Bill Text: IL SB3810 | 2011-2012 | 97th General Assembly | Engrossed
Bill Title: Creates the Uniform Assignment of Rents Act. Provides for the creation, perfection, priority, and enforcement of a security interest in rents. Includes provisions concerning: assignments of rents; appointment of a receiver; enforcement by notices; and coordination with the Uniform Commercial Code.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Failed) 2013-01-08 - Session Sine Die [SB3810 Detail]
Download: Illinois-2011-SB3810-Engrossed.html
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1 | AN ACT concerning rent assignments.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | ||||||
5 | Uniform Assignment of Rents Act.
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6 | Section 2. Definitions. In this Act: | ||||||
7 | (1) "Assignee" means a person entitled to enforce an | ||||||
8 | assignment of rents. | ||||||
9 | (2) "Assignment of rents" means a transfer of an interest | ||||||
10 | in rents in connection with an obligation secured by real | ||||||
11 | property located in this State and from which the rents arise. | ||||||
12 | (3) "Assignor" means a person that makes an assignment of | ||||||
13 | rents or the successor owner of the real property from which | ||||||
14 | the rents arise. | ||||||
15 | (4) "Cash proceeds" means proceeds that are money, as | ||||||
16 | defined in Article 1 of the Uniform Commercial Code, whether in | ||||||
17 | the form of cash, checks, deposit accounts, or the like. | ||||||
18 | (5) "Day" means calendar day. | ||||||
19 | (6) "Deposit account" means a demand, time, savings, | ||||||
20 | passbook, or similar account maintained with a bank, savings | ||||||
21 | bank, savings and loan association, credit union, or trust | ||||||
22 | company. | ||||||
23 | (7) "Document" means information that is inscribed on a |
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1 | tangible medium or that is stored on an electronic or other | ||||||
2 | medium and is retrievable in perceivable form. | ||||||
3 | (8) "Notification" means a document containing information | ||||||
4 | that this Act requires a person to provide to another, signed | ||||||
5 | by the person required to provide the information.
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6 | (9) "Person" means an individual, corporation, business | ||||||
7 | trust, estate, trust, partnership, limited liability company, | ||||||
8 | association, joint venture, public corporation, government or | ||||||
9 | governmental subdivision, agency, or instrumentality, or any | ||||||
10 | other legal or commercial entity. | ||||||
11 | (10) "Proceeds" means personal property that is received or | ||||||
12 | collected on account of a tenant's obligation to pay rents.
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13 | (11) "Purchase" means to take by sale, lease, discount, | ||||||
14 | negotiation, mortgage, pledge, lien, security interest, issue | ||||||
15 | or reissue, gift, or any other voluntary transaction creating | ||||||
16 | an interest in property. | ||||||
17 | (12) "Rents" means: | ||||||
18 | (A) sums payable for the right to possess or occupy, or | ||||||
19 | for the actual possession or occupation of, real property | ||||||
20 | of another person; | ||||||
21 | (B) sums payable to an assignor under a policy of | ||||||
22 | rental interruption insurance covering real property; | ||||||
23 | (C) claims arising out of a default in the payment of | ||||||
24 | sums payable for the right to possess or occupy real | ||||||
25 | property of another person; | ||||||
26 | (D) sums payable to terminate an agreement to possess |
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1 | or occupy real property of another person; | ||||||
2 | (E) sums payable to an assignor for payment or | ||||||
3 | reimbursement of expenses incurred in owning, operating | ||||||
4 | and maintaining, or constructing or installing | ||||||
5 | improvements on, real property; or | ||||||
6 | (F) any other sums payable under an agreement relating | ||||||
7 | to the real property of another person that constitute | ||||||
8 | rents under law of this State other than this Act. | ||||||
9 | (13) "Secured obligation" means an obligation the | ||||||
10 | performance of which is secured by an assignment of rents. | ||||||
11 | (14) "Security instrument" means a document, however | ||||||
12 | denominated, that creates or provides for a security interest | ||||||
13 | in real property, whether or not it also creates or provides | ||||||
14 | for a security interest in personal property. | ||||||
15 | (15) "Security interest" means an interest in property that | ||||||
16 | arises by agreement and secures performance of an obligation. | ||||||
17 | (16) "Sign" means, with present intent to authenticate or | ||||||
18 | adopt a document: | ||||||
19 | (A) to execute or adopt a tangible symbol; or | ||||||
20 | (B) to attach to or logically associate with the | ||||||
21 | document an electronic sound, symbol, or process. | ||||||
22 | (17) "State" means a state of the United States, the | ||||||
23 | District of Columbia, Puerto Rico, the United States Virgin | ||||||
24 | Islands, or any territory or insular possession subject to the | ||||||
25 | jurisdiction of the United States. | ||||||
26 | (18) "Submit for recording" means to submit a document |
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1 | complying with applicable legal standards, with required fees | ||||||
2 | and taxes, to the appropriate county clerk or recorder's office | ||||||
3 | under the Conveyances Act. | ||||||
4 | (19) "Tenant" means a person that has an obligation to pay | ||||||
5 | sums for the right to possess or occupy, or for possessing or | ||||||
6 | occupying, the real property of another person.
