Page 15 - John Hundley 2013

Real Estate Roundup

Sharp Thinking

No. 87 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. April 2013

Quitclaim Buyer May Not Claim Breach of Contract

A buyer of property by quitclaim deed generally may not claim breach of contract when it learns
that the seller did not have fee simple title, a panel in the Appellate Court’s Third District has held.

Leaving open the possibility that the buyer may be able to allege such an action when the
contract is made through fraud, the court said that “[i]n the absence of fraud, the consideration paid
for a quitclaim deed of land cannot be recovered even if the grantor has no title to the property.”
Lindy Lu LLC v. Ill. Central R.R. Co., 2013 IL App (3d) 120337.

At issue in Lindy Lu was a quitclaim deed given by the Illinois Central to a strip of
land adjoining its tracks in Decatur, Ill. After it was learned that the railroad had
acquired the property (and much other of its right of way) by condemnation rather
than purchase, the buyer sought to bring a class action suit on behalf of all parties
who had purchased from the IC property it had acquired by condemnation.

Rejecting the buyer’s argument that it was jusitified in assuming the railroad had
fee simple, and noting that the buyer willingly had failed to obtain title insurance in
connection with the transaction, the court said a “person may not enter a transaction
with his eyes closed to available information and then charge that he has been
deceived by another.” Illinois Central Lawyer

The decision highlights the ambiguity that may exist when a railroad “owns”
real estate. If the railroad purchased the property from a previous owner, it
may have a fee simple just like most other owners. However, when it acquired
the land by condemnation, it generally will have just an easement (hence the
term “right of way”) with the fee still vested in the party from whom the property
was condemned, or that party’s successors.

Creditor Loses Priority When Judgment Recording Lapses

A judgment creditor loses its priority position as to real estate when it allows its judgment to
expire under the revival statute without recording a new memorandum of the revived judgment within
7 years from the date of entry of the original judgment, another panel of the Appellate Court’s Third
District has held.

Assuming but not deciding that a lapsed judgment lien could be revived, the court in Wells Fargo
Bank v. Heritage Bank of Central Ill., 2013 IL App (3d) 110706, held that when the judgment lien
lapsed the judgment creditor at least lost its priority position, allowing two mortgagees to “jump
ahead” and take first and second positions when the property eventually was foreclosed upon.

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal
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