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BASIC

UNDERWRITING

ILLINOIS
ATG

UNDERWRITING DEPARTMENT
800.252.0402
Fax: 217.359.2014
E-mail: legal@atgf.com







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Table of contents
CHAPTER 1 ABSTRACT REVIEW AND TITLE SEARCH
CHAPTER 2 BANKRUPTCY
CHAPTER 3 CO-OWNERSHIP:
A. J OINT TENANCY
B. TENANCY BY THE ENTIRETY
C. TENANCY IN COMMON
CHAPTER 4 DISSOLUTION OF MARRIAGE & CHILD SUPPORT
CHAPTER 5 EASEMENTS & ACCESS
CHAPTER 6 ENCROACHMENTS & EXTENDED COVERAGE
CHAPTER 7 ENTITIES:
A. ASSOCIATIONS
B. CORPORATIONS
C. LAND TRUSTS
D. LIMITED LIABILITY COMPANIES
E. MUNICIPAL CORPORATIONS
F. PARTNERSHIPS
G. TRUSTS
CHAPTER 8 ESTATES:
A. DISABLED PERSONS
B. MINORS
C. DECEDENTS
CHAPTER 9 FINANCING & SECURED INTERESTS:
A. FUTURE ADVANCES
B. INSTALLMENT CONTRACTS
C. MORTGAGES
D. REVOLVING CREDIT MORTGAGES
E. VARIABLE RATE MORTGAGES
CHAPTER 10 LIENS:
A. ENVIRONMENTAL & IRPTA
B. ILLINOIS TAX & MISCELLANEOUS
C. J UDGMENTS
D. MECHANICS
E. MUNICIPAL
F. SPECIAL DISTRICTS
CHAPTER 11 MISCELLANEOUS:
A. ALIENS
B. HOMESTEAD
CHAPTER 12 MORTGAGE FORECLOSURE
CHAPTER 13 POWERS OF ATTORNEY
CHAPTER 14 RAILROADS
CHAPTER 15 SPECIAL POLICIES:
A. CONSTRUCTION
B. LEASEHOLDS
C. U.S. GOVERNMENT
CHAPTER 16 SUBDIVISION OF LAND:
A. CONDOMINIUMS
B. PLANNED UNIT DEVELOPMENTS
C. SUBDIVISIONS
D. TOWNHOUSES
E. VACATED STREETS & ALLEYS
F. ZONING
CHAPTER 17 WATERWAYS
CHAPTER 18 (RESERVED)
CHAPTER 19 (RESERVED)
CHAPTER 20 (RESERVED)
CHAPTER 21 (RESERVED)
CHAPTER 22 (RESERVED)
CHAPTER 23 (RESERVED)
CHAPTER 24 SPECIAL EXCEPTIONS
CHAPTER 25 UNDERWRITING BULLETINS AND NOTES

FORWARD


This Underwriting Manual is for the use of Illinois ATG members in examining title to real estate in
Illinois and raising appropriate exceptions for matters disclosed by the examination. The Manual is not
intended to be an exhaustive treatment of all possible problems that might affect title to real estate. Nor
is it intended to be all-inclusive of the potential title defects within the subject matter of a chapter.
Rather, the Manual is addressed to the most common title problems encountered by ATG members and
ATG requirements in dealing with these problems. Finally, this Manual is not intended to be a substitute
for attorney examination and judgment in insuring title. While we encourage ATG members' paralegal
and secretarial staffs to read the following chapters in order to better understand the process of title
examination, we emphasize that the determination of the status of title to real estate is part of the
practice of law and therefore must be conducted with the direct participation of a licensed attorney.
ATG members should note that the Underwriting Manual sets forth the most conservative position on
handling title defects. In certain cases, it may be possible to treat defects more liberally, depending upon
all of the facts and circumstances surrounding the transaction. Thus, while the Manual may be used to
discover when and how to raise specific exceptions, and will indicate the most conservative way to
handle them from ATG's standpoint, we encourage ATG members to contact the Underwriting
Department for possible alternatives where the procedures outlined herein are overly burdensome, if not
impossible, under the circumstances.
The subject matter of the following chapters and the scope of coverage therein was based upon our
perception of the areas most commonly encountered by ATG members. This perception was based upon
the numbers and types of questions we received at ATG on a day-to-day basis. We encourage the users
of this Manual to call us with any comments, questions, and suggestions to improve the subjects covered
and the scope of the coverage of those subjects.
February 1999








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ATG Basic Underwriting - Illinois Page 1-1
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CHAPTER 1 ABSTRACT REVIEW AND TITLE SEARCH

I. ABSTRACT REVIEW
Every attorney who has been faced with the review of an abstract of title or complicated title
search report faces a preliminary problem of how to organize such a review. The problem is
compounded by the necessity of establishing a written memorial of the review that is capable of
being understood both at the time of the review and in the event it needs to be analyzed in the
future. There are no set rules for the mechanics of an abstract review and most attorneys develop
their own system. The following is a suggested approach that an attorney may find helpful. The
example set forth below is an over-simplification of what would be necessary in most abstract
reviews. However, the concept can be used for more difficult title reviews.
The basic idea is to provide a chronological listing of both the chain of title and any defects,
encumbrances or other matters discovered during the search which may affect the quality of title.
Therefore, the format is divided into two columns. The column on the right will be the chain of
title. The left-hand column will be a listing of defects, encumbrances, or special problems that
have been noted in the search. To identify the review, a brief legal description is written in the
upper left-hand corner. The client name or file number could be written in the upper right-hand
corner along with the date.
The first information on the left-hand column would be the date of certification of the first
section of the abstract. Most abstracts will have been updated on several occasions and there may
be numerous certifications each of which should be identified. This will also serve to confirm
that the abstract is a complete record of the title. For identification purposes, each certification
should be noted in the chronological order as it appears in the abstract. The reviewer will then
commence the chain of title column on the right-hand side of the page with the first deed being
the patent deed from the United States government or such subsequent deed as is the first deed in
the abstract to be reviewed. Thereafter, each transfer of title will be noted chronologically by
inserting the name or initials of the grantee and the number of the item at which the transferring
document appears. In our example, the patent deed from the United States government to A. B.
J ones is item 1 in the first portion of the abstract, which is certified to May 1, 1922. The chain of
title then proceeds from J ones to C. D. Smith by warranty deed and then to E. F. Smith through
probate proceedings which first appear at item 6 of the abstract.
The only matters that were listed in the example for the first section were the mortgage at item 4
from C. D. Smith to First National Bank and the release of that mortgage. The release, which
was item 5, is noted directly after the mortgage. It is not necessary to list every item that appears
in the abstract, but only those that the examiner believes may have some impact upon the quality
of title that would form the basis of a title objection. If there is a question in the reviewer's mind
on a matter, it should be noted for later analysis.
Section B of the left-hand column notes the second portion of the abstract, which is certified
through J une 15, 1984. In that section is a quitclaim deed from G. H. Black to I. J . White, which
is item 1. Also in that section is a mortgage that has been executed by White to First Federal
Savings & Loan. There was no release of this mortgage and, therefore, the item remains as a
defect which must be set forth on a title commitment or policy as a Schedule B exception.
Furthermore, there was a judgment at item 3 by K. L. Gray against I. J . White, the titleholder,
and, again, this item remains unreleased and must be disclosed as an exception on the title
commitment and policy.
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Upon completing the abstract review notes, the reviewer will then go back to determine which
matters still affect the property and must be set forth as exceptions in either a title commitment
or policy. Once it has been determined that a matter no longer affects the property, a line can be
drawn through that note so that it will be ignored when dictating or writing the commitment,
policy, or opinion. After omitting all matters that no longer affect the property, the reviewer can
then quickly determine from the right-hand column who is in title and from the left-hand column
which exceptions must be set forth.
Again, this is not an exhaustive analysis of abstract review procedures. It is intended to give a
reviewer a procedure for organizing such a review. It is suggested that these notes be retained in
the client file for future reference.
If the attorney or firm does a great deal of abstract review, it may be wise to set up an index for
subdivisions and sections so that if another abstract or search is to be reviewed at a later time
which involves the same subdivision or section, a quick reference can be made to the prior notes
which involve the larger tract from which that lot was carved. This can be easily accomplished
for example by having an index for various subdivisions and sections in the locality, referencing
within those subdivision and section headings which lots and parcels have been reviewed. For
example, if Tall Oaks subdivision was subdivided in 1955 and a review has already been made
of Lot 1 (per our example), the index would list all of the subdivisions in alphabetical order,
including Tall Oaks subdivision. Under Tall Oaks subdivision an entry would be made for Lot 1
with a reference to the specific client file in which the abstract review notes could be found.
Thereafter, if the attorney is presented with an abstract for Lot 2 in Tall Oaks subdivision, he
would need only to start his search for Lot 2 from the date of the platting of the subdivision
(1955), since prior review of the real estate which formed that subdivision has already been
made. Of course, the notes for Lot 1 must be examined to determine exceptions that may affect
Lot 2 as well.
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EXAMPLE


Page 1-4 ATG Basic Underwriting - Illinois
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II. TITLE SEARCH STANDARDS AND PRACTICES
A. Purpose
It is a requirement of Attorneys Title that a title search be conducted in connection with
issuing title commitments and policies. There are several methods by which this can be
accomplished. Qualified searchers from the members office may conduct this search.
Many counties offer on-line search capability. Call your recorders office for information
and pricing. You can also contract the search out to a qualified search service. Before
contracting with a search provider that is not on the ATG-approved list, be certain that
the search service has a current Errors & Omissions (E&O) policy. Keep proof of the
search results with the other title documents in your file. Using the form of checklist
suggested by ATG

will assure that proper procedures for conducting a search are


followed, and will provide evidence that a search was conducted, should that evidence be
required in a claim.
B. Search Period
1. Prior Evidence of Title Exists (All States)
a. You are authorized to conduct a search from the date of an existing
owners or mortgagee/loan policy written by an ATG

member or a
commercial title insurance company authorized to conduct business in the
state in which the property is located. Mid-America Title Insurance
Company policies are not acceptable as prior title policies.
b. A prior title commitment may be used as prior evidence of title provided
the member has evidence that the final policy has been or will be issued.
c. You are also authorized to conduct a search from the date of the last
continuation of an abstract that you have in hand for examination as long
as an ATG member has issued an abstract opinion letter through the last
continuation date. This requirement exists because the member, and
consequently ATG

