REAL ESTATE LAW PRACTICE “KEYPOINTS”

(January, 2004)

 

By Steven B. Bashaw

Steven B.  Bashaw, P.C.

Suite 1012

1301West 22nd Street

Oak Brook, Illinois  60523

Tel.: (630) 472-9990

Fax.: (630) 472-9993

e-mail:  sbashaw@bashawlaw.com

(Copyright 2004 - All Rights Reserved)

In addition to encouragement from the Illinois Institute of Continuing Legal Education and the Illinois State Bar Association's Real Estate Section Council, it should be noted that Chicago Title Insurance Company helps underwrite the monthly production of these real estate law "Keypoints". Chicago Title is committed to the role of attorneys in real estate transactions and their continuing education in this area. Its staff attorneys are pleased to offer their view points on various developments in the law as set forth below from the perspective of a title company serving the public and the attorneys who represent their clients in real estate transactions.

(Ed.'s Note: Happy New Year to all! Resolutions, of course are the 'topic of the day', and my secretary has convinced me that I should not try to catch-up on the missed months from last year, but simply go forward. So, on we will go into January. And…my other New Year's resolution was keep my garage clean at home and to be more practical and hands-on this year. Accordingly, you will find not one, but four tidbits I found while cleaning my real estate 'garage' that were contributed from the font of all knowledge used in the day-to-day real estate law world by Dick Bales…one on the revival of judgments, and the others on the Plat Act, Dedications, and implied easements.

 

1. MECHANIC'S LIENS; INSTALLMENT CONTRACTS AND EQUITABLE CONVERSION AND KNOWINGLY PERMITTED/AUTHORIZED WORK:

Construx of Illinois, Inc. v. Kaiserman, (4th Dist., 12/16/2003), http://www.state.il.us/court/Opinions/AppellateCourt/2003/4thDistrict/December/Html/4030136.htm is a case brought to foreclose a mechanic's lien against property in Springfield, Illinois. The contract giving rise to the lien was between Construx and John Shipley, who was purchasing under an installment sales contract from the owners, Bette Kaiserman, and her sons Donald and Herbert Kaiserman. The trial court ruled in favor of Construx, entering a judgment of foreclosure, and Kaiserman appealed contending that they were not "owners" under the Mechanics Lien Act definition, and, regardless, did not authorize or knowingly permit the improvements. The Fourth District opinion affirmed the trial court.

The property was improved with a three story brick building with a tavern on the first floor, (operated by Shipley), along with two other commercial units, and apartments on the second and third floor. Shipley was purchasing over a five year period by making monthly installments. The contract specifically provided that Shipley agreed to make no improvements without Kaiserman's written consent, and that he would keep the property free and clear of any mechanic's liens. The contract, however, was not recorded.

Shipley entered into the contract with Construx to demolish portions of the rear of the building and provide a three story staircase and deck in its place following a notice from the City of Springfield. After the work was complete but before it was paid for, Shipley ran into problems with the IRS, defaulted on the monthly payments to Kaiserman and was unable to pay the real estate taxes. Kaiserman and Shipley agreed to terminate the contract, and Shipley stayed on as a tenant, operating the tavern.

The trial on Construx's lien turned on the issues relating to knowledge and authorization of the construction work. Bette Kaiserman managed the property for herself and her sons, but testified that she "very rarely" drove by the rear of the building and did not know that the rear stairs were in need of repair or that Construx was doing the work. One of Shipley's employees, however, testified that he observed Bette at the rear of the building while construction was in progress. Shipley testified that he had received notice from the City of Springfield that the stairway was in need of repair and that he remodeled the interior of the building as well, but all without telling or receiving any written consent from Kaiserman over a three year period. More damaging testimony came from Construx's chief executive officer, who testified he spoke "to some extent" with Bette "probably near the end" of construction, and another Construx officer who stated that Bette told him she and Shipley were going to "work things out" and "they would take care of it" when she was contacted with concern about payment at the end of the project. A private investigator hired by Construx testified that he spoke with Shipley and was told by him that Bette knew about the work, did not object, and "kept herself aware of what was going on".

Turning first to the issue of "ownership", the Court rejected the argument that based on the installment contract relationship that applying the doctrine of equitable conversion, Bette's interest was only that of a lien holder. Noting that under Section 16 of the Act, (770 ILCS 60/16), a mechanic's lien only attaches to the extent of the value, (i.e., enhancement), to the interest of a lien holder, whereas under Section 1 of the Act, the owner's interest in the property is subject to the full amount of the contract, and that this ownership interest can be a fee simple, life estate, estate for years, right of redemption or "other interest which the owner may have", the Court also noted that there was an extensive collection of Illinois Supreme Court cases going back to the 1880s and 1960s that deal with equitable conversion and these were argued by the parties in their briefs. After distinguishing or clarifying the cases, Judge Steigermann here notes that equitable conversion "stems from the basic equitable principal that equity regards as done that which ought to be done….The doctrine of equitable conversion [however] is a fiction and its application is limited to the extent necessary to accomplish equity…[and should not be applied] where it interferes with other equitable considerations…[or] would circumvent or avoid established principles of law and public policy." The Act in Section 1 defines an "owner" as the "owner of any interest or estate in such lot or land", and has as its purpose avoiding a situation where an owner is "permitted to receive the benefit and escape the liability of the mechanic's lien attaching to their interest."

