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Chicago Trivia

Chicago Title Ad - Bisnow Chicago Morning Brief: February 1, 2016 to February 5, 2016.

In case you missed the complete trivia question and answers, here you go!

Just 6 months after becoming mayor, Richard J. Daley officially opened what major landmark in 1955?

A. O'Hare International Airport, the busiest airport in the world by the early 1960s.

B. Millennium Park, which became the premier tourist destination.

C. The Merchandise Mart, which debuted as the largest building in the world in terms of floor space.

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#CTtalk: Limited Liability Companies in Illinois

By Ann E. Minarik
Assistant Vice President and Commercial Counsel
Chicago Title Insurance Company, Chicago NCS

DOWNLOAD ARTICLE HERE.

Introduction

Illinois was the 18th state in the Union to adopt a version of the limited liability company concept. The original Illinois Limited Liability Company Act (“ILLCA”) [1] took effect as of January 1, 1994. Since 1994, all 50 states have enacted similar legislation. The ILLCA is by no means a carbon copy of any other state’s version, and revisions to ILLCA, effective January 1, 1998, affect all Illinois limited liability companies (“LLC”) as of January 1, 2000. The most noteworthy revisions regard (1) permitting almost perpetual life for LLCs, (2) authorizing single-member LLCs and (3) permitting the conversion and merger of LLCs and other entities.

Illinois real estate practitioners have embraced the LLC concept, and the popularity of LLCs has grown steadily every year since 1994. A high percentage of commercial real estate transactions in which the parties would customarily have conveyed the land into land trusts, corporations or partnerships are increasingly using existing or newly-created LLCs. From a title company’s perspective, it is common to see single-purpose LLCs formed. An example of this is an LLC with a name bearing a property address, with the sole purpose of this LLC to acquire and manage this particular real estate. Members and managers of this single-purpose LLC may be members and managers of other similar single-purpose LLCs.

What is an LLC and what makes it so popular? How does it differ from corporations and partnerships, since it appears to be a blend of both? An LLC is an unincorporated entity and offers its members (with some exceptions) protection from personal liability for a debt, obligation, or liability of the LLC solely by being or acting as a member or manager.[2] Another attractive feature is favorable tax treatment. Although an LLC may elect to be taxed as a corporation, most LLCs are “pass through” entities. Typically, a multiple member LLC is treated for tax purposes, like a partnership with members paying federal taxes, and no federal tax owed by the LLC.[3] A single member LLC can be treated, for tax purposes, as a “disregarded entity,” with all tax ramifications reported by the sole member. LLCs offer flexibility in operation in that they may be managed by members, designated managers, or a combination of both.

Formation of an LLC

When a new LLC is created, a document called Articles of Organization must be executed and filed with the Illinois Secretary of State’s office along with the appropriate filing fee. The Secretary of State’s form LLC-5.5 must be used. Articles of Organization contain information about the name, principal place of business, purpose of the LLC and the name of the registered agent. The LLC must contain one of the following designations in its name: (1) LLC (2) L.L.C. or (3) Limited Liability Company. [1]   The LLC name cannot contain any word or abbreviation that confuses the LLC with any other type of entity such as (1) Corporation (2) Corp. (3) Incorporated (4) Inc. (5) Ltd (6) Co. (7) Limited Partnership or (8) L.P. The person who executes and delivers the Articles of Organization is called the organizer. (9) Company, except as part of the phrase “Limited Liability Company.” As with corporations, the name of the LLC cannot be a duplicate of an existing LLC filed in Illinois. If the LLC anticipates extensive out-of-state contacts, whether through expected real estate ownership or as an ongoing business, it is prudent to search the Secretary of State’s records in these other states to make sure the same name is not already in use. A box must be checked on the second page of the Articles of Organization form as to whether LLC management is vested in the member(s) or in designated manager(s). The ILLCA does not require management by members. As a result, members can manage the LLC, or they can appoint outsiders to manage the LLC. ILLCA allows the filing of Articles of Amendment to the Articles of Organization at a later time as needed.

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Important Changes to the City of Chicago Transfer Stamp Purchases & Penalties

Effective January 1, 2016, all City of Chicago transfer stamp purchases will be handled within MyDec, the online stamp purchasing website, established by the State of Illinois.

Paper forms will no longer be accepted by the City of Chicago. State of Illinois & County transfer tax forms are not affected by this change.

As of January 1, MyDec will automatically assess applicable interest and late penalty charges on the declaration at the time Chicago transfer stamps are purchased when payment for the stamps is made more than 7 days after the date of the transfer in question. Apparently, MyDec is now programmed to compare the date entered in Section 4, question 1“The earlier of the Date of Transfer or Date of Recording” field to the date stamps are purchased and, if the difference is greater than 7 days, charge interest and late penalty accordingly. Inquiries regarding this process or requests for penalty abatement for reasonable cause should be directed to taxpolicy@cityofchicago.org.