, will have no privity with the author of a title opinion


letter written by another attorney should a claim arise. If another ATG


member wrote the opinion letter, contact an ATG underwriter for
approval.
2. No Prior Evidence of Title Exists
The following guidelines set forth the search requirements in situations in which
there is no prior title evidence.
a. Subdivided residential land
The searcher should review the plat and any covenants, building line, and
restrictions attached to the plat. The purpose of reviewing the plat is to
determine easements, building lines, and restrictions that should be shown
as exceptions to title and to establish the titleholder to the property. The
first deed conveying the lot being searched should then be reviewed to
uncover any restrictions created by that deed. To find this deed, the
searcher should search the name of the subdivision developer in the
ATG Basic Underwriting - Illinois Page 1-5
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Grantor Index or find the first deed in the Tract index if available.
Thereafter, a chain of title search should be conducted, beginning with the
first warranty deed recorded more than the applicable search period prior
to the current date, through the current date.
If the subdivision or condominium was created within the past 20 years,
and there are 10 or more lots or units, the search may be conducted
beginning with the recorded plat or declaration. If there are less than 10
lots or units, then a 20-year search must be conducted.
i. Illinois and Indiana
The applicable search period for platted land is 20 years;
ii. Wisconsin
The applicable search period platted land is 30 years for deeds,
mortgages, all other conveyances, judgments, liens and
encumbrances. The applicable search period for easements and
restrictions is 60 years.
If the land being searched is part of an area that has a history of
land patents to Native Americans, reservations of mineral rights or
other land grants or reservations, it may be necessary to search for
the federal land patent.
b. Unsubdivided land or commercial property
The searcher should conduct a search for the applicable search period,
regardless of whether or not there is a more recent plat. If the plat and first
deed are dated before the applicable search period, obtain the plat and first
deed, and then continue the search for the applicable search period. In
addition to discerning that title has transferred properly throughout the
years, this procedure will discover any restrictions, easements, or other
exceptions to title created by recorded instruments.
i. Illinois and Indiana
The applicable search period for unplatted land and unplatted
commercial property is 100 years. The applicable search period
for platted commercial property is 40 years.
ii. Wisconsin
The applicable search period for unplatted land and commercial
property is 30 years for deeds, mortgages, all other conveyances,
judgments, liens, and encumbrances. The applicable search
period for easements and restrictions is 60 years.
If the land being searched is part of an area that has a history of
land patents to Native Americans, reservations of mineral rights or
Page 1-6 ATG Basic Underwriting - Illinois
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other land grants or reservations, it may be necessary to search for
the federal land patent.
C. Documenting the Search (All States)
1. Prior Policy
Keep a copy of the prior policy with the search checklist in the event a claim is
created by title exceptions not being raised or other inaccuracies in that policy.
2. Effective Date
Determine the effective date and time of the initial search for the preparation of a
commitment, as of the end of the day through which documents have been posted,
according to the Recorder's Office. The effective date and time of your final
search (in preparation of the owner's and mortgagee policies) will be the date and
time of recording of the documents being insured. The effective date and time of
your search is determined by the date and time of recording of the last document
searched, and not the date and time you leave the Recorder's office. Since some
Recorder's offices are several days behind in recording documents, it is always
wise to ask the Recorder through what date/time the records have been posted.
3. Copies of documents
Provide copies or abstracts of documents in accordance with the requirements set
forth, below.
4. J udgment and lien search
Provide a judgment and lien search for all parties who are or were in title to the
property at any time during the appropriate search period. Provide a judgment and
lien search for the buyers for the appropriate search period.
5. Real estate tax search
Provide a real estate tax search for the past five years. Include in the search the
amount and status (paid; unpaid and due; unpaid and forfeited; unpaid and sold;
not yet due and payable) of the most recent years taxes, and provide a copy of the
tax bill, if available.
6. Special assessments
Provide a special assessment search, indicating the date the special assessment
was confirmed, the amount due, the total number of installments, if any, and the
status of payment.
7. Special service areas
Examine the tax bill for information regarding special service areas and separately
report the information, including the name or number of the special service area.
ATG Basic Underwriting - Illinois Page 1-7
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8. Computerized records
Provide a computerized printout of the judgment and lien search and the land
records for those counties that have computerized records, along with a legend
explaining any abbreviations, column headings, etc. In Cook County, the
computerized printout from either Landata or Chicago Title must be provided.
D. Document Copies (All States)
1. General Rule
a. All Documents indicated in the search report, including, but not limited to,
deeds, mortgages, liens, releases, plats, easements, restrictions, and
declarations, must be provided to the member with the search.
b. When the property searched is part of a condominium, the plat attached to
the declaration must be provided. The first page of the plat and the page of
the plat containing the unit and any page containing common elements or
limited common elements that are part of the unit must be provided.
c. All plats copied must include the full plat showing easements, restrictions,
county and municipal certifications, legal descriptions, signatures, and
recording information.
2. Abstracts of documents
a. In all counties except Cook and DuPage, if documents are not available or
if copying documents would be unreasonably expensive or time
consuming, the searcher may have an ATG-approved abstractor abstract
the document.
b. Abstracting of a document must include at a minimum the following
information if available:
i. date of the document;
ii. date of acknowledgement of the document;
iii. date of recording of the document;
iv. the document number and book and page (if applicable);
v. marital status of the grantors;
vi. estate or tenancy of the grantees in deeds;
vii. restrictions, covenants, or agreements;
viii. clauses stricken from a preprinted form;
ix. variations in the legal description in the document with the legal
description searched;
Page 1-8 ATG Basic Underwriting - Illinois
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x. the absence of, or inconsistencies or irregularities in, the signatures
and acknowledgement of the document.
3. Abstracting is permitted only for form deeds, mortgages, releases, assignments of
mortgages and assignments of rent. Any non-form document must be provided
with the search.
E. Later Date Searches (All States)
A later date search from the effective date of the most recently conducted search, through
the current date or through the date of recording of documents, must be provided. The
search shall comply with all of the rules and procedures as set forth, above.
F. The Title Search Checklist
The top portion of every title search checklist prepared by ATGis the same. It prompts
the searcher to examine the prior evidence of title before commencing the search and
provides the searcher with ready access to title information needed to conduct that search.
A permanent record of the search must be created, and a part of that record is the exact
names of the parties searched, the date the search is commenced, and the legal description
of the property searched. The checklist also prompts the searcher to look only at
mortgage releases that affect the subject property by providing space to note the
particulars of an existing mortgage.
Complete the top portion of the search checklist before going to the Recorders office in
order to become familiar with the particulars of the search and to assure the completion
of an accurate search. This will require an examination of the abstract or prior title policy
before starting the search process to determine the titleholder, any liens or encumbrances
affecting the property, any special taxing districts to which the property is subject, or any
other title matters that may be affected by recordings found in the search.
Once again we issue a warning: a title searcher should not become too familiar with
the transaction as to presume the outcome of the search and fail to pay proper
attention to searching the indices.
1. Releases of Existing Liens
List on the back of the checklist any liens that show as exceptions in the prior
evidence of title, such as state and federal tax liens, mechanics liens, etc. This is
done as a reminder to the searcher to check the original indexing of the lien for a
release of that lien. Remember that the originals of certain liens are returned to
their rightful owners after recording and others are kept in the Recorder's Office.
In most cases, those liens that are kept in the Recorders office are filed by a file
number rather than by book and page number or document number. Thus, the
searcher will not find them in microfilm or photocopies but in filing cabinets
located in the Recorders Office. The releases of these liens are indexed on the
same line as the original indexing of the lien. Thus, to find if a lien has been
released, the searcher must note the existence of that lien on the search checklist
prior to commencing the search. Maintain a record of documents found in the
search by keeping a list of all documents found under each name in the search.
Indicate NOP (not our property) beside a document that does not affect the
ATG Basic Underwriting - Illinois Page 1-9
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subject property. A copy of each applicable document is to be made as required
under Section D, above. This system will give you an opportunity to make a legal
determination as to each documents sufficiency. The third and fourth pages of
the checklist provide a place to record pertinent information concerning each
document found in the initial search and final search.
Oftentimes the buyer of property may assume a mortgage entered into by a prior
owner (mortgagor) of the property. If this is so and the county indexes releases in
a Mortgage Release Index, search for a release under the name of the mortgagor
in the mortgage. In this case, the Mortgage Release Index will be the only index