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7 | Section 3. Manner of giving notification.
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8 | (a) Except as otherwise provided in subsections (c) and | ||||||
9 | (d), a person gives a notification or a copy of a notification | ||||||
10 | under this Act: | ||||||
11 | (1) by depositing it with the United States Postal | ||||||
12 | Service or with a commercially reasonable delivery | ||||||
13 | service, properly addressed to the intended recipient's | ||||||
14 | address as specified in subsection (b), with first-class | ||||||
15 | postage or cost of delivery provided for; or | ||||||
16 | (2) if the recipient agreed to receive notification by | ||||||
17 | facsimile transmission, electronic mail, or other | ||||||
18 | electronic transmission, by sending it to the recipient in | ||||||
19 | the agreed manner at the address specified in the | ||||||
20 | agreement. | ||||||
21 | (b) The following rules determine the proper address for | ||||||
22 | giving a notification under subsection (a): | ||||||
23 | (1) A person giving a notification to an assignee shall | ||||||
24 | use the address for notices to the assignee provided in the | ||||||
25 | document creating the assignment of rents, but, if the |
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1 | assignee has provided the person giving the notification | ||||||
2 | with a more recent address for notices, the person giving | ||||||
3 | the notification shall use that address. | ||||||
4 | (2) A person giving a notification to an assignor shall | ||||||
5 | use the address for notices to the assignor provided in the | ||||||
6 | document creating the assignment of rents, but, if the | ||||||
7 | assignor has provided the person giving the notification | ||||||
8 | with a more recent address for notices, the person giving | ||||||
9 | the notification shall use that address. | ||||||
10 | (3) If a tenant's agreement with an assignor provides | ||||||
11 | an address for notices to the tenant and the person giving | ||||||
12 | notification has received a copy of the agreement or knows | ||||||
13 | the address for notices specified in the agreement, the | ||||||
14 | person giving the notification shall use that address in | ||||||
15 | giving a notification to the tenant. Otherwise, the person | ||||||
16 | shall use the address of the premises covered by the | ||||||
17 | agreement. | ||||||
18 | (c) If a person giving a notification pursuant to this Act | ||||||
19 | and the recipient have agreed to the method for giving a | ||||||
20 | notification, any notification must be given by that method. | ||||||
21 | (d) If a notification is received by the recipient, it is | ||||||
22 | effective even if it was not given in accordance with | ||||||
23 | subsection (a) or (c).
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24 | Section 4. Security instrument creates assignment of | ||||||
25 | rents; assignment of rents creates security interest.
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1 | (a) An enforceable security instrument creates an | ||||||
2 | assignment of rents arising from the real property described in | ||||||
3 | the security instrument, unless the security instrument | ||||||
4 | provides otherwise. | ||||||
5 | (b) An assignment of rents creates a presently effective | ||||||
6 | security interest in all accrued and unaccrued rents arising | ||||||
7 | from the real property described in the document creating the | ||||||
8 | assignment, regardless of whether the document is in the form | ||||||
9 | of an absolute assignment, an absolute assignment conditioned | ||||||
10 | upon default, an assignment as additional security, or any | ||||||
11 | other form. The security interest in rents is separate and | ||||||
12 | distinct from any security interest held by the assignee in the | ||||||
13 | real property.