Closing with an analysis of the extensive facts in the case relating to whether Bette authorized or knowingly permitted the construction, the decision notes that: "The owner is presumed 'to have knowingly permitted' the improvements where he knew and failed to protest or accepted the benefits of the improvements." Here, while the evidence was conflicting, the Court was not persuaded by Kaiserman's argument that Bette could not have taken any action to protect herself, stating: "When Bette first learned of the construction project, she could have then informed both [the tenant and the contractor] that she was neither authorizing nor permitting the contraction project to take place." Failing to do so, the lien was valid as to her ownership interest.

 

2. LANDLORD/TENANT; SECURITY DEPOSITS AND DISCHARGE IN BANKRUPTCY:

During the last few years a number of decisions dealing with security deposits under the Chicago Residential Landlord and Tenant Ordinance have put fear into the hearts of landlords who have failed or refused to handle their tenant's money strictly in accord with the local law. In Re Bertha McGee, (7th Cir., December 23, 2003), http://caselaw.lp.findlaw.com/data2/circs/7th/032297p.pdf, is further instruction. A landlord attempted to avoid the harsh penalty imposed by a state court for failure to return a security deposit by seeking a discharge in bankruptcy - to no avail.

Bertha McGee accepted a security deposit of $2,500 from Gloria Nelson and her mother Linda Mitchell when she rented a single family house in Chicago to them. A dispute arose over the condition of the property, the tenants refused to pay rent and vacated, and McGee began eviction proceedings. Nelson and Mitchell counter claimed for the return of their security deposit. During the pendency of the case, McGee, (stating that she believed the court would rule in her favor), removed the security deposit and spent it. The state court judge entered judgment for the tenant in the sum $5,207.50, (the statutory 'double damages plus interest"), and McGee filed bankruptcy in order to obtain a discharge of the debt.

Bankruptcy Judge Squires ruled for McGee in granting the discharge, but Judge Shadur reversed on appeal based on his determination that McGee was acting as a "fiduciary" in holding the security deposit and therefore was not entitled to a discharge under the Bankruptcy Code, 11 U.S.C. Section 523(a)(4).

Judge Easterbrook's decision affirmed Shadur. The Bankruptcy Code does not allow a discharge of debts in the nature of a fiduciary obligation of the debtor; "defalcation while acting in a fiduciary capacity." Turning to the Chicago Municipal Code relating to landlords and holding security deposits, (Chicago Municipal Code, Section 5-080(a) ), the decision holds that a landlord is indeed acting as a fiduciary when holding the tenant's security deposit. The Code controls the nature of the relationship, and the fact that the funds "continue to be the property of the tenant", "shall not be commingled", "shall not be subject to the claims of any creditor of the landlord", are required be deposited in an interest bearing, insured account with the interest to be paid to the tenant, all indicate the nature of the relationship. The aspects of segregation, management by financial institution deposit, accounting, and the fact that the landlord has only bare legal title to the funds for the benefit of the tenant all result in a finding that "McGee was obligated to act as the tenants' fiduciary in investing and preserving the funds. Instead she made off with the money, an act of defalcation that disqualifies her from receiving a discharge." Another victory for the tenants. Are there any landlords who don't want security deposits yet?

 

3. LANDLORD/TENANT; STATUTE OF LIMITATIONS AND 'STATUTORY PENALTY' LIMITATION:

In another blow to landlords, the First District has determined in Sternic v. Hunter Properties, Inc., (1st Dist., December 2, 2003), http://www.state.il.us/court/Opinions/AppellateCourt/2003/1stDistrict/December/Html/1023606.htm that the statute of limitations for filing of actions under the Chicago Residential Landlord and Tenant Ordinance is five (5) rather than two (2) years pursuant to the Code of Civil Procedure.

Sternic brought an action against his landlord for damages under the Chicago Ordinance for retaliatory conduct. Sternic lived in the property from 1989 to 2000, and when Hunter Properties took over management of the apartment complex in 1997, he notified the landlord on numerous occasions over the next two years that there were "profuse" leaks in his unit. When his lease came up for renewal in 2000, Hunter notified Sternic there would be no renewal. More than two years after his lease terminated, Sternic filed a two count complaint under the ordinance alleging that the landlord had retaliated for the repair requests by not renewing his lease and by charging full rent despite the apartments diminished value while it was in disrepair. The trial court granted the landlord's motion to dismiss, finding that since the ordinance violations entitled Sternic to "statutory penalties", it was therefore subject to the two year statute of limitations under 735 ILC 5/13-202 . The opinion by Justice Cahill reversed finding that the penalty provisions of the Chicago Residential Landlord and Tenant Ordinary are "not 'statutory penalties' under the Code limitation because they do not specify an amount to be awarded for violations by a formula for calculating an award without regard to the actual damages suffered by the plaintiff." "A statute is a statutory penalty if it imposes automatic liability for a violation of its terms and the amount of liability is predetermined by the act and imposed without actual damages suffered by the plaintiff.", Cahill points out, and, because the Ordinance does not specify an actual amount for an award, and the sum is "contingent on actual damages", it does not come under the definition of 'statutory penalty" for the Code of Civil Procedure purposes. While there is a limit the exemplary damages in the ordinance, the penalty provision of the ordinance sets forth a sum which is the greater of either two months rent or twice the plaintiff's actual damages. While "two months rent" may be susceptible of a pure formula calculation, the penalty cap is twice the actual damages, resulting in a potential award directly related to actual damages and therefore not "a statutory penalty". While an "ordinance" is a "statute" when interpreting applicability of the "statutory penalties" standard, the fact that this ordinance incorporates a reference to actual damages renders the penalty 'non-statutory' in nature. Accordingly, the applicable limitation period is five years after the cause of action accrued under the 735 ILCS 5/13-205 provision for "all civil actions not otherwise provided for", rather than the "statutory penalty" limitation of Section 202. (Not a good day for landlords here either. )

