save himself a few dollars by not using a lawyer to convey property subject to a mortgage to other family members. The trouble is, he was not the owner of record. PRACTICE POINTER: Always, always, always either conduct your own title search or obtain a title insurance commitment and policy from a reputable company before drafting instruments that purport to affect title to real estate!! We can chuckle all we want to about the hapless consumer in this case, but lawyers have made similar mistakes. (See, e.g., Snyder v. Heidelberger). Consumers are in the habit of using generic and not-very-helpful terms such as “ownership” when it comes to real estate. We expect lawyers to be more specific. This is why.

Enbridge Energy v. Kuerth, 2018 IL App (4th) 150519-B (February 27, 2018); Enbridge Pipeline v. Temple, 2019 IL App (4th) 150346 (October 16, 2019); These two cases are instructive for a variety of reasons. Read them through fully, in the order cited. Both are pipeline easement condemnation cases. In the former case, an appeal was taken from an order granting condemnation and the argument on appeal was that there was not a public benefit to the taking because one particular company was going to be entitled to use the majority of the pipeline’s capacity. The Fourth District Appellate Court held that despite the unequal use of the pipeline’s capacity, there was still a public benefit and it affirmed the trial court decision. The appellate court denied a sanctions motion because it found that the argument raised was not raised in bad faith since the question had not been decided previously. However, the court warned that subsequent cases making the same argument could result in sanctions because the court had now decided the issue. Of course, a lawyer made exactly the same argument in a subsequent case involving the same pipeline project (though different real estate). The lawyer was sanctioned under both Illinois Supreme Court Rules 137 and 375(b). PRACTICE POINTER: If you are faced with a similar problem, how do you make a record of your argument when it is the same or very close to the same as another where the same court has previously ruled? Very, very carefully! The second opinion pretty convincingly demonstrates that the sanctioned lawyer had gone beyond the bounds of advocacy in dealing with the courts.

In re Estate of Siedler, 2019 IL App (5th) 180574 (August 28, 2019); A residuary legatee under a decedent’s will is not a bona fide “third party purchaser” for the purposes of deciding the price an optionee under the will must pay for real estate. Here, the optionee was permitted to purchase a particular parcel of real estate from the estate at the higher of its appraised value or the price offered by a bona fide third party purchaser. A residuary legatee of the estate made a higher offer to purchase than the optionee. In the battle between the optionee and the residuary legatee, the optionee won. PRACTICE POINTER: The appellate opinion is well-reasoned and disqualified the offer of the residuary legatee because he was, in effect, buying with “house” money.

Smith v. The Purple Frog, Inc., 2019 IL App (3d) 180132 (October 16, 2019); No premises liability where a drinking customer caught himself on fire by leaning against a wall heater in an outdoor area for smoking customers of a bar. He had been to the bar on many occasions and on the night in question told an EMT he had consumed eight beers. PRACTICE POINTER: If your client owns a bar with an outdoor smoking area heated with a gas heater, perhaps a sign like the one at The Purple Frog would be helpful. The sing read, “Heater is hot. We are not responsible for your silly ass getting too close!! Thanks, Pottsie’s.”

Trilisky v. The City of Chicago, 2019 IL App (1st) 182189 (September 26, 2019); Fannie Mae and Freddie Mac are not exempt from the City of Chicago real property transfer tax because they are not governmental bodies. PRACTICE POINTER: The use of transfer taxes as applied to real property transactions to increase tax revenues for various government bodies is likely to continue, as indicated by the Chicago mayor’s budget address. Further, the new governor seems inclined to follow suit. These trends are not good for either real estate practitioners or their clients.

Pack v. Maslikiewicz, 2019 IL App (1st) 182447 (September 26, 2019);

Consumer Fraud Act case against someone who purchased a home to rehab and flip under circumstances where there were multiple problems with the quality of the rehabber’s work. Judgment for the purchasers against the rehabber affirmed on appeal. PRACTICE POINTER: The 53 page appellate opinion is worth reading whether you represent rehabbers or purchasers of rehabbed property.

Baillie v. Raoul, 2019 IL App (4th) 180655 (October 16, 2019); This case involves the proper valuation of a decedent’s one-half interest in three joint tenancy properties should be valued for purposes of “the Illinois estate tax” (according to the court, though I was always told in Illinois we have an “inheritance” tax), where the surviving joint tenant executes a qualified disclaimer. PRACTICE POINTER: This is really a tax case and that’s not my area, but since it involves real property, it’s included here for your edification. Michael J. Rooney 312-4011-3454 mrooney@iicle.com