Legal Question in Real Estate Law in Illinois

Who has legal possession of mortgaged property if the person that took out the mortgage (owner) no longer lives there? By whom is the property possessed? The owner or the bank that holds the mortgage?


Asked on 2/01/12, 12:54 pm

2 Answers from Attorneys

Thomas Moens Moens Law Offices, Chartered

The bank has no ownership interest unless there has been a foreclosure and sale. Otherwise, the owner is still the owner. There is no requirement that one must "live" at a property in order to own it.

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Answered on 2/02/12, 7:13 am

Assuming the lender hasn't taken actual possession under its loan documents (correctly or not) and is excluding the borrower, even when a borrower doesn't actually occupy the mortgaged property, at the very least the borrower has "constructive possession" which is the right to occupy. Whether the mortgage required the borrower to actually occupy may only be another breach of the loan. It may also be a huge insurance issue: most casualty and liability policies have provisions that can deny coverage in case of a loss if there is a lapse in occupancy of a certain number of continuous days..... Then again, if this is commercial property under commercial mortgaging documents and instruments, the lender may have certain rights -- to leases and rents, for example, or to appoint a receiver.... But the bottom line is that lenders generally affirmatively disclaim rights to possession, use and occupancy pending foreclosure/sale as Mr. Moens said, as lenders have been caught in the wringer when they have taken possession and do something that damages the property.

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Answered on 2/02/12, 7:47 am


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