 

4. MORTGAGE FORECLOSURE; LATE CHARGES AND FAIR DEBT COLLECTION PRACTICES ACT:

Because of the impact the act has on mortgages and mortgage foreclosures, an area that requires continual monitoring by real estate practitioners is the Fair Debt Collection Practices Act, ( 15 U.S.C. Section 1692f). A recent case from the Seventh Circuit Court of Appeals in this arena, Rizzo v. Pierce & Associates, (7th Cir., December 12, 2003), http://caselaw.lp.findlaw.com/data2/circs/7th/024129p.pdf, affirmed a decision finding that there was no violation of FDCPA when post-acceleration late charges were collected on reinstatement, but nonetheless offers some interesting implications relating to collecting late charges in a mortgage default that indicates not all late charges need be paid under some circumstances.

Michael and Louise Rizzo brought suit under FDCPA against their lender's foreclosure attorneys alleging that Pierce & Associates improperly collected late charges from them. When the Rizzos defaulted in their monthly mortgage payments, their lender accelerated the debt and referred the case to Pierce to file foreclosure. The Rizzos then cured the default by paying the sums demanded, reinstated the loan, and the foreclosure was dismissed. They later determined from a review of their loan history, however, that included in the sums collected from them were late charges imposed on monthly payments that accrued after acceleration and before reinstatement. These, the Rizzos argued were "unlawful" and therefore improperly collected in violation of FDCPA.

The note provided, as is typical of mortgage documents, that the lender was entitled to a late charge of 5% for any payment if it was not received by the 15th day of the month. Elsewhere in the mortgage documents was a provision entitled "Borrower's Right to Reinstate", that granted the borrower the right to pay all sums that would be then due had no acceleration occurred. This, Rizzo appears to have asserted, was an ambiguity in the mortgage documents, and then cited the court to sixteen cases in support of their position that post-acceleration late fees are unlawful. Circuit Judge Bauer acknowledged that "these cases uniformly stand for the proposition that a lender cannot demand payment of late fees for failure to make monthly payments after the loan has been accelerated." Noting that here, "The distinguishing characteristic of this case is the fact that the plaintiffs reinstated the note and mortgage.", and "We find that the monthly payments are deemed to have been due each and every month on the dates set out in the mortgage and note. We find this language to unambiguously require plaintiffs to pay the late fees." The question before the court, however, was whether the FDCPA prohibited collection of the late fees. Noting that there is no prohibition of collection of sums which are "expressly authorized by the agreement creating the debt or permitted by the law…We hold that defendants have not violated the FDCPA."

Appearing to anticipate the confusion this ruling may cause, (i.e., collection of post-acceleration late charges is "unlawful", but not a violation of FDCPA because they are authorized by the mortgage documents), the majority opinion concludes: "It should be noted that the Rizzos are no obligated to pay the late fees in all cases. If, for whatever reason, the Rizzos did not want to pay the late fees, they were free to pay the loan as accelerated. Such a payment would nullify any obligation to pay post-acceleration late fees. Reinstatement essentially allows the borrower a second 'bite at the apple'. It follows that the lender should not be penalized, nor the borrower rewarded, for a breach on the part f the borrower."

Judge Williams concurred, but pointed out that: "Had the Rizzos attempted to reinstate during the statutory period, they would have been required to pay only the monthly payments and late fees that they had failed to pay in the months prior to acceleration…the majority's opinion should not be read to hold borrowers liable for late fees on the monthly payments that would have come due in the intervening months had acceleration never occurred…i.e., acceleration stops the payments from actually coming due…"

Hmmmmmm…..

 

5. MECHANIC'S LIEN; INNACCURATE LIEN DESCRIPTION:

Mechanic's lien claims are "in derogation of common law and must be strictly construed" to determine if the party seeking to enforce the lien has perfected the claim properly. In Bale v. Barnhart, (4th Dist., July 24, 2003), http://www.state.il.us/court/Opinions/AppellateCourt/2003/4thDistrict/July/Html/4020729.htm the Court dismissed the mechanic's suit pursuant to Section 2-619 because the claim improperly set forth the name of the claimant in the body of the claim.

Bale was an excavating contractor who verbally agreed to create a one acre pond on the Barnhart's property. The Barnharts and their lender, Huntington Mortgage, attacked the lien claim noting that while the caption of the recorded claim properly identified "Martin L. Bale, d/b/a Bale Excavating and Farm Drainage", the actual text of the claim identified "Carla Bale" as the claimant. Noting that it is the burden of the claimant to prove each element of the statutory lien, Justice Knecht's opinion holds that the contradiction between name of the claimant in the caption and in the body of the text is a "conflict [which] creates an ambiguity that results in an inaccurate description of the contract. Strictly construing the Act, we find the claim for lien fails section 7." The decision cites cases for the proposition that when the caption and text conflict, the text controls and improper identification of a party to the contract fails to comply with the required 'brief statement of the contract'. A prior reported decision holds that misstatement of the owner's name was fatal. This case stands for the proposition that misstatement of the claimant's name, (or contradictory statements), are also fatal.