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14 | Section 5. Recordation; perfection of security interest in | ||||||
15 | rents; priority of conflicting interests in rents. | ||||||
16 | (a) A document creating an assignment of rents may be | ||||||
17 | submitted for recording in the county clerk or recorder's | ||||||
18 | office in the same manner as any other document evidencing a | ||||||
19 | conveyance of an interest in real property. | ||||||
20 | (b) Upon recording, the security interest in rents created | ||||||
21 | by an assignment of rents is fully perfected, even if a | ||||||
22 | provision of the document creating the assignment or law of | ||||||
23 | this State other than this Act would preclude or defer | ||||||
24 | enforcement of the security interest until the occurrence of a | ||||||
25 | subsequent event, including a subsequent default of the |
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1 | assignor, the assignee's obtaining possession of the real | ||||||
2 | property, or the appointment of a receiver. | ||||||
3 | (c) Except as otherwise provided in subsection (d), a | ||||||
4 | perfected security interest in rents takes priority over the | ||||||
5 | rights of a person that, after the security interest is | ||||||
6 | perfected: | ||||||
7 | (1) acquires a judicial lien against the rents or the | ||||||
8 | real property from which the rents arise; or | ||||||
9 | (2) purchases an interest in the rents or the real | ||||||
10 | property from which the rents arise. | ||||||
11 | (d) A perfected security interest in rents has priority | ||||||
12 | over the rights of a person described in subsection (c) with | ||||||
13 | respect to future advances to the same extent as the assignee's | ||||||
14 | security interest in the real property has priority over the | ||||||
15 | rights of that person with respect to future advances.
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16 | Section 6. Enforcement of security interest in rents.
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17 | (a) An assignee may enforce an assignment of rents using | ||||||
18 | one or more of the methods specified in Sections 7, 8, and 9 or | ||||||
19 | any other method sufficient to enforce the assignment under law | ||||||
20 | of this State other than this Act. | ||||||
21 | (b) From the date of enforcement, the assignee or, in the | ||||||
22 | case of enforcement by appointment of a receiver under Section | ||||||
23 | 7, the receiver, is entitled to collect all rents that: | ||||||
24 | (1) have accrued but remain unpaid on that date; and | ||||||
25 | (2) accrue on or after that date, as those rents |
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1 | accrue.
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2 | Section 7. Enforcement by appointment of receiver.
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3 | (a) An assignee is entitled to the appointment of a | ||||||
4 | receiver for the real property subject to the assignment of | ||||||
5 | rents if: | ||||||
6 | (1) the assignor is in default and: | ||||||
7 | (A) the assignor has agreed in a signed document to | ||||||
8 | the appointment of a receiver in the event of the | ||||||
9 | assignor's default; | ||||||
10 | (B) it appears likely that the real property may | ||||||
11 | not be sufficient to satisfy the secured obligation; | ||||||
12 | (C) the assignor has failed to turn over to the | ||||||
13 | assignee proceeds that the assignee was entitled to | ||||||
14 | collect; or | ||||||
15 | (D) a subordinate assignee of rents obtains the | ||||||
16 | appointment of a receiver for the real property; or | ||||||
17 | (2) other circumstances exist that would justify the | ||||||
18 | appointment of a receiver under law of this State other | ||||||
19 | than this Act. | ||||||
20 | (b) An assignee may file a petition with the circuit court | ||||||
21 | of a county in which any portion of the premises is located for | ||||||
22 | the appointment of a receiver in connection with an action: | ||||||
23 | (1) to foreclose the security instrument; | ||||||
24 | (2) for specific performance of the assignment; | ||||||
25 | (3) seeking a remedy on account of waste or threatened |
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1 | waste of the real property subject to the assignment; or | ||||||
2 | (4) otherwise to enforce the secured obligation or the | ||||||
3 | assignee's remedies arising from the assignment. | ||||||
4 | (c) An assignee that files a petition under subsection (b) | ||||||
5 | shall also give a copy of the petition in the manner specified | ||||||
6 | in Section 3 to any other person that, 10 days before the date | ||||||
7 | the petition is filed, held a recorded assignment of rents | ||||||
8 | arising from the real property. | ||||||
9 | (d) If an assignee enforces an assignment of rents under | ||||||
10 | this Section, the date of enforcement is the date on which the | ||||||
11 | court enters an order appointing a receiver for the real | ||||||
12 | property subject to the assignment. | ||||||
13 | (e) From the date of its appointment, a receiver is | ||||||
14 | entitled to collect rents as provided in Section 6(b). The | ||||||
15 | receiver also has the authority provided in the order of | ||||||
16 | appointment and law of this State other than this Act. | ||||||
17 | (f) The following rules govern priority among receivers: | ||||||
18 | (1) If more than one assignee qualifies under this | ||||||
19 | Section for the appointment of a receiver, a receivership | ||||||
20 | requested by an assignee entitled to priority in rents | ||||||
21 | under this Act has priority over a receivership requested | ||||||
22 | by a subordinate assignee, even if a court has previously | ||||||
23 | appointed a receiver for the subordinate assignee. | ||||||
24 | (2) If a subordinate assignee obtains the appointment | ||||||
25 | of a receiver, the receiver may collect the rents and apply | ||||||
26 | the proceeds in the manner specified in the order |
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1 | appointing the receiver until a receiver is appointed under | ||||||
2 | a senior assignment of rents.