searched in the name of the mortgagor.
2. Similar names
Let us assume for sake of reference that we are searching the names J ohn Public
and Patricia C. Public. If a searcher finds a judgment or lien against J ohn M.
Public or Patricia (no middle initial) Public, that document should be considered
as applying to the search and the following exception added to Schedule B of the
commitment:
We find judgments, liens, or other matters of record involving a
person or persons whose names are similar to J. Public. Relative
thereto, a Personal Information Affidavit establishing the identity
of the above-described person must be supplied in order to
facilitate the exclusion, if possible, of these items.
Do not rely solely on the denial of the affiant in the Personal Information
Affidavit that no judgments or liens exist against him or her. Consider a situation
wherein a previous address of affiant is the same as the address of the judgment or
lien debtor found in the search. Remember, also, to check a name under the first
initial of the first name when conducting a name search. For instance, when the
name is Patricia Public, check all entries for Public, with a first name beginning
with P to discover a document executed by P.C. Public rather than searching
just Patricia Public. Also search for nicknames, such as Bill for William and
Bob for Robert. This is particularly important when performing a computer
search.
G. Guidelines to Indices
1. Tract index
Some counties maintain a tract index in addition to the other indices required by
statute. While this is a valuable tool to the title searcher, it is an unofficial index
and may not be relied on solely to conduct the search. The searcher is required to
conduct a search in the Grantor/Grantee index and any other applicable indices.
This requirement is waived for counties in which the tract index has been proven
to be reliable and, in some cases, superior to the Grantor/Grantee index. All
documents that contain a legal description will be indexed in a Tract index. Be
aware that in searching a tract index, the search is not by name but by legal
description of the subject property. In other words, if a document is discovered
that contains the legal description of the subject property, but that is filed against
Page 1-10 ATG Basic Underwriting - Illinois
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a name unknown to the chain of title, examine the document, and raise an
exception in Schedule B of the commitment in the following form:
Right, title, or interest of * as disclosed by * recorded *, as
Document No. *
2. Grantor Index
When preparing a title search checklist in an unfamiliar county, first determine
what documents are indexed in the Grantor Index. Some counties index all
documents therein, some index only deeds, mortgages, and other documents that
contain a legal description and effect a conveyance of all or part of a property. For
example, Champaign County maintains a Miscellaneous Index into which powers
of attorney and other documents that do not contain a legal description are
indexed. Other counties do not maintain a Miscellaneous Index and index those
documents in the Grantor Index.
The Grantor Index contains documents indexed by name of the grantor and should
be searched in the name of the seller and/or any other party in interest to the
property. (Hereafter, seller will include any other party-in-interest to the
property.) If a tract index is not maintained, the Grantor index is the first index
that must be searched to determine whether title has transferred since the date of
the prior evidence of title. If a document has been recorded that creates a new
interests in the property, (e.g., a deed in trust or memorandum of contract), the
additional names must be searched in the same manner as the seller from the date
the interests in the property were created. These names must also be searched for
the appropriate length of time in the applicable judgment and lien and other
indices to determine if there are outstanding liens against them that attached to the
property at the time their interest in the property was created.
Because there is nothing in a Grantor Index that could be executed by a buyer of
property that would affect the property being searched, you are not required to
search this index in the name of the buyer. Therefore, the checklist must be
structured to illustrate that fact.
3. Grantee Index
The same documents that are indexed in the Grantor Index will be indexed in the
Grantee Index by name of the grantee in a document. The only instance in which
you will be required to search this index is if the Recorders Office does not
maintain a separate Release Index, but indexes releases in the Grantee Index. If
this is so, search in the name of any party who is a mortgagor in an existing
mortgage against the property.
Bear in mind that some counties index liens in the Grantor/Grantee Index. If so,
searching individual lien indices may be avoided. Again, if this is the case,
determine which liens are indexed therein to determine which names should be
searched in the Grantee Index.
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4. Mortgagor Index
Mortgages are indexed in this index in the name of the mortgagor. A search in the
name of the seller is required in the Mortgagor Index from the date of the prior
evidence of title. Some counties do not maintain a mortgage index, but index
mortgages in the Grantor/Grantee Index. Remember that some counties do not
maintain a Release Index, but index releases on the same line as the original
indexing of the mortgage. Also, some counties do not even index releases, but
simply note the recording information of the release on the copy of the mortgage.
Absent a Mortgage Release Index, you should question the Recorder as to how
releases of mortgages are indexed.
With the introduction of the secondary mortgage market and mortgage
assignments becoming commonplace, it is necessary to search for an assignment
of any existing mortgage on the property. To do this, the searcher must first
determine where these assignments are indexed. Some counties may index them
in the Grantor Index, while others may index them in the Mortgagor Index.
Simply check with the Recorder to find out where they are indexed. Thereafter,
when conducting a search, search the name of the mortgagee in the appropriate
index from the date of the prior evidence of title. There is one exception to the
rule that all documents containing any name in the search must be checked.
Because of the volume of documents found in the name of a mortgagee and the
fact that mortgage assignments are made individually, you may rely on the legal
description in the index to determine whether an assignment relates to the subject
property. In some counties, the reference may be to the book and page or
document number of the mortgage recording rather than to the legal description
and you may rely on this information also to determine whether an assignment
relates to the subject property.
5. Mortgagee Index
Mortgages are indexed in this index in the name of the mortgagee. While this
index is maintained in Recorders Offices that maintain a Mortgagor Index, you
are not required to search this index under any name.
6. Oil and Gas Leases
Conveyances of mineral rights to the property will be indexed herein. This index
must be searched in the name of the seller from the date of the prior evidence of
title.
7. Lessor Index
Effingham County, and possibly others in the State, has a development of
personal residences around Lake Sara. These properties are not sold but are
leased. Effingham County maintains a Lessor/Lessee Index into which transfers
of these properties are indexed. Thus, if a partys interest in property is a
leasehold, this index will be searched in the same fashion as a Grantor Index.
Additionally, a Lessor will be searched in the same manner as the seller in the lien
and other indices maintained by the Recorders Office.
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8. Lessee Index
Like the Grantee Index, members are not required to search this index in the
course of their search.
9. Plats and Amendments
It is necessary to search for the recording of plats or amendments to existing plats
from the date of the prior evidence of title. This is done in various ways,
depending upon the indices available and the type of property.
If the county in which the property is located maintains a Tract index, plats or
amendments to plats will be indexed therein and no other index need be searched.
In this case, there is no need for a separate line for Plats and Amendments on
the title search checklist.
If the county maintains a Grantor/Grantee system and the property lies within a
platted subdivision, search the Plat Index in the name of the subdivision from the
date of the prior evidence of title. If the county maintains a Grantor/Grantee
system and the property lies within unplatted ground, search the Plat Index in the
name of the seller from the date of the prior evidence of title. Notice on the
sample checklist that there is a line to indicate whether Plats and Amendments
have been checked.
10. Miscellaneous Index
Few counties maintain a Miscellaneous Index, but if they do, it contains
documents that do not have a legal description. Some examples are powers of
attorney, articles of incorporation, reports of stock transfers, and other documents
for which there is not a separate index. It is necessary to conduct a search in the
name of the seller in this index and thereafter, to determine whether any document
found will affect the subject property. It is unnecessary to search this index in the
name of the buyer.
11. Release Index
Few counties maintain a Release Index. But if they do, mortgage releases are
indexed therein. In other counties, mortgage releases are indexed in the Grantee
Index noted on the same line as the original indexing of the mortgage, or noted on
the copy of the mortgage maintained in the Recorders office, either on microfilm
cards or photocopies. The absence of a Release Index will point out that some
other method is used. Whatever the method, search in the name of the mortgagor
for each existing mortgage from the date of the prior evidence of title or from the
date of the mortgage if entered into during, the period of the search. Search the
applicable names in the Grantee section of this index, as the mortgagor will be the
grantee in a release.
The following table contains a breakdown of various liens that may be
encountered during the search process and the statutes of limitations relating to
those liens:
ATG Basic Underwriting - Illinois Page 1-13
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Type of Lien
Lien Affects
Property or
Person
Search Buyer
or Seller
Statute of
Limitations
Mobile Home Person Both 10 Years
Federal Tax Person Both 10 Years
Retailer's Occupation Tax Person Both SEE BELOW
Unemployment Compensation Contribution Person Both 3 Years
Memorandum of J udgment Person Both 8 Years
Old Age Assistance Property SEE BELOW 5 Years
Lis Pendens Notice Property SEE BELOW
Mechanics Lien Property Seller 2 Years
Sanitary District Property Seller 30 Years
Demolition Liens Property Seller 10 Years
Bail Bonds Property Seller NONE
Oil & Gas Property Seller SEE BELOW

