Ask the Experts: Closing & Escrow

TRUE OR FALSE: A loan statement showing the amounts deducted from the face amount of the loan, received from the lender to a transaction, is all that is necessary for the closer to disburse the lender's funds when they are deposited.

FALSE!  The closer must also have written closing instructions detailing:

  • The documents that are to be recorded
  • Any other documents the closer is to collect from the borrower
  • The type and amount of the loan policy to be issued (or a statement that a policy is not required, if that is the case, which it sometimes is!)
  • Any required endorsements
  • Any conditions to be met prior to closing
  • Delivery instructions for the recordable documents and loan policy

In addition the closer must have (usually received by email):

  • Lender's approval of the disbursement statement
  • Final approval to close

Ask the Experts: Construction

TRUE OR FALSE: Title companies analyze three different points when a lender is seeking construction coverage: (1) contracts let prior to closing; (2) contracts which will be let subsequent to the closing but paid for out of the proceeds of the insured mortgage; and (3) how much of the loan will be disbursed at closing.

TRUE!  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. Check out our article, "Construction Issues at Closing: A Title Company's Perspective" which will help identify construction issues that arise at closing and how Chicago Title Insurance Company deals with these issues.

Ask the Experts: Title

TRUE OR FALSE: Lien claimants no longer have rights or claims to a subject property once the property has been sold to a new owner(s) and a deed is recorded.

FALSE!  Real estate has traditionally been a family's most valuable asset. It is a form of wealth that is protected by many laws. These laws have been enacted to protect one's ownership of real estate and the improvements located on the land. The owner, the owner's family, and the owner's heirs have rights or claims in and to the property that you are buying. Those who may have an interest in or lien upon the property could be governmental bodies, contractors, lenders, judgment creditors, the Internal Revenue Service, or various other individuals or corporations. The real estate may be sold to you without the knowledge of the party having a right or claim in and to the property. In addition, you may purchase the real estate without having any knowledge of these rights or claims. In either event, these rights or claims remain attached to the title to the property that you are buying until they are extinguished.

#CTtalk: What’s New in Mortgage & Mortgage Foreclosure Law

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


Several new laws affecting mortgages and mortgage foreclosures recently became effective. This article will describe these new laws.

Mortgage Originators

Public Act 99-113 (HB 2814), effective July 23, 2015, amends Section 1-3 of the Residential Mortgage License Act of 1987, 205 ILCS 635/1-3, to counteract the holding in a recent Illinois appellate court case. See First Mtg. Co. v. Dina, 2014 IL App. (2d) 130567 (a mortgage is void ab initio if originated by an unlicensed lender and any judgment of foreclosure based on such a mortgage is also void).

Section 1-3, entitled Necessity for License, is amended at paragraph (e) to state:

A mortgage loan brokered, funded, originated, serviced, or purchased by a party who is not licensed under this Section shall not be held to be invalid solely on the basis of a violation under this Section.

The amendment goes on to state that this enactment is declarative of existing law—the usual remark when the legislature seeks to upend a judicial ruling.


The amendment effectively eliminates one defense to a mortgage foreclosure proceeding. See also LVNV Funding, LLC v. Trice, 2015 IL 116129 (a judgment is not void if the court that entered the judgment had both personal and subject matter jurisdiction).

Deceased Mortgagors

In a mortgage foreclosure proceeding, case law, court rule, and statute now require the appointment of a special representative for a deceased mortgagor in order to vest subject matter jurisdiction in the trial court. See ABN AMRO Mtg. Group, Inc. v. McGahan, 237 Ill.2d 526 (2010); Ill. S. Ct. Rule 113(i) (referencing 735 ILCS 5/13-209); and Section 15-1501(h) of the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1501(h). Public Act 99-24 (SB 735), effective January 1, 2016, amends Section 15-1501(h) to clarify when a special representative need not be appointed. As amended, paragraph (h) states that the court is not required to appoint a special representative for a deceased mortgagor if there is a:

  1. Living person, persons, or entity holding a 100% interest in the property as the deceased mortgagor’s surviving joint tenant or surviving tenant by the entirety;
  2. Beneficiary under a transfer on death instrument (TODI) executed by the mortgagor and recorded prior to the mortgagor’s death;
  3. Person, persons, or entity who acquired title through a conveyance of the property from the mortgagor prior to the mortgagor’s death;
  4. Person, persons, or entity who acquired title through a conveyance of the property from the administrator or executor of the mortgagor’s probate estate; or
  5. Trust that acquired title through a conveyance of the property from the mortgagor or from any other person, persons, or entities identified above.


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Ask the Experts: Construction Disbursing

TRUE OR FALSE: Chicago NCS’s Construction Disbursing Department can service construction escrows nationwide, not just in Illinois.  

TRUE!!!  Chicago NCS has established the largest national construction disbursing department in the country. Our seasoned staff represents over 160 years of combined construction disbursing experience and knowledge to help you with your next construction project. Whether it is a ground-up build, property rehab or tenant finish work, we manage escrows ranging from small single-family homes to billion-dollar mixed-use developments, in most of the 50 states.  


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



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

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.