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3 | Section 8. Enforcement by notification to assignor. | ||||||
4 | (a) Upon the assignor's default, or as otherwise agreed by | ||||||
5 | the assignor, the assignee may give the assignor a notification | ||||||
6 | demanding that the assignor pay over the proceeds of any rents | ||||||
7 | that the assignee is entitled to collect under Section 6. The | ||||||
8 | assignee shall also give a copy of the notification to any | ||||||
9 | other person that, 10 days before the notification date, held a | ||||||
10 | recorded assignment of rents arising from the real property. | ||||||
11 | (b) If an assignee enforces an assignment of rents under | ||||||
12 | this Section, the date of enforcement is the date on which the | ||||||
13 | assignor receives a notification under subsection (a). | ||||||
14 | (c) An assignee's failure to give a notification under | ||||||
15 | subsection (a) to any person holding a recorded assignment of | ||||||
16 | rents does not affect the effectiveness of the notification as | ||||||
17 | to the assignor, but the other person is entitled to any relief | ||||||
18 | permitted under law of this State other than this Act. | ||||||
19 | (d) An assignee that holds a security interest in rents | ||||||
20 | solely by virtue of Section 4(a) may not enforce the security | ||||||
21 | interest under this Section while the assignor occupies the | ||||||
22 | real property as the assignor's primary residence.
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23 | Section 9. Enforcement by notification to tenant. | ||||||
24 | (a) Upon the assignor's default, or as otherwise agreed by |
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1 | the assignor, the assignee may give to a tenant of the real | ||||||
2 | property a notification demanding that the tenant pay to the | ||||||
3 | assignee all unpaid accrued rents and all unaccrued rents as | ||||||
4 | they accrue. The assignee shall give a copy of the notification | ||||||
5 | to the assignor and to any other person that, 10 days before | ||||||
6 | the notification date, held a recorded assignment of rents | ||||||
7 | arising from the real property. The notification must be signed | ||||||
8 | by assignee and: | ||||||
9 | (1) identify the tenant, assignor, assignee, premises | ||||||
10 | covered by the agreement between the tenant and the | ||||||
11 | assignor, and assignment of rents being enforced; | ||||||
12 | (2) provide the recording data for the document | ||||||
13 | creating the assignment or other reasonable proof that the | ||||||
14 | assignment was made; | ||||||
15 | (3) state that the assignee has the right to collect | ||||||
16 | rents in accordance with the assignment;
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17 | (4) direct the tenant to pay to the assignee all unpaid | ||||||
18 | accrued rents and all unaccrued rents as they accrue; | ||||||
19 | (5) describe the manner in which subsections (c) and | ||||||
20 | (d) affect the tenant's payment obligations; | ||||||
21 | (6) provide the name and telephone number of a contact | ||||||
22 | person and an address to which the tenant can direct | ||||||
23 | payment of rents and any inquiry for additional information | ||||||
24 | about the assignment or the assignee's right to enforce the | ||||||
25 | assignment; and | ||||||
26 | (7) contain a statement that the tenant may consult a |
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1 | lawyer if the tenant has questions about its rights and | ||||||
2 | obligations. | ||||||
3 | (b) If an assignee enforces an assignment of rents under | ||||||
4 | this Section, the date of enforcement is the date on which the | ||||||
5 | tenant receives a notification substantially complying with | ||||||
6 | subsection (a). | ||||||
7 | (c) Subject to subsection (d) and any other claim or | ||||||
8 | defense that a tenant has under law of this State other than | ||||||
9 | this Act, following receipt of a notification substantially | ||||||
10 | complying with subsection (a):
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11 | (1) a tenant is obligated to pay to the assignee all | ||||||
12 | unpaid accrued rents and all unaccrued rents as they | ||||||
13 | accrue, unless the tenant has previously received a | ||||||
14 | notification from another assignee of rents given by that | ||||||
15 | assignee in accordance with this Section and the other | ||||||
16 | assignee has not canceled that notification; | ||||||
17 | (2) unless the tenant occupies the premises as the | ||||||
18 | tenant's primary residence, a tenant that pays rents to the | ||||||
19 | assignor is not discharged from the obligation to pay rents | ||||||
20 | to the assignee; | ||||||
21 | (3) a tenant's payment to the assignee of rents then | ||||||
22 | due satisfies the tenant's obligation under the tenant's | ||||||
23 | agreement with the assignor to the extent of the payment | ||||||
24 | made; and | ||||||
25 | (4) a tenant's obligation to pay rents to the assignee | ||||||
26 | continues until the tenant receives a court order directing |