12. State Tax Lien and Retailer's Occupation Tax Liens
These liens affect any property now owned or hereafter acquired by a debtor. On
September 13, 1984, the Legislature amended the statute of limitations for each of
these liens changing the enforceability from five years to 20 years. This
amendment also provided that any such liens that were not unenforceable by lapse
of time became effective for 20 years. Therefore, it is not yet required to search
these indices for 20 years, but simply begin the search in 1979. In late1999, after
20 years has passed since the change in the statute, and those initial liens filed
under the new statute begin to expire, you will begin searching for a 20-year
period.
13. Old Age Assistance Liens
These liens affect only the property against which they are filed. Therefore, in
examining the lien, the searcher should see that it contains a legal description. In a
Recorders office that maintains a Tract index, these liens will be indexed therein.
In an office that maintains a Grantor/Grantee system, search this index in the
name of the seller but not in the name of the buyer. Old Age Assistance Liens are
effective for five years.
14. Lis Pendens
In this instance, the designers of books of index erred as Memoranda of J udgment
and Lis Pendens are normally indexed in the same book, the J udgment, Notice &
Decree Index. Lis Pendens (or Notice of Pending Suit) contains a legal
description (it will be indexed in a Tract index) and affects only the property
against which it is filed. Furthermore, it is effective against the property for the
pendency of the search. Thus, while the purpose of a search checklist is to keep
Page 1-14 ATG Basic Underwriting - Illinois
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tract of all names to be searched in each index and for what length of time to
search each name, special attention must be paid to the document that is found to
determine whether it affects the search. Pay particular attention if the Recorder's
Office maintains a Tract index. While Lis Pendens notices will be indexed in the
Tract index, the J udgment, Notice, and Decree Index must still be searched for
memoranda of judgment.
15. Mechanics Liens
These liens affect only the property against which they are filed; therefore, search
this index only in the name of the seller. This lien will contain a legal description
and, thus, will be indexed in a Tract index. Mechanics liens are enforceable for
two years from the date the work was completed.
16. Sanitary District Liens
These liens affect only the property against which they are filed; therefore, search
this index only in the name of the seller. These liens contain a legal description
and will be indexed in a Tract Index. Sanitary district liens are enforceable for 30
years. They are normally indexed in a Lien Index (along with Mechanics Liens
and, sometimes, other liens) and, therefore, the search checklist must indicate the
longest number of years to search determined by which liens are indexed therein.
17. Demolition Liens
These liens affect only the property against which they are filed; therefore, search
this index only in the name of the seller. This lien will contain a legal description
and, thus, will be indexed in a Tract index. Normally these liens are indexed in the
Lien Index. Demolition Liens are enforceable for 10 years.
18. Oil and Gas Liens
While this is a rare instrument, this index is found in at least one county in
Illinois. Its purpose is to index agreements subordinating previously existing liens
created by mortgages or deeds of trust to the oil and gas lease. This agreement
obtains the lien holders consent to development of the property for oil and gas,
and may address directing payment of proceeds directly to the lien holder for
application on the secured debt. This index should be searched in the name of the
seller from the date of the prior evidence of title. This lien will contain a legal
description and will be indexed in a Tract index.
19. Bail Bond Liens
These liens affect only the property against which they are filed; therefore, search
this index only in the name of the seller. This lien will contain a legal description
and, thus, will be indexed in a Tract index. A Bail Bond Lien remains in effect
until the conditions of the bail bond have been performed and the bail bond
discharged, meaning that this index should be searched for the pendency of the
search.
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This list may not be all inclusive of the liens you will find indexed in the
Recorder's Office. If you find other liens filed against the parties, contact an ATG
underwriter for information concerning the effect and duration of those liens.
H. Guidelines for General Real Estate Taxes
1. General Real Estate Taxes
a. Indicate the permanent index number assigned to the property, and note
the name of the party paying the real estate taxes (or the party to whom the
taxes are billed). If the tax records indicate payment was made by or billed
to someone other than the seller of the property, this fact may indicate the
existence of a contract sale or lease of the property that does not appear of
record, and requires inclusion of the following exception on Schedule B of
the title commitment:
The tax records indicate that *, a stranger to title, made
payments of general real estate taxes. The original receipt
showing such payment should be produced at this office
and this commitment is subject to: (1) rights or claims of
said party and all parties claiming thereunder, including
judgment and lien creditors, if any; and (2) the aforesaid
taxes, if not paid by a parry interested in the land.
This paragraph applies also to special assessments paid by someone other
than the titleholder. It does not apply to taxes paid by the mortgagee in a
mortgage existing against the property.
b. First determine the amount and status of the last known tax bill. This
information will be used to create a Schedule B exception for taxes in the
following form:
Permanent Index No. *; General real estate taxes for the
year, in the amount of $* are shown paid; * taxes are not
yet due and payable.
c. The next step is to check the real estate taxes for the last five years to
determine that those taxes have not been sold or forfeited. The five-year
period begins with the last taxes that could have been sold at tax sale. For
instance, assume that the commitment was effective December 21, 1997.
Real estate taxes for the year 1996, if not paid, would have been offered at
tax sale. Therefore, the five-year period would begin with 1996, meaning
that the searcher would check for payment of the 1996, 1995, 1994, 1993,
and 1992 taxes.
d. All permanent index numbers that affect the property must be verified by
the searcher. If a permanent index number affects property in addition to
that being searched, that fact must be indicated in the search report. If
more than one permanent index number affects the property being
searched, those additional permanent index numbers must be searched and
reported.
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2. Special Assessments
The procedures necessary to levy a special assessment of any kind are basically
the same. A petition for court approval with an assessment roll is filed, notice to
interested parties is served, a court hearing is held, and the courts decision with
the assessment roll is certified to the appropriate collecting officials.
When any assessment roll has been approved and confirmed by the Circuit Court
having jurisdiction of the district, a certified copy of the judgment is delivered to
the County Collector. In counties with township organization, the offices of the
County Collector and County Treasurer are combined.
Before any assessment becomes due and payable, the collector mails to the owner
of the property, or to the persons in whose name the property was last assessed, a
statement containing a property description, the amount of the assessment, the
date the assessment is due, and the manner in which it should be paid. The annual
maintenance assessments are due and payable and become a lien on the land on
the first day of J anuary next succeeding the confirmation of the levy. Original and
additional assessments are due as specified in the court order approving the
assessments. One-half of the annual maintenance assessment becomes delinquent
on the first day of the following J une and the remaining half becomes delinquent
on the first day of the following September.
Effective J anuary 1, 1988, Public Act 85-521 requires that, after entry of the
judgment for a special assessment for a drainage district, the Clerk shall record
the entire assessment roll or verdict as confirmed in the record, and make out and
certify copies of the assessment roll or verdict as it pertains to property in the
district located in the county. The amendment further requires the Commissioner
to file the certified copies in the Recorder's Office of every county containing
lands or other property of the district. Public Act 85-479, effective September 17,
1987, requires that all municipal assessments must be recorded in the County
Recorder's office. No lien for payment can exist until this recording takes place.
Quite obviously, the concern is finding the proper keeper of records of city or
township assessments or assessments by the various other authorities empowered
to levy these assessments prior to September 17, 1987 or J anuary 1, 1988. Bear in
mind that assessments may be levied by drainage districts (which records are
normally kept with the County Treasurer) or hospital, fire protection, forest
preserve, or other types of special districts. These records may be kept by city or
village clerks, treasurers, township officials, or commissioners. In the smaller
towns, it is often more difficult to find the keeper of the records, but easier to keep
abreast of special assessments because of newspaper coverage or ones
involvement in city government. Personal knowledge of road improvements or
street lighting additions (or the like) should alert the searcher that assessments
might exist against the property.
I. Break in the Chain of Title/Wild Deed or Mortgage (All States)
1. If a deed from an interloper (stranger) is found in the search, show the chain of
title up to the last grantee before the interloper, report the deed from the interloper
ATG Basic Underwriting - Illinois Page 1-17
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with a note that the deed is outside the chain of title, and continue the search
through both the interloper and the proper grantee in the chain, if possible.
2. If the search reveals a wild deed or mortgage (a deed or mortgage in which
neither the grantors or mortgagors nor the grantees or mortgagees appear
anywhere in the chain of title), report the wild deed or mortgage with a note that
the grantors/mortgagors and the grantees/mortgagees do not appear in the chain of
title, and continue the search through the proper grantees.
J. Miscellaneous
1. Torrens Property (Cook County)
a. Property registered in Torrens will have a Certificate that shows the owner
of the property, the legal description, and, on the reverse side, the
exceptions that pertain to the property. The Torrens system has been
eliminated, but many of the properties have not yet been deregistered.
b. In searching Torrens property, the member or searcher must check the last
Torrens certificate at the Registrars Office. Copies should be provided, if
available.
c. All documents from the last Torrens certificate must be reported and
included with the search report, even if there is a prior policy.
d. Property that has been deregistered will have a new chain of title
beginning with the recorded Certification of Title, a document prepared by
the Torrens Office showing the names of the owners of the property, the
legal description, and the matters that affect the title to the property. If
there is no prior policy, the search may commence with the recorded
Certification of Title.
e. The requirements stated above must be followed for all Torrens searches.
2. Recording services
When recording services are provided by you or your search provider, all
documents to be recorded must be recorded in a timely manner, in no case more
than five days after receipt of the documents by you or your search provider.
3. Gap Searches
In Cook County, the search provider must provide a gap search from the effective
date of the initial search in accordance with ATGs gap search program.

