KEEPING CURRENT PROPERTY CASES ANNEXATION: Annexation agreement binds purchaser who acquires only part of annexed subdivision. In 2003, the Village of Kirkland and a landowner entered into an annexation agreement, providing that the village would annex 114 acres of land to be developed as a residential subdivision. The recorded agreement was executed under the Illinois Municipal Code sections titled “Annexation Agreements,” 65 Ill. Consol. Stat. §§ 5/11-15.1-1 to 11-15.1-5, the goal being to allow the village to ensure orderly growth and quality of life in a manner that served the best interests of all. In 2017, Kirkland Properties Holding Company acquired title to 34 of the 82 lots in the subdivision subject to the annexation agreement. The village filed suit when Kirkland Properties failed to comply with provisions of the agreement, including completion of the roads. The trial court dismissed the village’s complaint with prejudice because Kirkland Properties had purchased less than the whole of the annexed land and thus was not a successor under the annexation agreement to be bound by its provisions. The appellate court reversed, and the supreme court affirmed, rejecting the assertion that the absence of language in the Municipal Code or annexation agreement expressly stating the agreement is binding on successor owners of the entire parcel or any portion thereof, freed Kirkland Properties of successor liability. Indeed, the opposite reasoning was compelling—nothing in the code states that an annexation agreement is binding only upon successor owners of the entire Keeping Current—Property Editor: Prof. Shelby D. Green, Elisabeth Haub School of Law at Pace University, White Plains, NY 10603, sgreen@law.pace.edu. Contributing Authors: Prof. Darryl C. Wilson and Jesudunsin Awoyeye.
Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
parcel annexed. The court read the dictionary meaning of “successor” to mean all lot owners who purchased land in the annexed subdivision. Also, the annexation agreement expressly required its provisions to be binding on successors as the subdivision developed in stages. Village of Kirkland v. Kirkland Prop. Holdings Co., 2023 Ill. LEXIS 327 (May 18, 2023). BANKRUPTCY: Bankruptcy discharge does not accelerate balance on note secured by mortgage to start statute of limitations on lender’s foreclosure action. In 2012, a bankruptcy court discharged Silvernagel’s personal liability on his mortgage debt under Chapter 7 of the Bankruptcy Code, see 11 U.S.C. § 727 (2018), but the discharge did not extinguish the mortgage on the debtor’s home. In 2019, US Bank threatened to foreclose on the property if Silvernagel did not make payments. In response, Silvernagel requested declaratory relief to prevent US Bank’s enforcement of the mortgage. He argued that US Bank’s interest was extinguished by the six-year statute of limitations. Alternatively, he asserted that the doctrine of laches prevented enforcement of the agreement. US Bank moved to dismiss, arguing that the loan’s maturity date was in 2036 and that its claim had not accrued, such that the relevant statute of limitations had not commenced. The trial court granted US Bank’s motion and dismissed the case, concluding that the remaining debt was not yet due because US Bank never accelerated payment on the note. The
trial court also determined that the doctrine of laches did not apply. Silvernagel appealed, and the intermediate appellate court reversed, holding that the balance of the mortgage became due upon the bankruptcy discharge, at which point the lender’s claim accrued and the statute of limitations began to run. Because six years had passed since the discharge, the court determined that US Bank’s claim had expired. The supreme court reversed. The court explained that an acceleration of the debt requires a “clear, unequivocal” affirmative act by the lender, but all Silvernagel alleged was that the lender “did not commence any action to enforce its rights under the note within six years” of his default. This was not an acceleration, and Silvernagel could not unilaterally accelerate the payments by filing bankruptcy. Nor did the discharge in bankruptcy operate to accelerate the debt. After bankruptcy, a mortgagee’s only recourse is against the property. Although the debtor is no longer personally liable on the note, if the debt is not voluntarily paid, the debtor risks losing the property in foreclosure. US Bank Nat. Ass’n. v. Silvernagel, 528 P.3d 163 (Colo. 2023). EASEMENTS: Easement granting “absolute water rights” allows easement holder to grant rights to neighbors to use servient estate. In 1961, Duke Power Company purchased an easement from the Kisers covering 280 acres of largely dry land to create a lake. Duke also purchased an interest in the surrounding lakebed property to construct a dam under a federal license it held to operate a long-term hydroelectric project. Duke later flooded the land, now known as Lake Norman, and the Kisers retained some land, now known as Kiser Island, which they partially subdivided and sold as waterfront lots. Duke later implemented shoreline management guidelines and issued permits to the owners of the waterfront lots to build
Published in Probate & Property, Volume 37, No 6 © 2023 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
10
November/December 2023