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1 | the tenant to pay the rent in a different manner or a | ||||||
2 | signed document from the assignee canceling its | ||||||
3 | notification, whichever occurs first. | ||||||
4 | (d) A tenant that has received a notification under | ||||||
5 | subsection (a) is not in default for nonpayment of rents | ||||||
6 | accruing within 30 days after the date the notification is | ||||||
7 | received before the earlier of: | ||||||
8 | (1) 10 days after the date the next regularly scheduled | ||||||
9 | rental payment would be due; or
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10 | (2) 30 days after the date the tenant receives the | ||||||
11 | notification. | ||||||
12 | (e) Upon receiving a notification from another creditor | ||||||
13 | that is entitled to priority under Section 5(c) that the other | ||||||
14 | creditor has enforced and is continuing to enforce its interest | ||||||
15 | in rents, an assignee that has given a notification to a tenant | ||||||
16 | under subsection (a) shall immediately give another | ||||||
17 | notification to the tenant canceling the earlier notification. | ||||||
18 | (f) An assignee's failure to give a notification under | ||||||
19 | subsection (a) to any person holding a recorded assignment of | ||||||
20 | rents does not affect the effectiveness of the notification as | ||||||
21 | to the assignor and those tenants receiving the notification. | ||||||
22 | However, the person entitled to the notification is entitled to | ||||||
23 | any relief permitted by law of this State other than this Act. | ||||||
24 | (g) An assignee that holds a security interest in rents | ||||||
25 | solely by virtue of Section 4(a) may not enforce the security | ||||||
26 | interest under this Section while the assignor occupies the |
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1 | real property as the assignor's primary residence.
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2 | Section 10. Notification to tenant; form. No particular | ||||||
3 | phrasing is required for the notification specified in Section | ||||||
4 | 9. However, the following form of notification, when properly | ||||||
5 | completed, is sufficient to satisfy the requirements of Section | ||||||
6 | 9:
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7 | NOTIFICATION TO PAY RENTS TO PERSON OTHER THAN LANDLORD
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8 | Tenant: ................................................. | ||||||
9 | Name of Tenant
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10 | Property Occupied by Tenant (the | ||||||
11 | "Premises"): ...................... | ||||||
12 | Address
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13 | Landlord: ......................... | ||||||
14 | Name of Landlord
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15 | Assignee: ......................... | ||||||
16 | Name of Assignee
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17 | Address of Assignee and Telephone Number of Contact Person
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18 | Address of Assignee: ....................................
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1 | Telephone number of person to contact: ..................
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2 |
1. The Assignee named above has become the person | ||||||
3 | entitled to collect
your rents on the Premises listed above | ||||||
4 | under ................................................... | ||||||
5 | Name of document
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6 | (the "Assignment of Rents") dated ......................, | ||||||
7 | Date
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8 | and recorded at ..................................... | ||||||
9 | Recording data
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10 | with the County Clerk or Recorder of .............County. | ||||||
11 | County of Recording
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12 | You may obtain additional information about the Assignment | ||||||
13 | of Rents and the Assignee's right to enforce it at the | ||||||
14 | address listed above. | ||||||
15 | 2. The Landlord is in default under the Assignment of | ||||||
16 | Rents. Under
the Assignment of Rents, the Assignee is | ||||||
17 | entitled to collect rents from the Premises. | ||||||
18 | 3. This notification affects your rights and | ||||||
19 | obligations under the
agreement under which you occupy the | ||||||
20 | Premises (your "Agreement"). In order to
provide you with |
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1 | an opportunity to consult with a lawyer, if your next | ||||||
2 | scheduled
rental payment is due within 30 days after you | ||||||
3 | receive this notification, neither the Assignee nor the | ||||||
4 | Landlord can hold you in default under your Agreement for
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5 | nonpayment of that rental payment until 10 days after the | ||||||
6 | due date of that payment
or 30 days following the date you | ||||||
7 | receive this notification, whichever occurs first.