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EXHIBIT 1-1: PERSONAL INFORMATION AFFIDAVIT (page 1 of 2)

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EXHIBIT 1-1: PERSONAL INFORMATION AFFIDAVIT (page 2 of 2)


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[NOTES]









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CHAPTER 2 BANKRUPTCY


In certain situations, you may be requested to issue title insurance upon the sale of real estate owned by
a party or parties who have filed a bankruptcy petition. Prior to October 8, 1984, the Bankruptcy Act
provided that upon filing of a petition in bankruptcy, title to all property of the bankrupt vested in the
trustee. This is no longer true for petitions filed on or after October 8, 1984. While it may be true that
title no longer passes upon the filing of a petition in bankruptcy, the trustee and the bankruptcy court
clearly have rights and duties in connection with the control of all property of the debtor, including the
real estate. Extreme care must be taken in dealing with any bankruptcy situation whether it be Chapter 7
(Liquidation), Chapter 11 (Reorganization), Chapter 12 (Farm), or Chapter 13 (Adjustment of Debts of
an Individual with Regular Income).
I. EFFECT OF FILING A PETITION IN BANKRUPTCY
At the time of the filing of the petition, all of the property of the debtor is brought within the
control of the trustee and the court.
1
This also includes property acquired by bequest, devise,
inheritance, or divorce within 180 days after the filing of the petition. All other property acquired
by the estate after the commencement of the case will also be the property of the estate.
Naturally, the bankrupt is not authorized to transfer any of the property which would diminish
the available assets that are to be held by the trustee for satisfaction of the creditors claims.
Under the Act in effect prior to October 8, 1984, the trustee under 549 could avoid any transfer
of the property after commencement of the proceedings unless the buyer had acquired an asset
for value without knowledge of the bankruptcy proceedings and the property was not located in
the county where the bankruptcy court sat. For cases commenced on or after October 8, 1984, the
trustee must file a copy of the petition in the recorders office for every county in which real
estate is located in order to impart constructive notice to third parties of the bankruptcy
proceedings.
2
That provision states:
The trustee may not avoid a transfer of real property to a good faith purchaser
without knowledge of the commencement of the case and for present fair
equivalent value unless a copy or notice of the petition was filed, where a transfer
of such real property may be recorded to perfect such transfer, before such
transfer is so perfected that a bona fide purchaser of such property, against whom
applicable law permits such transfer to be perfected, could not acquire an interest
that is superior to the interest of such good faith purchaser. A good faith
purchaser without knowledge of the commencement of the case and for less than
present fair equivalent value has a lien on the property transferred to the extent of
any present value given, unless a copy or notice of the petition was so filed before
such transfer was so perfected.
Therefore, a duty is imposed on the trustee to record notice of the bankruptcy proceedings in
order to prevent an effective transfer of the property to a good faith purchaser.
It is necessary, therefore, in all cases to make a search of the recorders office to determine
whether a bankruptcy proceeding has been filed by either the seller or buyer of the property. If a
recorded notice is found in the search, or if you have personal knowledge of the bankruptcy
Page 2-2 ATG Basic Underwriting - Illinois
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proceedings, or otherwise become aware of the proceedings, the following exception should be
inserted in the commitment:
Statutory rights, powers and duties of the trustee in bankruptcy and the court in
the bankruptcy proceedings filed by *, on *, in the Federal District Court for the
* District of Illinois in Case No. *, [notice of which was recorded on * as
Document No. * (in Book *, Page No. *).]
II. TRANSFERS OF PROPERTY OF A BANKRUPT
There are several ways that the property of a bankrupt can be effectively transferred. The first
instance, of course, would be where the bankruptcy proceeding has terminated and the debtor is
once again free to deal with the property as his own. It is important to remember that the entry of
a discharge alone is not sufficient to give the debtor the authority to transfer the property. There
must also be a dismissal of the bankruptcy proceedings following the discharge.
It is also possible for the property to be freed from the control of the trustee and the court by
abandonment of the property. Section 544 of the Act provides that after notice at a hearing the
trustee may abandon any property of the estate that is burdensome to the estate or that is of
inconsequential value and benefit to the estate. This often occurs when the mortgage or other
liens and homestead exemption exceed the value of the property making it valueless to the
creditors. Therefore, check the proceedings to make sure that notice of the intention to abandon
the property has been given to the creditors, no objection has been raised, and that an order of
abandonment of this specific property has been entered by the court. Once abandoned, the
property is free of the bankruptcy proceedings and may be transferred or otherwise dealt with by
the debtor. When an order of abandonment has been properly entered, the deed conveying the
property need be executed only by the debtor and any other titleholder, but not the trustee.
The trustee may also sell the property when such sale will benefit the estate.
3
Section 363(b)
authorizes the trustee, after notice and a hearing, to sell or lease, other than in the ordinary course
of business, the property of the estate. If the trustee is proposing to execute the deed to transfer
the property, check the bankruptcy proceedings to make sure that notice has been sent to all
creditors, and a hearing has been conducted wherein the court has ordered the sale of the specific
property by the trustee. Section 363(c) provides that where there is authority to continue the
business of the debtor, in the absence of a court order to the contrary, any use, sale, or lease of
the estate property in the ordinary course of that business may be made without prior notice,
hearing, or order of the court. For purposes of issuing title insurance, the following may be relied
upon as authority for the trustee to continue the debtors business:
1. Chapter 7 cases:
4
Find in the bankruptcy proceedings that a specific order of the
court authorizing conduct of the debtors business has been entered.
2. Chapter 11 cases:
5
The trustee or the debtor in possession may be assumed to
have authority to conduct the debtors business if no court order has been entered
denying that authority and the plan does not prohibit a sale in the ordinary course.
3. Chapter 13 cases:
6
The trustee or the debtor in possession may be assumed to
have authority to conduct the debtors business if no court order has been entered
denying that authority and the plan does not prohibit a sale in the ordinary course.
Finally, the trustee is given special authority to sell property free and clear of liens under limited
circumstances as set forth in 363(f). That section provides that the trustee may sell property free
ATG Basic Underwriting - Illinois Page 2-3
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and clear of any interest in such property of any entity other than the estate, only if one of the
following is true:
1. Applicable non-bankruptcy law permits sale of such property free and clear of
such interest;
2. Such entity consents;
3. Such interest is a lien and the price at which such property is to be sold is greater
than the aggregate value of all liens on such property;
4. Such interest is in bona fide dispute; or,
5. Such entity could be compelled, in a legal or equitable proceeding, to accept a
money satisfaction of such interest.
Naturally, this section requires that there be notice to all creditors and a hearing on the petition
for sale. Examine the proceedings under 363(f) to confirm that there has been compliance with
the statutory requirements and the court order must justify the sale for one of the reasons set
forth in 363(f). Assuming that a proper 363(f) sale has been conducted, issue the policy to the
grantee of the deed from the trustee free and clear of the liens and encumbrances of all parties
who were given notice in the petition for sale. Since this is somewhat of an extraordinary
remedy, strict compliance with the statutory requirements and notice provisions must occur.
III. LIENS AGAINST BANKRUPTS PROPERTY
A. Judgment Liens and Discharge
There is a common misconception that property held by a bankrupt will be freed from the
imposition of judgment liens if the debt is discharged in bankruptcy. This is not true for
property that was held by the bankrupt at the time of the discharge. In this situation, once
the judgment lien has been properly perfected by recording of a memorandum or certified
copy of the lien in the recorders office, the lien becomes much like a perfected security
interest. The discharge in bankruptcy, while removing the personal obligation to pay the
debt, does not remove the lien against the property. The judgment creditor could still
foreclose on the judgment lien and use the sale proceeds to satisfy the debt. There could
not be any deficiency award in the foreclosure proceedings, but the judgment creditor can
fully realize on the property even after discharge.
7
Therefore, if a judgment lien is
discovered in the search, an exception must be raised on the commitment and policies
even if there has been a discharge of the debt.
On the other hand, if the discharge and dismissal in bankruptcy occur prior to the
bankrupt acquiring title to the property, no lien attaches. Since the debt has been
eliminated by the discharge, the subsequent acquisition of real estate does not cause a lien
right to be created. In this situation, you do not need to raise an exception for a judgment
lien on the commitment or policies.
B. Avoidance of Liens in Bankruptcy Proceedings
Pursuant to 545, the trustee is entitled to avoid statutory liens on the property of the
debtor. Statutory liens are those liens that are created only by reason of a statute and not
based upon any form of agreement. Examples of statutory liens would be mechanics
Page 2-4 ATG Basic Underwriting - Illinois
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liens, tax liens, judgment liens, etc. The mortgage lien would be a lien arising by
agreement and, therefore, not subject to avoidance under this section.
The trustee is entitled to avoid such statutory liens on the property of the debtor to the
extent that such liens first became effective against the debtor:
1. when a bankruptcy case against the debtor has been commenced;
2. when an insolvency proceeding, other than bankruptcy was commenced;
3. when a custodian was appointed or took possession;
4. when the debtor became insolvent;
5. when the debtors condition fails to meet a specified standard; or,
6. at the time of an execution against the property of the debtor levied at the instance
of an entity other than the holder of such statutory lien.
Statutory liens may also be avoided under Section 545 when they are not perfected or
enforceable at the time of the commencement of the case against a bona fide purchaser
that purchased such property at the time of the commencement of the case, whether or not
such purchaser exists. This would apply, for example, to a mechanics lien claim that
relates back to the date of the contract with the owner. Since such then would be effective
against a bona fide purchaser (even if no such purchaser actually exists at the
commencement of the bankruptcy case), the trustee may not avoid the lien.
Only when the trustee has petitioned for removal of such a lien pursuant to this section
and the court, after notice and hearing, has approved the trustees petition may you waive
the listed statutory liens from a commitment or policy.
IV. BANKRUPTCY AND JOINT TENANCY
The case of In re Tyson, 48 B.R. 412, (Illinois 1985) has surprisingly held that the filing of a
petition in bankruptcy by a joint tenant severs the joint tenancy. The court concluded that the
filing of the bankruptcy gave some interest in the property to the trustee and, therefore, destroyed
one or more of the four unities.
The holding in this case seems somewhat questionable, especially since the new Bankruptcy
Code eliminates any reference to a transfer of title to the trustee. Certainly, there may be no
intention on the part of the joint tenants to sever the joint tenancy by simply filing bankruptcy. In
any event, if clients of ATG members have filed for bankruptcy and their joint tenancy property
has been abandoned by the trustee or otherwise returned to the joint tenants, it would be
advisable to re-convey the property to the joint tenants by quitclaim deed clearly setting forth the
joint tenancy of the grantees on the deed. This will eliminate any contention that the joint
tenancy no longer exists.
V. BANKRUPTCY AND MORTGAGE FORECLOSURE
See the section on Mortgage Foreclosure contained in this manual.
ATG Basic Underwriting - Illinois Page 2-5
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1 11 U.S.C 541
2 11 U.S.C. 549(c).
3 11 U.S.C. 363.
4 11 U.S.C. 721
5 11 U.S.C. 1108
6 11 U.S.C. 1304
7 Miller v. Barto, 247 Ill. 104, 93 N.E. 140 (1910).












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CHAPTER 3A CO-OWNERSHIP:
JOINT TENANCY


I. CREATION OF A JOINT TENANCY
J oint tenancy has long been used as a form of co-ownership of interests in real estate. At
common law, it was presumed that a conveyance or devise to two or more persons created a joint
tenancy unless the grantor or testator indicated otherwise. Illinois statutory law has reversed this
presumption. Therefore, closely examine the language of a document purporting to create a joint
tenancy to determine the intention of the grantor or testator.
In order to create a valid joint tenancy, there must be a conveyance to the co-owner grantees
using the statutory language: not in tenancy in common but in joint tenancy.
1
Although the
statute states that the conveyance shall expressly declare the joint tenancy, the Illinois courts
have frequently held that as long as the language used clearly intended to create a joint tenancy,
the statutory language need not be used.
2

In addition to a clear intent expressed in the conveyance, the four unities of time, title, interest,
and possession must be present in order to create a valid joint tenancy.
3
This means that each
joint tenant must have an equal undivided interest in the property, have an equal right to
possession, have the same quantity of estate, and that the interests were all created at the same
time. If any of these unities is missing, a tenancy in common will instead be created.
You can rely on the Illinois statute permitting a grantor to convey to himself and another so as to
create a valid joint tenancy. On the other hand, it remains true that one cannot create a joint
tenancy where the grantees own unequal shares in the property.
A related problem in determining the grantors intent arises when a joint tenancy form deed is
used and only one grantee is named. In this situation, the following exception must be raised:
The deed from * to * recorded * as Document No. * [in Book *, Page *] is a joint
tenancy deed in form. The deed should be produced for examination; and an
affidavit executed by all parties named in said deed disclosing the names of the
intended grantees should be supplied. This Commitment is subject to such further
exceptions, if any, as may then be deemed necessary.
This exception may be waived if you determine from the instrument and the affidavit that no
intended grantees name was erased, or omitted through inadvertence, from the deed.
II. SEVERANCE OF A JOINT TENANCY
Even though property may be held in joint tenancy, either joint tenant may freely alienate his
undivided interest in the property. Some types of acts or events may sever the joint tenancy, and
others may not. Samples of some of the more common acts or events and the probable effect on a
joint tenancy are as follows:
1. A conveyance by a joint tenant to a third party or parties will sever the joint
tenancy.
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2. A conveyance by a joint tenant to himself or herself will sever the joint tenancy if
such was the intention of the grantor-grantee.
3. An involuntary conveyance of the joint tenants interest will sever the joint
tenancy, e.g., sheriffs execution sale and deed or bankruptcy sale deed.
4. A judgment for dissolution of marriage will not sever a joint tenancy between
husband and wife unless the judgment orders that the property be sold and
proceeds be divided.
5. A partition complaint will not sever the joint tenancy but a judgment of partition
will.
6. A mortgage or trust deed will not sever a joint tenancy.
7. The last will and testament of a joint tenant who attempts to devise joint tenancy
property will not sever the joint tenancy (but see discussion on the doctrine of
election, infra.)
Any action or event that would cause any one of the four unities of time, title, interest, or
possession to be destroyed will sever the joint tenancy, and create a tenancy in common.
If the examination of title discloses these or any other acts or events by a joint tenant, and you
are unsure as to the result, contact the ATG underwriting department with the pertinent
information for instructions.
III. DEATH OF JOINT TENANT
As a general rule, on the death of a joint tenant, title to the real estate passes to the surviving joint
tenant or tenants. Accordingly, when examining title in such a situation first determine that the
joint tenancy was validly created and, if so, that it has not been severed prior to the death. See the
preceding sections in this chapter for a brief analysis of creation and severance problems.
If the title search, application for title insurance or other evidence discloses the death of a joint
tenant in the chain of title, show title in the surviving joint tenant or tenants and raise the
following exception on Schedule B of the OMC:
We should be supplied with satisfactory evidence establishing the death, the
testacy or intestacy, and the value of the estate of *, deceased; and this
commitment is subject to such further exceptions, if any, as may then be deemed
necessary.
This exception may be modified or eliminated when such evidence has been supplied in whole or
in part, prior to the issuance of the OMC.
A J oint Tenancy Affidavit (ATG Form 307) is available to members and, when properly
executed, will supply all information required in the above exception. The affidavit supplied
must then be examined to ascertain whether any further exceptions must be raised. The following
analysis points out potential problem areas to consider. If such problems arise, please contact the
ATG underwriting department for the appropriate exceptions or clearance procedures.
ATG Basic Underwriting - Illinois Page 3A-3
ATG
A. Proof of Death
You must be supplied with a certified copy of the death certificate of the decedent. The
reason for this requirement is two-fold: First, title will not pass until death occurs, and
second, the cause of death may bar the survivor from acquiring the decedents interest. A
person who intentionally and unjustifiably causes the death of another shall not receive
any property by reason of the death, including what a surviving joint tenant would have
received.
4
Accordingly, if the death certificate discloses that the decedent died from other
than natural causes, you must require further evidence as to who may have caused the
death.
B. Testacy or Intestacy
Even though the title to the real estate passes by operation of law to the surviving joint
tenant, the decedents last will and testament must be examined to determine whether the
case law dealing with joint and mutual wills or the doctrine of election is applicable.
The doctrine of election may be applicable where the decedent attempts to devise the
specifically described joint tenancy property to someone other than the surviving joint
tenant, and devises or bequeaths other property, not necessarily real estate, to the
surviving joint tenant. In such a situation if the decedent clearly indicates in his or her
will that the surviving joint tenant must elect the estate property or the joint tenancy
property, the surviving joint tenant must elect between the joint tenancy property and the
property bequeathed in the will.
5