 

6. SPECIFIC PERFORMANCE & EQUITABLE MORTGAGES:

Nave v. Heinzmann, (5th Dist., November 21, 2003), http://www.state.il.us/court/Opinions/AppellateCourt/2003/5thDistrict/November/Html/5020091.htm, is a case that starts out looking like a simple specific performance action to enforce a contract for the sale of real estate of farm land, but is resolved by the law relating to equitable mortgages, and, in the end, offers another excellent example of the confusion that happens, (presumably), when laypersons try to fashion their own transactional documents.

Nave filed suit against Heinzmann to specifically enforce a contract for real estate. His complaint alleged that on June 7, 1966, he delivered a check for $15,000.00 to Heinzmann, and they entered into a purchase contract. The agreement identified the Plaintiff as the buyer, Defendant as the seller, and identified the $15,000 as "earnest money" to be applied to the purchase price when the sale is consummated, with the balance of $10,000, (for a total purchase price of $25,000), to be paid on or before June 14, 1996. The contact provided that if the purchaser defaulted the earnest money would be forfeited as liquidated damages, and stated that the Seller had a right to re-purchase the real estate up to and including December 30, 1996 for the sum of $25,000, "together with interest at the rate of 10%"; and, in the event of re-purchase, the Seller would be entitled to 100% of all growing crops, whereas if there was no re-purchase, Buyer would pay to Seller 1/3 of the seed and fertilizer expenses and receive 1/3 of the growing crops.

The Defendant admitted the written contact and the delivery of the earnest money in the pleadings, denied the remaining allegations in the complaint, and raised no affirmative defense. At trial, nonetheless, two very divergent "explanations" for the circumstances came forth.

Nave testified that at the time Heinzmann entered into the complain, he had already sold 20 of the 60 acres purchased by Nave to one Irvin Bucholz. Heinzmann told Nave that he would clear the title to the property and then convey the entire parcel. Nave stated that although he attempted to contact the Defendants on a number of occasions over a four year period but was unable to meet with Heinzmann and "determined that the defendants were hiding from him." He recorded the contract in 1998, (2 years after execution), and filed suit after making a demand for the deed in 2000, (approaching five years after the contract).

When Heinzmann took the stand, he testified that this contract was one in a series to transactions thathe and his father had entered into with Nave over a four year period in which they used real estate contracts to provide security for loans by including re-purchase rights in the contracts; i.e., the transactions were actually loans in which real estate was used as collateral by giving Nave a contract to purchase, with a right to re-purchase to Heinzmann by paying the loan back.

The Appellate Court affirmed the trial court's ruling adopting Heinzmann's 'version' of the transactions as loans rather than contracts. Citing the Mortgage Act (765 ILCS 905/5), provision that every deed which is intended only as security in the nature of a mortgage, shall be construed as a mortgage despite the fact that it appears to be a deed absolute, the opinion does not seem to be concerned that the document involved was a contract rather than a "deed", noting that "The determination of this case, however, rests on whether the parties intended to enter into a contract for the transfer of a deed or intended to create a mortgage." Noting the positive presence of the four elements of consideration for an equitable mortgage, (relationship of the parties, circumstances surrounding the transaction, adequacy of the consideration, and situation of the parties after the transaction), it was clear the intent of the parties was to create a security/loan transaction. This contract was one in a series of similar transactions which were loans. The re-purchase agreement were clearly loan-type circumstances, the parties did not change positions relative to the real estate, and, in fact, Plaintiff waited two years before making a written inquiry and nearly five years before he filed suit on a contract that was to be performed within 7 days on its face. The provisions relating to ownership of the crops implied security rather than an ownership interest. And, "Agreements to reconvey are an indication that the parties intended the transaction to be a mortgage and not a conveyance." Although the evidentiary requirement for an equitable mortgage is proof which "must be clear, satisfactory and convincing" here, the record supported the trial court's determination that the parties intended a loan rather than a conveyance, and was affirmed. Since there was no contract relating to conveyance there could be no specific performance of a conveyance transaction

Also affirmed was the trial court award of the return of the "earnest money" sum of $15,000 without the interest requested by Plaintiff. Stating that the "plaintiff's claim for interest is unsupported", the decision notes that "The plaintiff does not point to any party of the agreement providing for interest or the amount of interest", and while "An argument could be made that the contract provided that interest would have been paid upon the repurchase of the land by the defendants. Any claim by the plaintiff under this provision is unfounded because the court found that the plaintiff 'did not, within a reasonable time, make a demand to perform." (Ed. Note: hmmmmm)

 

7-10. THE DICK BALES 'TOOL BOX':

(Ed. Note: As if the foregoing was not enough to meet your CLE New Year's Resolution, the following collection of Dick's thoughts on revival of judgments, the Plat Act, Dedications, and implied easements are really worthwhile!)

Re: Query on revival of judgments

Steve:

My own notes on revival of judgments are as follows:

Dick Bales

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7.  Revival of judgments

A. Although the statute of limitations for a judgment is seven years from the time it is entered (not recorded), 735 ILCS 5/12-101 provides that a judgment may be revived at any time within twenty years from the date the judgment was entered. See 735 ILCS 5/13-218.