You may | ||||||
8 | consult a lawyer at your expense concerning your rights and | ||||||
9 | obligations
under your Agreement and the effect of this | ||||||
10 | notification. | ||||||
11 |
4. You must pay to the Assignee at the address listed | ||||||
12 | above all rents
under your Agreement which are due and | ||||||
13 | payable on the date you receive this notification and all | ||||||
14 | rents accruing under your Agreement after you receive this | ||||||
15 | notification. If you pay rents to the Assignee after | ||||||
16 | receiving this notification, the
payment will satisfy your | ||||||
17 | rental obligation to the extent of that payment. | ||||||
18 |
5. Unless you occupy the Premises as your primary | ||||||
19 | residence, if you
pay any rents to the Landlord after | ||||||
20 | receiving this notification, your payment to the
Landlord | ||||||
21 | will not discharge your rental obligation, and the Assignee | ||||||
22 | may hold you
liable for that rental obligation, | ||||||
23 | notwithstanding your payment to the Landlord. | ||||||
24 |
6. If you have previously received a notification from | ||||||
25 | another person
that also holds an assignment of the rents | ||||||
26 | due under your Agreement, you should
continue paying your |
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1 | rents to the person that sent that notification until that | ||||||
2 | person
cancels that notification. Once that notification | ||||||
3 | is canceled, you must begin paying
rents to the Assignee in | ||||||
4 | accordance with this notification. | ||||||
5 |
7. Your obligation to pay rents to the Assignee will | ||||||
6 | continue until you
receive either: | ||||||
7 | (a) a written order from a court directing you to | ||||||
8 | pay the rent in a manner specified in that order; or
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9 | (b) written instructions from the Assignee | ||||||
10 | canceling this notification.
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11 | Assignee: ......................... | ||||||
12 | Name of Assignee
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13 | By: ................ | ||||||
14 | Officer/authorized agent of Assignee
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15 | Section 11. Effect of enforcement. The enforcement of an | ||||||
16 | assignment of rents by one or more of the methods identified in | ||||||
17 | Sections 7, 8, and 9, the application of proceeds by the | ||||||
18 | assignee under Section 12 after enforcement, the payment of | ||||||
19 | expenses under Section 13, or an action under Section 14(d) | ||||||
20 | does not: | ||||||
21 | (1) make the assignee a mortgagee in possession of the | ||||||
22 | real property; | ||||||
23 | (2) make the assignee an agent of the assignor; |
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1 | (3) constitute an election of remedies that precludes a | ||||||
2 | later action to enforce the secured obligation; | ||||||
3 | (4) make the secured obligation unenforceable; or | ||||||
4 | (5) limit any right available to the assignee with | ||||||
5 | respect to the secured obligation.
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6 | Section 12. Application of proceeds. Unless otherwise | ||||||
7 | agreed, an assignee that collects rents under this Act or | ||||||
8 | collects upon a judgment in an action under Section 14(d) shall | ||||||
9 | apply the sums collected in the following order to: | ||||||
10 | (1) the assignee's reasonable expenses of enforcing | ||||||
11 | its assignment of rents, including, to the extent provided | ||||||
12 | for by agreement and not prohibited by law of this State | ||||||
13 | other than this Act, reasonable attorney's fees and costs | ||||||
14 | incurred by the assignee; | ||||||
15 | (2) reimbursement of any expenses incurred by the | ||||||
16 | assignee to protect or maintain the real property subject | ||||||
17 | to the assignment; | ||||||
18 | (3) payment of the secured obligation; | ||||||
19 | (4) payment of any obligation secured by a subordinate | ||||||
20 | security interest or other lien on the rents if, before | ||||||
21 | distribution of the proceeds, the assignor and assignee | ||||||
22 | receive a notification from the holder of the interest or | ||||||
23 | lien demanding payment of the proceeds; and | ||||||
24 | (5) the assignor.