If the decedent and the surviving joint tenant have executed a joint and mutual will, the
will may have created a contract to devise the joint tenancy property to the ultimate
devisees in the will. Thus, while title is vested in the survivor, it is subject to the contract
so created that may be enforced against the survivor or his or her successors in interest.
C. Value of the Decedents Estate
You must be supplied with information relative to the value of the decedents taxable
estate so that you can determine whether to raise exceptions relative to Illinois or federal
estate taxes. The federal estate tax is imposed upon the net value of decedents estate.
Each decedent is entitled to a lifetime credit from the unified estate and gift tax. For
decedents dying in 1998 and thereafter, the value of the gross estate equivalent to the
maximum allowable lifetime credit is $625,000. The amount of the credit equivalent is
currently scheduled to increase every year through the year 2000, so the Internal Revenue
code must be consulted for the current amount. If you ascertain that the estate of the
decedent was of such size that it is unlikely that an estate tax would be due, he or she
need not raise an exception for the tax. Further, a surviving joint tenant can convey title
to a bona fide purchaser or mortgagee free and clear of the lien of federal estate taxes.
6

Effective J anuary 1, 1983, the Illinois Inheritance Tax was eliminated and was replaced
by the Illinois Estate Tax. There is no Illinois estate tax due except to the extent that the
decedents estate would be eligible for the credit for state death taxes under Federal estate
tax law. Therefore, for decedents dying after December 31, 1982, if you have eliminated
the possibility of federal estate taxes, you need not raise Illinois estate taxes as an
exception upon a conveyance to a bona fide purchaser or mortgagee. For decedents dying
Page 3A-4 ATG Basic Underwriting - Illinois
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prior to J anuary 1, 1983, contact the ATG underwriting department if you have any
questions regarding Illinois inheritance tax liens.

1
765 ILCS 1005/1
2
See, e.g., Slater v. Gruger, 165 Ill. 329, 46 N.E. 235 (1897)
3
Klouda v. Pechousek, 414 Ill.75, 110 N.E.2d 258 (1953)
4
755 ILCS 5/2-6
5
Williamson v. Williamson, 275 Ill.App.3d 999, 657 N.E. 2d 651, 212 Ill. Dec 450 (1995)
6
6324(a)(2) of the Internal Revenue Code
ATG Basic Underwriting - Illinois Page 3A-5
ATG
EXHIBIT 3A-1: JOINT TENANCY AFFIDAVIT (page 1 of 2)

Page 3A-6 ATG Basic Underwriting - Illinois
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EXHIBIT 3A-1: JOINT TENANCY AFFIDAVIT (page 2 of 2)


ATG Basic Underwriting - Illinois Page 3A-7
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[NOTES]













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CHAPTER 3B CO-OWNERSHIP:
TENANCY BY THE ENTIRETY


I. CREATION OF A TENANCY BY THE ENTIRETY
This form of survivorship ownership became effective starting on October 1, 1990.
1
A husband
and wife may take title by tenancy by the entirety if all of the following conditions are satisfied:
A. The property is maintained or intended to be maintained as a homestead by both husband
and wife together during coverture;
B. The deed or instrument of conveyance to the husband and wife expressly declares that the
devise is to the grantees, as husband and wife, not as joint tenants or tenants in common
but as tenants by the entirety.
C. The grantees are in fact husband and wife (tenancy by the entirety is not available for
non-married grantees).
If the grantees are not in fact husband and wife at the creation of the tenancy, then a joint tenancy
is created.
2

If the Owner Policy to be issued will insure the proposed Insureds as tenants by the entirety, the
following exception must be raised on the commitment:
If the policy or policies committed for under this commitment will insure the
titleholders as tenants by the entirety, any deed or instrument of conveyance must
convey the land to the proposed Insureds and must identify them as husband and
wife, and must contain the language required under Illinois law. In addition, ATG
must be supplied an affidavit (ATG Form 329) signed by the proposed Insureds
and setting forth that at the time of execution and delivery of the deed or
instrument of conveyance, the proposed Insureds were husband and wife, that
they maintain, or intend to maintain the insured land as their homestead, and that
they maintain no other property as their homestead.
Property, the title to which is held by one of the spouses, may be conveyed by that spouse to both
of them, without the use of a straw person, to create the tenancy.
Any conveyance or mortgage of the land held in tenancy by the entirety must be executed by
both spouses in order to be effective.
3
Any such instrument signed by only one of the spouses
will convey no interest to the grantee or mortgagee, nor will it sever the tenancy.
If the policy or policies to be issued will insure a grantee or mortgagee who is obtaining a deed
or mortgage from a titleholder who is holding title as a tenant by the entirety, the following
exception must be raised on the commitment:

Page 3B-2 ATG Basic Underwriting - Illinois
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Any conveyance or mortgage of the land must be executed by both titleholding
spouses in order to be effective, and in lieu thereof, the following exception will
appear on the policy or policies to be issued:
Consequences of the failure of * to execute the deed or mortgage or
other instrument of conveyance.
II. JUDGMENTS AND LIENS
One of the unique advantages of tenancy by the entireties over the other forms of ownership is its
ability to shield the property from enforcement of judgments and liens against only one of the
tenants. Although the law in this area is still uncertain, generally, property held as tenants by the
entirety is not subject to enforcement of a judgment or lien entered against only one of the
spouses, if all of the following are true:
A. The judgment or lien was entered after October 1, 1990;
B. The judgment or lien did not constitute a lien on the interest of the debtor before it was
transferred to the debtor and spouse as tenants by the entirety;
C. The property was not transferred into tenancy by the entirety specifically to avoid the
attachment of the judgment or lien, or to avoid the payment of existing debts beyond the
debtors ability to pay those debts.
It is important to note that the entireties act amended the statute regarding what property is liable
to enforcement of a judgment debt.
4
This means that although a judgment recorded against one
tenant by the entirety is not enforceable while the property is held as tenants by the entirety, the
judgment still constitutes a lien on the tenants interest. Thus, if the tenancy terminates, or is
severed, the judgment becomes enforceable. For this reason, if a judgment or lien appears of
record against only one of the tenants, the following exception must be raised on the
commitment and any policies insuring such interest.
Judgment entered * and recorded *, [in Book *, at page *,] as document no. *, in
favor of * and against * [in the amount of $ *].
The judgment or lien for a definite amount may be insured against if a title indemnity escrow is
established for the lien with a deposit of funds equal to at least 150 percent (150%) of the current
principal amount due (plus interest and costs). Additionally, the judgment or lien may be insured
against on the Mortgagee Policy using a Schedule B, Part II, if the mortgage is a purchase-money
mortgage, and the judgment or lien is against the tenant/mortgagor.
III. SEVERANCE
A tenancy by the entireties, unlike a joint tenancy, cannot be severed by the actions of only one
of the spouses deeding his or her interest to himself or herself or a third party, since any deed or
conveyance is effective only if signed by both tenants.
5
A tenancy by the entirety can be severed
by only one of the following means:
A. Entry of a judgment of dissolution, which automatically severs the tenancy (unless the
judgment provides otherwise) and converts the estate into a tenancy in common
6
;
B. Failure of the tenants to maintain the property as their homestead;
ATG Basic Underwriting - Illinois Page 3B-3
ATG
C. Death of one of the tenants;
D. Involuntary sale of the property or satisfaction of a debt of both tenants.
See the discussion above, under Severance of a J oint tenancy for situations that will not cause
a severance.
If the facts evidence that the tenancy has been or may have been severed, a joint tenancy or
tenancy in common, depending upon the facts, will be created. Obviously, at the time of
severance any judgments or liens against only one of the tenants will become immediately
enforceable. If one of the tenants dies after severance, the interest of that tenant may descend to
the tenants heirs and devisees, and not the surviving tenant. In any case, the matter should be
discussed with an ATG underwriter.
IV. DEATH OF A TENANT BY THE ENTIRETY
See discussion elsewhere in this manual entitled Death of J oint Tenant. All the issues
discussed in that preceding section apply to the death of a tenant by the entireties. Additionally,
upon the death of the tenant, any judgments or liens against the surviving tenant become
immediately enforceable.


1
765 ILCS 1005/1c
2
765 ILCS 1005/1c
3
765 ILCS 1005/1c
4
735 ILCS 5/12-112 and 735 ILCS 5/12-101
5
765 ILCS 1005/1c
6
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ATG Basic Underwriting - Illinois Page 3C-1
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CHAPTER 3C CO-OWNERSHIP:
TENANCY IN COMMON


I. TENANCY IN COMMON
A tenancy in common is a type of co-ownership wherein each of the co-tenants owns a separate
and distinct undivided interest in the real estate. This is in contrast to the joint tenancy or tenancy
by the entireties estates in which, until severance, each co-tenant is deemed to own the entire
estate in the land. Even though each tenant in common owns a distinct share, he or she is entitled
to possession of the whole estate unless otherwise agreed. Thus, it might be said that a tenancy in
common is characterized by only one of the four unities, that of possession. The other unities,
time, title and interest, are not required and therefore tenants in common can acquire their
interests by different conveyances, at different times and in unequal shares.
A tenancy in common is created whenever the conveyance or devise does not contain the
specific language required to create a joint tenancy or tenancy by the entireties. It is also created
where a party holding a non-joint tenancy estate dies intestate leaving more than one heir. It may
also arise when an attempt to create a joint tenancy or tenancy by the entireties has failed or a
joint tenancy has been severed. The statutes in Illinois provide for a presumption in favor of
tenancy in common in the absence of an express statement to the contrary.
Upon the death of a tenant in common, his or her share in the real estate passes to his or her heirs
or devisees subject to claims, death taxes, statutory powers of the personal representative and
other matters set forth herein in the Decedents Estates section.
A tenant in common may execute a mortgage upon his or her undivided interest without
affecting the shares of the co-tenants. Similarly, a judgment or other lien against a co-tenant
creates no lien on the shares of the other co-tenant.
II. INSURING A FRACTIONAL INTEREST
If you are required to issue a title insurance policy insuring title in one or more, but not all,
tenants in common to a parcel of real estate, or to insure a mortgage made by less than all co-
tenants, raise the following exceptions on Schedule B of the OMC and policy:
1. Rights of co-tenants to partition, contribution, and possession.
2. The right of the United States government to sell the entire property to
enforce a tax lien against any co-tenant of the land.
3. The right of a creditor, trustee, or debtor in possession to sell the entire
property in the event of a bankruptcy of any co-tenant of the land.
The requirement for the first exception is based upon: the statutory right to partition; the
common law requirement of contribution for, among other things, taxes, assessments, repairs and
mortgage payments; and the right of all co-owners of the real estate to possession of the entire
tract of land.
1