B. When a judgment is revived, it is a lien on the real estate of the judgment debtor from the time a transcript, certified copy or memorandum of the order of revival is recorded. See 735 ILCS 5/12-101(d); Wolff v. Groshong, 101 Ill.App.3d 606 (1981).

C. Once revived, the lien exists for an additional seven years, but it can never last longer than twenty years.

D. A revival made during the original seven year limitations period or any subsequent seven year limitations period will allow the judgment creditor to keep his priority vis-a-vis subsequent lienholders.

E. Example: In 1990 Creditor gets a judgment against Debtor and promptly records it in Cook County, the county in which Debtor lives. The only real estate that Debtor owns is his home in Cook County. The judgment expires in 1997. In 1999 Creditor gets an order of revival and records it. The judgment is good for another seven years and can be enforced against any property that Debtor owns.

F. Example: Same facts as above, but in 1998 Debtor refinances his mortgage. In 1999 Creditor gets his revival order and records it. But Creditor is too late; his judgment is now subordinate to this mortgage.

1. Rule of Title Practice: The priority of an expired and then revived judgment is determined by the recording date of the revival order, not by the date of the original recording of the judgment. Therefore, the priority of the judgment is from 1999, and so the judgment is subordinate to the mortgage which was recorded in 1998.

G. Example: Same facts as above, but this time Debtor sells his home in 1998. In 1999 Creditor gets his order of revival and records it. Creditor is again too late. A title search in 1998 correctly revealed that the judgment had lapsed. The revived judgment becomes a lien on real estate only from the date it is recorded. In 1999, when the judgment was recorded, Debtor no longer owned his home. As his only real estate in Cook County was his home, there is no other real estate that Creditor can enforce his judgment against.

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8.  The Plat Act 

The Plat Act is found at 765 ILCS 205/1. The fact that there is no paperwork or that the client no longer remembers the facts of the case should not have any bearing here. The title company can easily search the recorded documents and determine what and to whom land was sold. Title companies request that a Plat Act affidavit be delivered at closing when they are closing unsubdivided land. Generally speaking, one cannot subdivide land without first platting it. (One can certainly sell unsubdivided land without triggering the Plat Act, as long as one is selling everything that one originally bought.) But note that there are exceptions to the Plat Act. 

I. Exceptions to the Plat Act -- No subdivision plat is required under the following instances: 

A. The division or subdivision of land into parcels or tracts of five acres or more in size which does not involve any new streets or easements of access. 

1. A owns a large tract of land. He can subdivide it, as long as all subdivided parcels are five acres or more in size, and as long as the subdivision process does not require any new streets or access easements. 

a. In other words, you cannot take an eight acre tract of land and deed out a five acre tract, arguing that this is a five acre tract under this section, since the remainder tract is not five acres or more in size. 

B. The division of lots or blocks of less than one acre in any recorded subdivision which does not involve any new streets or easements of access. 

1. Many subdivisions recorded years and years ago consisted of relatively large lots. Under this provision of the Plat Act, these lots can be further subdivided without preparing a new plat of subdivision. However, again, this is the case, provided no new streets or access easements are required. 

2. This exception can be confusing. The first exception deals with the division of land into tracts of five acres or more in size. This second exception deals with the division of existing lots or blocks of less than one acre in size. This second exception is not referring to the division of land into lots or blocks of less than one acre in size. 

C. The sale or exchange of parcels of land between owners of adjoining and contiguous land. 

1. A and B live next to each other in Sunny Acres subdivision. By virtue of this exception to the Plat Act, A can deed the Easterly 10 feet of his lot to B without having to prepare a plat of subdivision. 

D. The conveyance of parcels of land or interests therein for use as a right of way for railroads or other public utility facilities and other pipe lines which does not involve any new streets or easements of access. 

1. A conveyance of a portion of one's property to a railroad, utility company, or pipeline company, for, respectively, railroad, utility, or pipeline purposes, does not necessitate the preparation of a plat of subdivision, as long as new streets or easements of access are not required. 

E. The conveyance of land owned by a railroad or other public utility which does not involve any new streets or easements of access. 

1. A railroad or public utility can divide and convey property without first subdividing it, as long as the division does not require any new streets or easements of access. 

2. Note that paragraph "D," above, concerns conveyances to railroads, public utilities, and other pipe lines. But here, the statute concerns conveyances from only railroads and public utility companies. Pipe line companies are omitted. Does this mean that a pipeline company can receive subdivided property without the property first being platted, but it cannot deed the property without first subdividing it? 

a. Apparently so, unless the pipeline company is a public utility company. 

F. The conveyance of land for highway or other public purposes or grants or conveyances relating to the dedication of land for public use or instruments relating to the vacation of land impressed with a public use. 

1. The owner of a tract of land can convey a portion of it to a municipality for public use without first subdividing it. 

2. Any document relating to the vacation of, e.g., a public street would not require a plat of subdivision. 

G. Conveyances made to correct descriptions in prior conveyances. 

1. The re-recording of a deed to correct the legal description does not require a plat of subdivision. 

H. The sale or exchange of parcels or tracts of land following the division into no more than two parts of a particular parcel or tract of land existing on July 17, 1959 and not involving any new streets or easements of access. 