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1 | Section 13. Application of proceeds to expenses of | ||||||
2 | protecting real property; claims and defenses of tenant. | ||||||
3 | (a) Unless otherwise agreed by the assignee, and subject to | ||||||
4 | subsection (c), an assignee that collects rents following | ||||||
5 | enforcement under Section 8 or 9 need not apply them to the | ||||||
6 | payment of expenses of protecting or maintaining the real | ||||||
7 | property subject to the assignment.
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8 | (b) Unless a tenant has made an enforceable agreement not | ||||||
9 | to assert claims or defenses, the right of the assignee to | ||||||
10 | collect rents from the tenant is subject to the terms of the | ||||||
11 | agreement between the assignor and tenant and any claim or | ||||||
12 | defense arising from the assignor's nonperformance of that | ||||||
13 | agreement. | ||||||
14 | (c) This Act does not limit the standing or right of a | ||||||
15 | tenant to request a court to appoint a receiver for the real | ||||||
16 | property subject to the assignment or to seek other relief on | ||||||
17 | the ground that the assignee's nonpayment of expenses of | ||||||
18 | protecting or maintaining the real property has caused or | ||||||
19 | threatened harm to the tenant's interest in the property. | ||||||
20 | Whether the tenant is entitled to the appointment of a receiver | ||||||
21 | or other relief is governed by law of this State other than | ||||||
22 | this Act.
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23 | Section 14. Turnover of rents; commingling and | ||||||
24 | identifiability of rents; liability of assignor. | ||||||
25 | (a) In this Section, "good faith" means honesty in fact and |
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1 | the observance of reasonable commercial standards of fair | ||||||
2 | dealing. | ||||||
3 | (b) If an assignor collects rents that the assignee is | ||||||
4 | entitled to collect under this Act: | ||||||
5 | (1) the assignor shall turn over the proceeds to the | ||||||
6 | assignee, less any amount representing payment of expenses | ||||||
7 | authorized by the assignee; and | ||||||
8 | (2) the assignee continues to have a security interest | ||||||
9 | in the proceeds so long as they are identifiable. | ||||||
10 | (c) For purposes of this Act, cash proceeds are | ||||||
11 | identifiable if they are maintained in a segregated account or, | ||||||
12 | if commingled with other funds, to the extent the assignee can | ||||||
13 | identify them by a method of tracing, including application of | ||||||
14 | equitable principles, that is permitted under law of this State | ||||||
15 | other than this Act with respect to commingled funds. | ||||||
16 | (d) In addition to any other remedy available to the | ||||||
17 | assignee under law of this State other than this Act, if an | ||||||
18 | assignor fails to turn over proceeds to the assignee as | ||||||
19 | required by subsection (b), the assignee may recover from the | ||||||
20 | assignor in a civil action: | ||||||
21 | (1) the proceeds, or an amount equal to the proceeds, | ||||||
22 | that the assignor was obligated to turn over under | ||||||
23 | subsection (b); and | ||||||
24 | (2) reasonable attorney's fees and costs incurred by | ||||||
25 | the assignee to the extent provided for by agreement and | ||||||
26 | not prohibited by law of this State other than this Act. |
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1 | (e) The assignee may maintain an action under subsection | ||||||
2 | (d) without bringing an action to foreclose any security | ||||||
3 | interest that it may have in the real property. Any sums | ||||||
4 | recovered in the action must be applied in the manner specified | ||||||
5 | in Section 12.
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6 | (f) Unless otherwise agreed, if an assignee entitled to | ||||||
7 | priority under Section 5(c) enforces its interest in rents | ||||||
8 | after another creditor holding a subordinate security interest | ||||||
9 | in rents has enforced its interest under Section 8 or 9, the | ||||||
10 | creditor holding the subordinate security interest in rents is | ||||||
11 | not obligated to turn over any proceeds that it collects in | ||||||
12 | good faith before the creditor receives notification that the | ||||||
13 | senior assignee has enforced its interest in rents. The | ||||||
14 | creditor shall turn over to the senior assignee any proceeds | ||||||
15 | that it collects after it receives the notification.
