Legal Question in Real Estate Law in Illinois

My father deceased in August. He owned a condo in IL. After his death I discovered that his REVERSE MORTGAGE CREDIT LINE balance was, according to our research, clearly much higher than the value of the condo. There isn't even enough money in the estate to pay off the loan let alone in the value of the condo.

I am his son and executor of of the estate, but my name is not on any property title, loan contract or anything else. I live in AZ and am at a huge disadvantage in dealing with this (financially & otherwise).

Mortgage company had an appraisal done 2 weeks ago but the results are not yet known. We have requested deed in lieu of foreclosure, which is current "in process." I will be signing a quit claim deed within the next month, when loan co. sends it to me.

The problem is the HOA. I have not paid any monthly assessments out of the meager cash in the estate since my father died 8/25. There will be other obligations, possible incomes taxes, for the estate to pay for 2013. The HOA management co. is demanding payments. I have explained the above situation but they threaten to "send this account to collections." My questions are:

1. Do I have to pay the assessment fees (out of the meager estate funds of course not my personal funds)?

2. What does it even mean to send an "estate" to collections?" What will be my obligations if they do (as executor of the estate)?

Thanks


Asked on 11/26/13, 8:49 pm

1 Answer from Attorneys
Stephen Messutta

Sorry for your loss; welcome to the wonderful world of condos and probate....

If title remained in ONLY your father's name til his death and all there is is a will, it will have to go through probate. Your duty as executor under the will is to represent the estate and try to give full effect to your father's wishes to the extent that there are net assets to do so.

In Illinois HOAs can lien a unit for unpaid assessments. Mortgage companies, because their mortgage liens are usually in a priority position, can wipe out the assessments but Illinois has seen fit to compromise and allow 6 months of assessments to remain payable by a buyer IF the lender fails or refuses to pay them.

Illinois HOAs also have the right to lease a unit on behalf of the owner and the rent is supposed to be used to pay the HOA assessments. However what you are dealing with is a reverse mortgage which MOST LIKELY (can't say for absolute sure without looking at the paperwork) says that the loan is now accelerated and the lender can foreclose and sell it.

The HOA has a couple of options at this point: (a) seek possession of the unit to lease it out to recoup unpaid assessments, (b) file a claim in probate for same, (c) file a lien on the unpaids.

Ultimately, however, if the estate consists of a condo with a reverse mortgage payoff greater than its value, about the only silver lining is that in probate certain fees and costs (such as final medical costs, funeral/burial costs, attorney, court costs, appraiser, taxes....) get paid first out of any estate funds. HOA fees are "down the line".

So the HOA or its management company may only be blustering, or may not have fully informed its counsel about your father's situation and doesn't understand what its rights are given the situation. Whatever, you should have local counsel because he or she will need to talk to the lender, the HOA or its counsel, and others, and deal with probate. Depending on other factors, an attorney may even be able to recommend resignation.

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Answered on 11/27/13, 9:12 am


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