1. A owns a large tract of unsubdivided land. He wants to divide it into two lots and sell off each lot. The conveyances will not involve any new streets or access easements. 

a. Whether or not he can do this under this paragraph depends on when this same tract of land was carved out of a larger tract of land. 

b. If this same tract of land existed on July 17, 1959, then it can be divided. 

c. On the other hand, if on July 17, 1959 this tract had not yet been created, that it was still a portion of a larger parcel, and that thus, this tract in question was created some time subsequent to July 17, 1959, then A cannot subdivide the property under this paragraph of the Plat Act without first preparing a plat of subdivision. 

I. The sale of a single lot of less than five acres from a larger tract when a survey is made by an Illinois Registered Land Surveyor; provided, that this exemption shall not apply to the sale of any subsequent lots from the same larger tract of land, as determined by the dimensions and configuration of the larger tract on October 1, 1973, and provided also that this exemption does not invalidate any local requirements applicable to the subdivision of land. 

1. This is called your "one chance" or "first bite of the apple" rule -- you are given one chance to exempt yourself from the Plat Act. 2. In order to use this exemption of the Plat Act: 

a. The tract of land to be divided must have existed as of October 1, 1973. If a title search indicates that on October 1, 1973, this tract had not yet been created, that it was still a portion of a larger parcel, and that thus, this tract in question was created some time subsequent to October 1, 1973, then this exemption cannot be used. 

b. A survey must be made by an Illinois surveyor. The survey does not have to be a subdivision plat. All you need is a survey which contains a sufficient legal description of the boundaries of the smaller tract to be conveyed. See 1974 Op.Att.Gen. No. S-768. 

c. This exemption shall not apply to the subsequent sale of lots. See 1974 Op.Att.Gen. No. S-768. d. This exemption cannot invalidate any local requirements. 

J. Note that the Plat Act does not prevent individual counties from establishing ordinances which reduce the acreage minimum to less than five acres, but not less than two acres, or otherwise supplement the Plat Act. 

II. Interesting court cases 

A. In Heerey v. City of Des Plaines, 225 Ill.App.3d 203 (1992), the court held that a plaintiff who was merely seeking to remodel his building, and not subdivide it or sell it, did not have to first have the property subdivided. In other words, the Plat Act was not applicable. 

B. In Orrin Dressler, Inc. v. Village of Burr Ridge, 173 Ill.App.3d 454 (1988), the owner of the land felt that the proposed subdivision of his land was exempt from the Plat Act, as it was a "...division into no more than two parts of a particular parcel or tract of land existing on July 17, 1959...". The plaintiff felt that the transaction was exempt, since the original parcel was divided into two parts, but then the lot line between two of the resulting parts was merely "relocated." (!!) The court disagreed. 

III. The Plat Act Affidavit 

A. If a proposed conveyance falls within one of the above exemptions, then a "Plat Act Affidavit," also called a "Metes and Bounds Affidavit," must be filled out and signed. This affidavit indicates the applicable exemption. 

1. Once the affidavit is presented to the recorder, the recorder cannot refuse to record the deed on the grounds that the conveyance is not in compliance with the Plat Act. See 1978 Op.Atty.Gen. No. S-1350, see also 1976 Op.Atty.Gen. No. S-1143.

Dick Bales

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9.  Re: Right of way v. ownership; diseased tree Goodness, this can be a VERY complex issue. Below is just some of my research on this issue. Dick Bales - - - - - - - -

I. Dedications 

A. A dedication of land involves two elements--offer and acceptance. That is, there must be an offer to the municipality to use the land for public use, and there then must be an acceptance of the offer. See Village of Riverside v. MacLain, 210 Ill. 308 (1904) 

1. The court cases always refer to the elements as follows: An intention of the owner to donate land to the public, an acceptance by the public, and clear and satisfactory proof of such facts. See Village of Joppa v. Chicago and Eastern Illinois Railroad, 51 Ill.App.3d 674 (1977).

B. There are two types of dedications: common law and statutory. 

C. A statutory dedication is a dedication that is in strict conformity to the Plat Act (See 765 ILCS 205/0.01 et seq; see especially 765 ILCS 205/3; see also Terwelp v. Sass, 111 Ill.App.3d, 443 N.E.2d 804 (1992); Klose v. Mende, No. 3-01-0098 (3rd Dist., 2001); First Illinois Bank of Wilmette v. Valentine, 619 N.E.2d 834 (1993) 

D. With a statutory plat, the fee simple ownership of the street vests in the public. With a common law plat, the public gets only an easement interest. See Grimming v. Ferris, 79 Ill.App.3d 546, 399 N.E.2d 141 (1979) 1. 765 ILCS 205/3: "The acknowledgment and recording of a [plat created under the Plat Act] shall be held in all courts to be a conveyance in fee simple of such portions of the premises platted as are marked or noted on such plat as donated or granted to the public. . . and the premises intended for any street, alley, way, common or other public use in any city, village or town, or addition thereto, shall be held in the corporate name thereof in trust to and for the uses and purposes set forth or intended." 

E. A common law plat is any plat that is not created in accordance with the Plat Act.

1. With a common law plat, the fee simple ownership of the street vests in the owner of the lot; the public, though, has an easement right to pass over the street. 

2. Example: Adam owns a tract of land. He creates a subdivision called "Adam's Acres." His plat of subdivision does not meet all the requirements of the Plat Act and thus is a common law plat. Although his plat creates streets throughout the subdivision, Adam owns the fee simple interest in the streets; the public has an easement interest in crossing over the surface of the streets. 

