Understanding State Protections During Foreclosure: An Introduction to the Illinois Mortgage Foreclosure Law (IMFL)

The Illinois Mortgage Foreclosure Law (735 ILCS 5/15 et seq.) is a state law that provides certain protection for Illinois tenants when the property they are renting is being foreclosed.

Who is protected and excluded by the Illinois Mortgage Foreclosure Law?

The IMFL applies to (1) any residential property that has a mortgage loan after July 1, 1987 and to (2) any bona fide lease or tenant meeting the bona fide criteria.

Exception #1: If the new owner wants to move in, the tenant is excluded from the majority of the PFTA’s protections and is only promised a 90-day notice to terminate the lease even if they have a bona fide lease.

Exception #2: Even if the tenant qualifies for protection under PTFA, they can still be evicted for cause (violating the lease or failing to pay rent).

What kind of protections does the IMFL give tenants in foreclosed buildings?

1. Honor the tenant's bona fide rental agreement for the full term of the lease.
2. Provide a 90-day notice to terminate the tenancy.
3. The new owner needs take action within 21 days after the court order approves the sale.
   1. The new owner must make a good faith effort to identify the names and addresses of all the occupants in the building within.
   2. Give written notice personally to the known occupant or a resident who is 13 years old or older or by first-class mail. To read more about what the written notice should include, click here.
   3. Post written notice on the foreclosed building's primary entrance. To read more about what the written notice should include, click here.
4. If an eviction case is filed, then then the case must be immediately sealed. However, sealing is not 100% effective and cases may still be on credit history.
5. Rent cannot be increased unless the tenant agrees to the rent increase or the new owner/receiver gets a court order. The receiver can file a motion to request an increase of rent because it is necessary to manage the rental property. All occupants who might be affected should be notified in writing about the motion, date and time of the motion hearing, and the court location where the motion will be heard. This written notice needs to be served personally or by first-class mail.

What happens if the new owner does not give written notice about how to pay rent within the 21-day period?

• The new owner cannot evict a tenant for non-payment of rent;
• The new owner/Receiver cannot collect rent; and
• The tenant is protected from paying rent to the wrong party and is not required to pay twice.

However, if the new owner does serve the written notice after the 21-day period, then they can collect the rent due and terminate the lease if the tenant fails to pay rent.