Page 3C-2 ATG Basic Underwriting - Illinois
ATG
The second exception sets forth the right of the United States. to levy upon and sell property in
which a delinquent taxpayer has an interest.
2
This right extends to the whole property even
though the lien of the government would affect only the undivided interest of a tenant in
common who is delinquent in payment of taxes.
The third exception sets forth the right of a bankrupt debtor, his trustee, or creditors, to force a
sale of the entire property in which the debtor has an interest.
3


1
35 ILCS 5/17-101, et seq
2
26 U.S.C.6331 et seq
3
Bankruptcy Code. 11 U.S.C.363(h)
ATG Basic Underwriting - Illinois Page 3C-3
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[NOTES]








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CHAPTER 4 DISSOLUTION OF MARRIAGE
AND CHILD SUPPORT


I. INTRODUCTION - BOTH SPOUSES CONVEYING
Many times you are asked to issue policies on the transfer of real estate during or after
dissolution of marriage proceedings involving an owner of real estate. If the transfer occurs
during the pendency of a divorce action and both the husband and wife have executed the
contract of sale for transfer of jointly owned property, insure the transfer much in the same
fashion as if no divorce proceeding was pending since both parties are in title to the real estate
and have agreed to the conveyance. There is no duty to conduct a separate search of circuit court
records to determine whether a dissolution proceeding is pending. However, when there is actual
knowledge of the divorce proceedings, the following exception should be inserted in the
commitment:
Dissolution of marriage proceedings filed by * against * in the Circuit Court of *
County as Case No. * .
If a lis pendens notice has been filed, the following exception should be placed in the
commitment:
Lis pendens notice dated * filed by * against * regarding a suit in the Circuit
Court of * County as Case No. * and recorded on * as Document No. * (in Book
*, Page *).
II. MARITAL PROPERTY
A more difficult situation arises when only one of the parties involved in a dissolution of
marriage proceeding is the owner of the property to be sold. The Illinois statutes provide:
Each spouse has a species of common ownership in the marital property which
vests at the time dissolution proceedings are commenced and continues only
during the pendency of the action. Any such interest in marital property shall not
encumber that property so as to restrict its transfer, assignment, or conveyance by
the titleholder unless such titleholder is specifically enjoined from making such
transfer, assignment, or conveyance.
1

This provision was initially enacted in order to provide federal income tax advantages to parties
involved in dissolution proceedings. By creating the marital property interest at the time of the
dissolution proceedings, it was intended that any subsequent transfer of title between the parties
pursuant to a court order would not become a taxable event.
2
However, the provision has created
some concerns as to the status of title once the dissolution proceeding is filed. Despite the fact
that the marital property interest vests at the time of the filing of the dissolution proceedings, a
titleholding spouse is free to transfer the property or an interest therein to a third party purchaser
or mortgagee unless an injunction has been entered precluding such transfer. In order to place a
third party on notice of the injunction, a lis pendens notice would have to be placed of record in
the recorder's office. This would impart constructive notice to all purchasers.
3
However, actual
Page 4-2 ATG Basic Underwriting - Illinois
ATG
notice of dissolution proceedings would also be sufficient to place a party on notice as to the
interest of a non-titleholding spouse.
Therefore, anytime you have actual knowledge of a dissolution proceeding that is still pending,
or when a lis pendens notice has been filed, verify through review of the court file that no
injunction has been entered precluding the transfer of real estate. If such an injunction has been
filed, the injunction must be lifted by court order prior to any conveyance or encumbrance of the
title, such as the execution of a mortgage.
III. TRANSFER BY ORDER OF COURT OR AGREEMENT OF PARTIES
If the court has ordered that the property be transferred, either by its own determination or by
incorporation of a settlement agreement between the parties, it is essential that a deed be
executed and recorded in order to effectuate the transfer of title. The order itself is not sufficient.
Of course, any time the transfer is to a third party, that third party is going to insist upon a deed.
Unfortunately, there are many situations in which one spouse is ordered to transfer his or her
interest in the property to the other spouse and the party refuses or fails to execute the deed to his
or her ex-spouse. If no deed appears in the chain of title to effectuate the court's order, obtain a
deed from the party ordered to make the transfer or petition the court to execute the deed.
4
The
statute provides in part:
Whenever an order is entered, directing the execution of any deed or other
writing, it shall be lawful for any judge of the court to execute or the court to
direct the sheriff to execute such deed or other writing, in case the parties under
no disability fail to execute such deed or other writing.
5

Therefore, if the spouse ordered to transfer title fails to do so, the attorney must petition the court
for the execution of a judicial deed and promptly record the same. All other aspects of any
dissolution decree must be complied with, including distribution of proceeds of an ordered sale
in accordance with the terms of the decree.
Please note that the court is authorized to grant a lien in the property to the non-titleholding
spouse.
6
Again, if such a lien has been created, proper payment must be made to the ex-spouse in
order to obtain and record a release.
IV. JOINTLY-OWNED PROPERTY IN DISSOLUTION PROCEEDINGS
A. Joint Tenancy Property
Often a divorce decree fails to adequately provide for what is to happen to joint tenancy
property that is not immediately transferred between the parties. It is fairly common for
the possession of the marital home to be granted to the custodial spouse with the order
providing for the sale of the property and splitting of the proceeds sometime in the future,
such as when the youngest child leaves the home or on a specific date. In this situation,
the divorce decree itself does not sever the joint tenancy.
7
It is a question of the intention
of the parties or the court dependent upon the language of the separation agreement or
decree as to whether the joint tenancy has been severed. Naturally, any such factual
determination is difficult to make. Therefore, the determination of whether a joint
tenancy has been severed in a dissolution action must be made on a case-by-case basis,
especially in cases in which one of the ex-spouses dies before actions or events
evidencing the severance of the joint tenancy take place. Please contact the ATG
underwriting department to discuss these situations.
ATG Basic Underwriting - Illinois Page 4-3
ATG
B. Tenancy by the Entirety Property
The entireties statute provides that upon entry of a judgment of dissolution, unless the
judgment provides otherwise, the tenancy is automatically severed and the spouses
become tenants in common. This obviously avoids the problem outlined above regarding
joint tenancy property. Still, examine the judgment of dissolution to ascertain if it
provides for a different disposition of the entireties property.
V. CHANGE OF MARITAL NAME
If by reason of a marriage or divorce decree, the wife has changed her name from the name by
which she took title to real estate, all documents (deeds, mortgages, etc.) that purport to convey
the interest of that spouse should be drafted to clearly indicate that the record title holder and the
current grantor are one and the same person. For instance, if the titleholder was Mary J ones who
then became divorced and took back her maiden name of Smith, the deed should read: "Mary
J ones, now known as Mary Smith, a divorced person, not since remarried." This is to insure that
the document will be properly indexed in the chain of title.
VI. CHILD SUPPORT JUDGMENT LIENS
An order for child support is deemed to be a series of judgments against the person obligated to
pay support. Like any other judgment, it is a lien on real estate only from the time a transcript,
certified copy or a memorandum of the judgment is recorded in the county where the real estate
owned by the judgment debtor is located. The lien applies to past as well as present child support
decrees. This ongoing judgment lien must be raised as an exception on ATG commitments. The
following language should be used:
Child support judgment filed against *, in Case No. * in the Circuit Court of *
County, Illinois, a memorandum of which was recorded on * as Document No. *,
(in Book *, Page *).
The problem in issuing the final policy arises from the statutory procedure to release the lien of
the judgment. If the support order provides for payments to the circuit clerk or a state agency,
ATG requires that the clerk's or agency's records be examined to determine that all payments
have been made through the date of the recording of the conveyance or mortgage insured. No
release need be recorded since the lien does not secure future payments not yet due at the time of
recording the deed or mortgage.
If the records disclose that payments are current, but that another payment will be due prior to
closing, either have the party pre-pay all payments due through the date of closing or withhold
one and one-half times the amount of child support owing from the sale proceeds and make
payment of the support obligations through the date of closing. Then reconfirm with the clerk's
office that all payments have been received through the closing date before issuing a title policy
free of the child support exception.
If the support order does not provide for payment to the clerk or a state agency, the lien may be
released by the recording of a notice of filing and an affidavit stating that all payments have been
made.
8
Proof of service of the notice and the affidavit must also be recorded. Service of the
documents can be made by personal service upon the recipient of the payments, by mailing them
to the attorney for the recipient, or by certified or registered mail, restricted delivery, addressed
to the recipient. If an affidavit is not recorded by the recipient within 28 days of the notice of
filing, objecting to the release of the judgment lien, the judgment is released.
Page 4-4 ATG Basic Underwriting - Illinois
ATG
Of course, if the recipient voluntarily releases the judgment lien the judgment may be waived. A
properly executed release must be recorded.
To recap, ATG's underwriting guidelines are as follows:
A. The order for support will become a title consideration only if a memorandum, certified
copy, or transcript thereof is recorded.
B. When discovered, the exception set forth above must be raised.
C. The lien of a child support judgment may be released in one of the following manners:
1. voluntary release by the support recipient; or,
2. verification from records of the clerk of the court or state agency that support
payments are current to the date of the recording of the deed and/or mortgage that
is to be insured; or
3. the recording of a notice and affidavit if no objecting affidavit is recorded within
28 days.
ATG Basic Underwriting - Illinois Page 4-5
ATG


1
750 ILCS 5/503(e)
2
750 ILCS 5/503(f).
3
765 ILCS 5/2-1701 and 765 ILCS 35/84.
4
735 ILCS 5/2-1304(b).
5
735 ILCS 5/2-1304(b)
6
Wilson v. Smart, 324 Ill. 276, 155 N.E. 288 (1927).
7
Thomas v. Johnson, 1 Ill. App. 3d 302, 297 N.E.2d 712 (1973) and Sondin v. Bernstein, 126 Ill. App. 3d 703, 81 Ill. Dec.
804, 476 N.E.2d 926 (1984).
8
The form of notice is set forth in 735 ILCS 5/12-101 and 12-183.