F. Creating a statutory plat under the Plat Act 

1. See 765 ILCS 205/2. This statute states that the plat must be acknowledged by the owner of the land; submitted to the city council or board of trustees of the municipality; and be subject to certain approvals. 

2. 765 ILCS 205/1 indicates that the plat must show all angular and linear data along the exterior boundaries of the tract of land being subdivided; the names and width of all public streets; and known and permanent monuments. 

3. The plat must be recorded. See 765 ILCS 205/2. 

4. There must be strict compliance in order for there to be a statutory plat. The following cases show how difficult (if not impossible) it is for a title examiner to determine if a plat is a statutory plat or a common law plat: 

a. In City of Chicago v. Rumsey, 87 Ill. 348 (1877), the court concluded that this was a common law plat because the plat was not properly acknowledged. See also Owen v. Village of Brookport, 208 Ill. 35, 69 N.E.952 (1904).

b. In Thompson v. Maloney, 199 Ill. 276 (1902) the plat was said to be a common law plat because it was executed by an attorney in fact.

c. In Village of Auburn v. Goodwin, 128 Ill. 57 (1889) the court said that a plat was a common law plat because it was prepared by a deputy surveyor and not the county surveyor.

d. In Road King Petroleum Products, Inc. v. Village of Wood Dale, 23 Ill.App.3d 181, 318 N.E. 2d 710 (1974), the court ruled that there was no statutory dedication of a platted fifty foot strip because the owner signed the plat before words of dedication were added by the surveyor. 

e. In Ingraham v. Brown, 231 Ill. 256, 83 N.E. 156 (1907) the court held that a plat not made by the owner of the land was a common law plat.

G. The above court cases and statutory references make it clear that the distinction between a common law plat and a statutory plat is a very fine distinction. Because of the rulings in these types of cases, most title companies will presume that a plat is a common law plat when asked, for whatever reason, to issue an opinion as to the ownership of platted streets. 

II. Utilities and rights-of-way

A. A public utility has the right to install underground utilities in a statutory dedicated road. Such underground installations are regarded as being within the easement for highway purposes, in favor of the public. 

1. But see 605 ILCS 5/9-113 for limitations on this right. This statute indicates that the consent of the underlying fee owner of a common law dedication would be a necessary prerequisite to the installation of any utilities. See especially 605 ILCS 5/9-113(a), 605 ILCS 5/9-113(l). 

2. See Chicago Title and Trust v. Village of Burr Ridge, 41 Ill. App. 3d 112 (1976), which allowed the construction of a municipal water main under the highway without compensating the owner of the fee interest. 

3. See also 65 ILCS 5/11-135-7, which allows for the construction of water mains under and across highways and street. 

4. On the other hand, see Cammers v. Marion Cablevision, 64 Ill.2d 97 (1976). Here the court stated that a cable television company, being a private company, and not a public utility, had no right to install its lines in a street, without the consent of the adjoining landowner, when the underlying land is owned by said landowner. 

5. Also, see Benno v. Central Lake County Joint Action Water Agency, 242 Ill.App.3d 306 (1993), where the court held that the installation of a water main under the highway was beyond the scope of the highway easement. Thus, the water agency was not free to install the water main in the land without obtaining the property owner's permission. 

B. Chicago Title and Trust v. Village of Burr Ridge and Cammers v. Marion Cablevision are inconsistent with Benno v. Central Lake County Joint Action Water Agency

1. The reason for this is that Section 9-113 of the Illinois Highway Code (605 ILCS 5/9-113) was amended in 1988 to also require the consent of fee owners to the location of easements in highways within a municipality, not just within unincorporated areas. 

2. Benno, therefore, represents the current state of the law and presents an excellent discussion of the current law in this area.

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10.  The Creation of Easements by Operation of Law 

A. Implied Easement--If a landowner of a tract of land uses one part of his land to benefit another part, and this use is such that if the parts were owned by different people, the use would constitute an easement, then, upon a conveyance of one of the parts, an implied easement, or easement by implication is created. See Limestone Development Corp. v. The Village of Lemont and K.A. Steel Chemicals, Inc., 284 Ill.App.3d 848 (1996). 

1. The situation must indicate an implied intent by the parties to create an easement, even though the easement is not formally created by an instrument. See 45 Ill.Bar.J. 689 (1957). 

2. Example: Jones, who owns lots 1 and 2, may have always used a dirt road located on lot 2 to get to his house on lot 1. If Jones sold lot 2 to Smith, a court might infer that an implied easement has been retained over lot 2 for ingress and egress, particularly if this was the only way in which Jones could get to and from his property. 

B. There are several elements of an implied easement. 

1. The prior use by the one landowner must have been obvious and "long continued." The reason for this is that the facts must indicate that the parties to the deed theoretically intended the present use of the land to continue, even after a portion of the land was sold. See Granite Properties Ltd. Partnership v. Manns, 117 Ill.2d 425 (1987). 

a. The Limestone Development Corp. case states that a party seeking an implied easement must establish by clear and convincing evidence that at the time of the severance of title, the easement was in existence and was intended to be permanent. 

2. It is not necessary that the easement be necessary for the enjoyment and use of the land; it is sufficient if the easement is highly convenient and beneficial to the dominant estate. See Flower v. Valentine, 135 Il..App.3d 1034 (1985); Seiber v. Lee, 158 Ill.App.3d 361 (1987). 

