In 2013 the Chicago City Council enacted the Keep Chicago Renting Ordinance (KCRO or Ordinance) to “preserve, protect, maintain and improve rental property and prevent occupied buildings from becoming vacant after foreclosures.” Pursuant to that Ordinance, Rivera, a tenant of a foreclosed property purchased by Bank of New York Mellon (the Bank), filed a lawsuit against the Bank claiming the Bank violated the KCRO by failing to offer her the relocation assistance or offer to extend her lease. At the trial level, the court found a portion of the KCRO conflicted with the Illinois Rent Control Prevention Act; however, it concluded offending portions could be severed and the remaining provisions enforced. The court found the Bank violated the KCRO and awarded Rivera $21,200 in relocation fees and $98,420 in attorneys’ fees.
The Bank appealed that judgment to the Illinois Appellate Court, First District (the Court). Rivera v. Bank of New York Mellon, 2021 IL App (1st) 192188 (Ill. App. Ct. 1st Dist. April 30, 2021). The appellate Court concluded that the portion of the KCRO which required any lease extension to be at 102% of the tenant’s prior year constituted improper regulation of rent in violation of the Illinois Rent Control Prevention Act. The Court also disagreed with the trial court’s conclusion that the “offending language” in the KCRO could be severed while still maintaining the legislative intent of the Act.
The Court reversed Rivera’s judgment and remanded for dismissal of the lawsuit. The First District’s findings and holding in this regard are a welcome development for property owners in Illinois. Our firm has successfully relied on the Rivera decision to have multiple KCRO actions dismissed against various banks and servicers. It remains to be seen whether the legislature will endeavor to pass additional laws or amend the KCRO to effectuate its stated goals. We will continue to monitor the situation and report any developments.
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