The other requirements for purchasing a Chicago transfer stamp do not appear to have been changed. All transfers as defined under the City Ordinance will still require a Full Payment Certificate (“FPC”) to be issued by the Chicago Water Department. Applications for an FPC will take a minimum of 10 business days for processing, and an FPC is good for 60 days for the authorization date listed on the processed FPC.

One of the following will be required to ensure a complete application:

  1. A copy of the Deed for the intended transaction (must be submitted if requesting an FPC for a tax exempt transaction)
  2. Title Commitment Schedule A
  3. Signed Sales Contract

Click here to access the FPC Applications.

Please keep this information in mind when you are preparing to close your next transaction for property in Chicago. If there will be any delay in the purchase of the transfer stamp the penalty and interest may be charged and should be considered at the time the stamp is ready for purchase. If the delay is a result of an issue with receipt of an FPC please contact one of Chicago Title’s Underwriters.

We strongly encourage you to contact our office with any questions or concerns. We will be happy to share with you any knowledge we have about the aforementioned penalty and interest scenario as well as discuss potential solutions to avoid the possible imposition of such penalties and interest.

Here you can find the full version of the Code referred to in this CT News Brief.

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#CTtalk: Construction Issues at Closing

By Jeffrey P. York
Assistant Regional Counsel
Chicago Title Insurance Company, Chicago NCS

One of the more complex and confusing issues that can rear its ugly head at a real estate closing is that of the existence of past, present, or, in some cases, future contracts for construction on the land. These contracts can create headaches for owners, purchasers, lenders, attorneys, and title insurers if the issues surrounding these contracts are not dealt with prior to closing. This article will identify construction issues that arise at closing and discuss how Chicago Title Insurance Company deals with these issues. The scope of this discussion will be limited to acquisition and refinance transactions rather than construction loan closings.

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#CTtalk: IL Real Estate Liens

Illinois Real Estate Liens & Encumbrances

By Richard F. Bales
Office Counsel
Chicago Title Insurance Company

Illinois real estate liens and other documents in the nature of encumbrances are, for the most part, scattered throughout the Illinois Compiled Statutes. Their statutes of limitation are as varied as their citations.  This article is an attempt to list, briefly describe, and, when applicable, note the statutes of limitation for these documents.

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#CTtalk: Bond in Lieu of Property

Bond in Lieu of Property - Something New in Mechanics Lien Law

By Douglas M. Karlen
Vice President and Regional Counsel
Chicago Title Insurance Company

Recent legislation creates a new concept in mechanics lien law, namely, a bond in lieu of property. Public Act 99-178 (HB 2635), effective January 1, 2016, adds new Section 38.1 to the Mechanics Lien Act to permit the substitution of a surety bond in lieu of real property in the context of the enforcement or possible enforcement of mechanics lien claims. See new 770 ILCS 60/38.1. By shifting the focus of mechanics lien litigation from the subject real property to the proceeds of a surety bond, the new Section allows owners to refinance construction loans or to sell newly constructed condominium units, single family homes, and commercial developments free and clear of mechanics lien claims.  

How does it work?

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#CTtalk: Illinois Statutes

Illinois Statutes (and a Few Court Cases) Relating to the Subdivision of Land

By Richard F. Bales
Office Counsel
Chicago Title Insurance Company

Compiled List:

Building Lines

55 ILCS 5/5-13001; a county can regulate building lines

65 ILCS 5/11-14-1; a municipality can regulate building lines; this statute states that “the corporate authorities in each municipality have power by ordinance to establish, regulate and limit the building or setback lines on or along any street. . . .[These powers] shall not be exercised so as to deprive the owner of any existing property of its use or maintenance for the purpose to which it is then lawfully devoted.”  This statute seems to suggest that in order to abrogate a building line, the parties benefited as well as burdened must join in the agreement.   A building line violation may render a home unmarketable, even if a title company agrees to endorse over it; in this regard, see Nelson v. Anderson, 286 Ill.App.3d 706, 676 N.E.2d 735, 221 Ill.Dec. 932 (5th Dist. 1997).

Plat Act (court cases)

In Heerey v. City of Des Plaines, 225 Ill.App.3d 203 (1992), the court held that a plaintiff who was merely seeking to remodel his building, and not subdivide it or sell it, did not have to first have the property subdivided.  In other words, the court determined that the Plat Act was not applicable.

In Orrin Dressler, Inc. v. Village of Burr Ridge, 173 Ill.App.3d 454 (1988), the owner of the land felt that the proposed subdivision of his land was exempt from the Plat Act, as it was a “division into no more than two parts of a particular parcel or tract of land existing on July 17, 1959. . . .” The plaintiff felt that the transaction was exempt, since the original parcel was divided into two parts, but then the lot line between two of the resulting parts was merely "relocated."  The court disagreed.

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