3. The ownership of the two tracts must have been in one ownership when the use commenced, and then, separated thereafter, so that one person owns the burdened tract and the other person owns the benefitted tract. 

a. Consider the facts of Legendre v. Harris, 125 Ill.App.2d 76 (1979), where the court stated that "when an owner of two adjoining lots built a portion of his garage over the boundary line between the lots and subsequently transferred one of the lots, his grantees took that lot subject to or benefited by easement by necessary implication in favor of the encroaching garage." 

C. Easement by Necessity--When the owner of land sells a portion of said land, so that what is left has no access to a dedicated road except over the owner's remaining land, or except over the land of a stranger, an easement by necessity is created over the remaining land of the seller. See Granite Properties Ltd. V. Manns, 117 Ill.2d 425 (1987); Luthy v. Keehner, 90 Ill.App.3d 127 (1980); 45 Ill.Bar J. 689 (1957); 12 Ill.L.Rev. 294 (1917); Canali v. Satre, 688 N.E.2d 351. 

1. With an easement by necessity, the easement must be necessary, and it must be shown that at some time in the past the two tracts of land were owned by the same person. See Granite Properties Ltd. Partnership v. Manns, 117 Ill.2d 425 (1987). 

a. But Illinois courts have found easement by necessity to exist under circumstances short of "absolute necessity" where there was no reasonable alternative access to the conveyed land. See Rextroat v. Thorell, 89 Ill.2d 221, cert. denied, 459 U.S. 837 (1982); see also 10 ALR4th 447. 

D. An implied easement (also known as an easement by implication) is very similar to an easement by necessity. But, there are a few subtle differences:

1. With an implied easement, there is a prior use of the land. The easement is being used prior to the severance of the tract. This is not the case with an easement by necessity.

a. In fact, this is the major difference between the two easements. With an implied easement, there is a prior use of the land, a type of "easement" (sometimes called a "quasi-easement," since you cannot have an easement over property you own in fee simple).

b. With an easement by necessity, there is no prior use of the land prior to the severance of the tract.

2. With an easement by necessity, the owner of the burdened tract has the right to locate the easement, provided that the location of the easement is reasonably convenient. With an implied easement, the easement is over the area that was originally being used.

3. But with both an easement by necessity and an easement by implication, there was at one time one ownership of two tracts that has subsequently been severed. See Deisenroth v. Dodge, 7 Ill.2d 340 (1955).

4. An easement by necessity ends when that element of necessity is no longer a factor. An implied easement, however, may continue forever, even after any element of necessity disappears.

E. Prescriptive Easement--This is sometimes called an easement by prescription. This easement is created when someone uses someone else's land in an adverse manner for a prescriptive period of at least twenty years. The use of the land must not be permissive; it must be adverse to the rights of the true owner. See Page v. Bloom, 223 Ill.App.3d 18 (1991); McRaven v. Charles, 7 Ill.App.3d 55 (1972). 

1. Essentially, a prescriptive easement is the easement equivalent of adverse possession. The use must be adverse, uninterrupted, exclusive, continuous, and under a claim of right. See Petersen v. Corrubia, 21 Ill.2d 525 (1961). 

2. For example: Independent Tube Corp. had an easement to use a railroad spur track. However, it had no legal right to use the drainage ditches that ran along each side of the spur track. Nonetheless, the corporation used the drainage ditches openly and continuously and without interruption for thirty years. When Ross and Kathryn Radke sued to terminate the easement and quiet the title to the land, Independent Tube Corporation counter-sued. The court ruled that Independent Tube Corporation had an express easement to use the spur track and an easement by prescription to use the drainage ditches. See Independent Tube Corp. V. Ross and Kathryn Radke, No. 3-97-0987 (1998). 

3. The use of the land must be continuous. An occasional act of trespass is not sufficient. See Leonard v. Pearce, 348 Ill. 518 (1932). 

4. The use of the land must be with the knowledge of the landowner, but without his permission. It must be adverse to the rights of the true owner. See Ruck v. Midwest Hunting and Fishing Club, 104 Ill.App.2d 185 (1968). 

5. The use of the land must be exclusive. This does not mean that no one else could use the land except for the easement claimant. Rather, "exclusive" means only that the claimant's right to use the land does not depend on someone else's right to use it. Thus, in Ritter v. Janson, 80 Ill.App.2d 169 (1967), the fact that claimant was not the only person to use a passageway did not prevent him from obtaining an easement by prescription. 

6. The use of the land must be continuous; it must last for the full 20 years, and not be interrupted by the owner of the land burdened by this potential easement. See Roller v. Logan Landfill, Inc., 16 Ill.App.3d 1046 (1974). 

7. It must appear that the use of the land is as a claim of right, that you are using it as if you have the right to use it, and not as a mere privilege, i.e., not as if someone were letting you use the land. See Light v. Steward, 128 Ill.App.3d 587 (1984). 

a. This claim of right does not have to be well-founded; it need only be a claim of right. See Leesch v. Krause, 393 Ill. 124 (1946). 

8. The use of the land must be "open and notorious." Thus, one cannot obtain a prescriptive easement when the use is invisible to the owner of the servient estate, such as a subsurface sewer or drain line. See Murtha v. O'Heron, 178 Ill.App. 347 (1913).

Dick Bales

Chicago Title Insurance Company

Wheaton, Illinois