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16 | Section 15. Perfection and priority of assignee's security | ||||||
17 | interest in proceeds. | ||||||
18 | (a) In this Section: | ||||||
19 | (1) "Article 9" means Article 9 of the Uniform | ||||||
20 | Commercial Code or, to the extent applicable to any | ||||||
21 | particular issue, Article 9 of the Uniform Commercial Code | ||||||
22 | as adopted by the state whose laws govern that issue under | ||||||
23 | the choice-of-laws rules contained in Article 9 as adopted | ||||||
24 | by this State. | ||||||
25 | (2) "Conflicting interest" means an interest in |
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1 | proceeds, held by a person other than an assignee, that is: | ||||||
2 | (A) a security interest arising under Article 9; or | ||||||
3 | (B) any other interest if Article 9 resolves the | ||||||
4 | priority conflict between that person and a secured | ||||||
5 | party with a conflicting security interest in the | ||||||
6 | proceeds. | ||||||
7 | (b) An assignee's security interest in identifiable cash | ||||||
8 | proceeds is perfected if its security interest in rents is | ||||||
9 | perfected. An assignee's security interest in identifiable | ||||||
10 | noncash proceeds is perfected only if the assignee perfects | ||||||
11 | that interest in accordance with Article 9. | ||||||
12 | (c) Except as otherwise provided in subsection (d), | ||||||
13 | priority between an assignee's security interest in | ||||||
14 | identifiable proceeds and a conflicting interest is governed by | ||||||
15 | the priority rules in Article 9. | ||||||
16 | (d) An assignee's perfected security interest in | ||||||
17 | identifiable cash proceeds is subordinate to a conflicting | ||||||
18 | interest that is perfected by control under Article 9 but has | ||||||
19 | priority over a conflicting interest that is perfected other | ||||||
20 | than by control.
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21 | Section 16. Priority subject to subordination. This Act | ||||||
22 | does not preclude subordination by agreement as to rents or | ||||||
23 | proceeds.
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24 | Section 17. Uniformity of application and construction. In |
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1 | applying and construing this Uniform Act, consideration must be | ||||||
2 | given to the need to promote uniformity of the law with respect | ||||||
3 | to its subject matter among states that enact it.
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4 | Section 18. Relation to Electronic Signatures in Global and | ||||||
5 | National Commerce Act. This Act modifies, limits, and | ||||||
6 | supersedes the federal Electronic Signatures in Global and | ||||||
7 | National Commerce Act (15 U.S.C. Section 7001, et seq.) but | ||||||
8 | does not modify, limit, or supersede Section 101(c) of that Act | ||||||
9 | (15 U.S.C. Section 7001(c)) or authorize electronic delivery of | ||||||
10 | any of the notices described in Section 103(b) of that Act (15 | ||||||
11 | U.S.C. Section 7003(b)).
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12 | Section 19. Application to existing relationships. | ||||||
13 | (a) Except as otherwise provided in this Section, this Act | ||||||
14 | governs the enforcement of an assignment of rents and the | ||||||
15 | perfection and priority of a security interest in rents, even | ||||||
16 | if the document creating the assignment was signed and | ||||||
17 | delivered before the effective date of this Act. | ||||||
18 | (b) This Act does not affect an action or proceeding | ||||||
19 | commenced before the effective date of this Act.
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20 | (c) Section 4(a) of this Act does not apply to any security | ||||||
21 | instrument signed and delivered before the effective date of | ||||||
22 | this Act. | ||||||
23 | (d) This Act does not affect: | ||||||
24 | (1) the enforceability of an assignee's security |
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1 | interest in rents or proceeds if, immediately before the | ||||||
2 | effective date of this Act, that security interest was | ||||||
3 | enforceable; | ||||||
4 | (2) the perfection of an assignee's security interest | ||||||
5 | in rents or proceeds if, immediately before the effective | ||||||
6 | date of this Act, that security interest was perfected; or | ||||||
7 | (3) the priority of an assignee's security interest in | ||||||
8 | rents or proceeds with respect to the interest of another | ||||||
9 | person if, immediately before the effective date of this | ||||||
10 | Act, the interest of the other person was enforceable and | ||||||
11 | perfected, and that priority was established.
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12 | Section 20. (Blank).
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13 | (765 ILCS 5/31.5 rep.)
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14 | Section 21. Repeal. The Conveyances Act is amended by | ||||||
15 | repealing Section 31.5.
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