Page 6 - John Hundley 2018

In the event the buyer on a contract for deed misses a monthly payment and defaults on the loan
obligation, the act now provides that the buyer must be given at least 90 days to cure the default
before the seller can bring legal action to recover possession. Depending on the duration of the
contract and the amount of the purchase price paid by the buyer before the default, a seller must
initiate proceedings under either the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq.
(“IMFL”) or the Forcible Entry and Detainer Act, 735 ILCS 5/9-101 et seq. (“FEDA”).

Previously, sellers were required to initiate judicial foreclosure
proceedings under the IMFL for any installment contract for residential
real estate (i) with a duration in excess of five years, and (ii) where the
unpaid amount was less than 80% of the original purchase price.
However, the act amended this section to remove the five year
requirement. This change ensures that even more buyers are afforded
the additional protections under the IMFL such as the right of redemption.

In situations where the buyer under an installment sales contract
has not paid at least 20% of the of the purchase price, FEDA still applies. However, in what may be
an oversight by the Illinois General Assembly, the act failed to amend the corresponding five year
requirement contained in 735 ILCS 5/9-102(a)(5). Accordingly, there may be some confusion by
courts as to whether the IMFL or FEDA applies in situations where the buyer has paid off more than
20% of the purchase price but the contract is for a duration of less than five years.

Despite these changes, the act’s impact on installment sales
contracts in Southern Illinois may be limited. Under the act, a seller is
defined as a person who enters into installment sales contracts more than
3 times in a 12-month period. Thus, individuals selling a single home
would not qualify as a seller under the act. Moreover, the Illinois General
Assembly specifically excluded tracts of real estate consisting of four
acres or more zoned for agricultural purposes. This means the sale of
farms under an installment contract are not subject to the act.

Because the new protections afforded under the act may not apply to
most transactions in Southern Illinois, potential buyers should be cautious
when considering entering into a contract for deed. Many protections
afforded to homebuyers under the IMFL are not necessarily applicable to
buyers under a contract for a deed. This is especially true for sales of
commercial property, which are not included under the act.

Brenda\SharpThinking\#148.pdf

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