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ATG Basic Underwriting - Illinois Page 5A-1
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CHAPTER 5A EASEMENTS AND ACCESS:
EASEMENTS


An easement is a right or privilege of a person in the land of another. This right or privilege is limited to
a specific purpose and, except for this right, the real estate ownership remains the same. An easement
may be connected to, or for the benefit of, a particular tract or tracts of land. This type of easement is
known as an easement appurtenant. On the other hand, an easement in gross is not connected to or
for the benefit of other land. It is simply a right to use land for a specific purpose. The most typical
example of an easement in gross is a public utility easement. In this chapter, we will examine ATG
requirements with respect to both raising exceptions for easements burdening the land to be insured and
insuring the owner of an easement.
I. EASEMENT BURDENING TITLE OF LAND TO BE INSURED
The land over which an easement runs is known as a servient tenement. For the purposes of title
insurance, it does not matter whether the easement is appurtenant or in gross if the title to be
insured is the title to servient tenement. Such a situation only requires that you ascertain the
existence of the easement and raise the appropriate exception language. In most cases, the prior
title evidence will disclose all easements affecting the land and will raise appropriate exceptions.
In certain situations, however, the title search will disclose new easements created by deed, plat
of subdivision, or other instrument. In addition, raise exceptions for all easements disclosed by
the title search where no prior policy is available or where the prior title evidence is an abstract.
In the following sections we will set forth the exception language to be used for various types of
easements. Any of the language suggested herein may be modified, if necessary, to fit the
particular facts which may confront you in the examination of a particular document. Finally, do
not waive an exception for the types of recorded or unrecorded easements addressed herein,
without prior approval from the ATG underwriting department. Easements have a perpetual
existence and while they may be terminated by agreement, merger, or other means, (see, infra.)
the question of termination is highly technical and must be examined on a case-by-case basis.
Approval for waiver must be obtained regardless of whether the exception appeared on a prior
policy or appears for the first time on the commitment and policy to be issued at this time.
A. Public Utilities (and Drainage) on Plat
If the title search, abstract or other information discloses that a plat of subdivision has
been filed affecting the land and that plat of subdivision designates certain areas as
Utility Easement or some other similar designation, raise the following exception on
Schedule B of the OMC and policies:
Easement over and upon (location and width) feet of the land for public
utilities and drainage as shown on the plat of * recorded * as Document
No. * (in Book *, Page *).
The words, and drainage, should be deleted where the easement is not designated as
used for drainage purposes.
Page 5A-2 ATG Basic Underwriting - Illinois
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B. Public Utilities (Specific Companies) on Plat
If the title search, abstract or other information discloses that a plat of subdivision has
been filed affecting the land and the plat of subdivision contains a legend granting
certain, specific companies an easement to provide utility services, raise an exception
similar to the following on Schedule B of the OMC and policies:
Easement over (location and width) feet of the land for the purposes of
installing and maintaining all equipment necessary for the purpose of
serving the Subdivision and other property with telephone and electric
service, together with the right to overhang aerial service wires and also
with right of access thereto and for the purpose of installation,
maintenance, relocation, renewal and removal of gas mains and
appurtenances as granted to Illinois Bell Telephone Company,
Commonwealth Edison Company and Northern Illinois Gas Company and
their respective successors and assigns and as shown on Plat of
Subdivision recorded * as Document No. * (in Book *, Page *).
If one or more of the companies mentioned in the above exception are not granted
easements or if other companies are named, the exception should be modified to reflect
this.
C. Public Utilities by Grant
If the title search, abstract or other information discloses an easement for public utilities
that have been created by an instrument other than a plat of subdivision, raise the
following exception on Schedule B of the OMC and policies:
Easement in, upon, over and along the following described part of the
land: * for the purpose of constructing, operating and maintaining * and
appurtenant facilities to serve the land and other property as created by a
grant to *, its successors and assigns, dated *, and recorded *, as
Document No. * (in Book *, Page *)
In the blank following the words, and maintaining, describe the utility service to be
supplied, e.g., a gas main, a telephone communication system, an electrical
transmission system, etc.
In the Chicago area, Commonwealth Edison and Ameritech have a common form of
grant of utility easement for which the following exception language may be used:
Easement in, upon, under, over and along the * feet of the land to install
and maintain all equipment for the purpose of serving the land and other
property with telephone and electric service, together with right of access
to said equipment, as created by grant to Commonwealth Edison
Company and Ameritech recorded * as Document *.
D. General Easements
If the title search, abstract or other evidence discloses a grant, reservation, or other
instrument creating an easement for a purpose other than public utilities, raise the
following exceptions on Schedule B of the OMC and policies:
ATG Basic Underwriting - Illinois Page 5A-3
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Easement in, upon, over and along the following described part of the
land: *(1) in favor of a dominant tenement described as follows: *(2) for
the purposes of *(3) and incidental purposes as created (reserved)
(disclosed) by *(4) made by (and between) *(5) to (and) *(6) recorded
*(7) as Document No. *(8) (in Book *, Page *) and subject to the
covenants, conditions and agreements therein contained.
In order to properly use this exception, the following explanation is keyed to the
appropriate blank in the exception:
(1) legal description of part of insured property burdened by the easement;
(2) legal description of property to which the easement is appurtenant;
(3) purpose of the easement, e.g., ingress and egress, water well and access
thereto, etc.;
(4) type of instrument which gave rise to the easement, e.g., warranty deed,
grant of easement, easement agreement, etc. (Please note that the language
preceding this blank must be properly selected to show how the easement
arose, i.e., created, reserved or disclosed by.);
(5) name of owner of servient tenement over which the easement runs (if
easement is created by agreement, the words and between should also be
used);
(6) name of owner of dominant tenement (if easement is created by
agreement, the word to should be deleted and replaced by the word
and); and
(7)-(8) date of recording and document number.
E. Party Walls
If the title search or abstract discloses an agreement to maintain a party wall upon the
premises to be insured, raise the following exception on Schedule B of the OMC and
policies:
Party wall rights of owners of adjoining land relating to a party wall
along the * side of the land as established by agreement made by * with *
recorded * as Document No. * (in Book *, Page *).
If, on the other hand, no party wall agreement appears of record but a survey or
inspection of the property discloses party walls on the land, or if you acquire such
knowledge in some other way, raise the following exception on Schedule B of the OMC
and policies:
Party wall rights of owners of adjoining land in and to a party wall along
the * line of the land.
Party wall rights and agreements are easements for support and may impose upon the
owner of the servient tenement obligations to maintain, repair, or reconstruct the wall for
Page 5A-4 ATG Basic Underwriting - Illinois
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the benefit of the dominant tenement. As noted before, party wall rights and agreements
are easements and, as such, must not be waived without prior ATG underwriting
department approval.
F. Party Driveways
If the survey, inspection, or other evidence discloses the existence of a party driveway
(less than 8 feet in width for each parcel) serving the insured premises and adjoining land,
raise the following exception on Schedule B of the OMC and policies:
*-foot party driveway located on said land and the land * and adjoining
and all rights ensuing thereunder in favor of said adjoining land.
Please note that this exception is applicable only when the party driveway does not
appear of record. If it does appear of record, the more appropriate exception would be the
General Easements exception language noted above.
G. Drainage Easements
If the land to be insured is farmland, was farmland recently converted to other uses, or
was or is adjacent to farmland, raise the following exception on Schedule B of the OMC
and policies:
Rights of way for drainage ditches, feeders, laterals and underground pipe
or tile, if any.
The reason for including such an exception in Schedule B is that both prior and current
statutes provide that easements for drainage may be acquired and need not be of record.
The Constitution of 1870, in Article IV, provided that the General Assembly was
authorized to pass legislation permitting the owners of land to construct drainage of their
own land. Many such statutes were passed under this constitutional authorization. The
Illinois Supreme Court has said, The constitutional provision was an express declaration
of the people of the State that in a country such as this the rights of drainage of the lands,
where such large proportions were swamp and overflowed lands, were paramount to the
right of the individual who sought to deny such drainage.
1

Although the 1970 Illinois Constitution contains no similar provision, the statutes of
today do contain provisions that authorize landowners to construct drainage apparatus
over the land of another. Specifically, reference is made to 70 ILCS 605/2-2 et seq. In
particular, 2-8 provides that adjoining landowners may consent by mutual license or
other agreement to establish drainage ditches, covered drains or underground tiles and
that such a consent or agreement need not be in writing. Of course, the ordinary rule is
that an easement, being an interest in land, must comply with the Statute of Frauds. Use
of anothers lands with his permission is generally characterized as a license, which is
revocable. However, the effect of the statute is to make such a license irrevocable, which
makes it the same as an easement. Furthermore, 2-10 provides that such drains shall
constitute a perpetual easement. Thus, it is possible that third parties may have acquired
drainage rights over the particular tract of land that is being insured and it is possible that
such rights might not be shown of record.
The problem is particularly acute in situations such as the following.
ATG Basic Underwriting - Illinois Page 5A-5
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Suppose a developer purchases a tract of ten or twenty acres of land for a new
subdivision. Often this tract will be on the outskirts of town and adjacent to farmland.
The tract itself may even be farmland when purchased. It is entirely possible, therefore,
that underground tiles are in place under the tract of land which the developer intends to
subdivide. Of course, the underground tiles would probably not be discoverable by any
inspection of the premises. If, in the course of developing the subdivision, the developer
obstructs, injures or removes the drainage tiles and causes a resulting damage to the
neighboring farmland because that land is deprived of the benefit of the drainage tiles, the
adjoining owner can compel the developer to replace the tiles. In fact, the entire
subdivision may be platted and improved with streets before the tiles are discovered. It
may not be until the first purchasers of lots in the subdivision begin to construct their
homes that the tiles are discovered.
Therefore, in any situation where a prior policy contains an exception for drainage
ditches, feeders, laterals and underground pipe or tile, an ATG policy which is issued
based thereon must also contain such an exception unless the entire subdivision has been
in existence for ten year or more. In addition, whenever you are writing a policy where
the facts would indicate that the premises involved are now or were formerly farmland, or
were or are adjacent to farmland, include such an exception in Schedule B since you may
have no way of knowing whether such underground tiles are in place.
H. Roads and Highways
If the land to be insured is not subdivided, raise the following exception on Schedule B of
the OMC and policies:
Rights of the public, the State of Illinois, and the municipality in and to
that part of the land, if any, taken, used or dedicated for roads, streets,
alleys, or highways.
The need for this exception arises from the fact that for many years, roads and highways
in the State of Illinois were constructed upon lands which had never been formally
conveyed to the public but rather had been established by long-time use. It is a fairly
recent development that roadways are acquired by the public in fee simple absolute. Of
course, if you know that no roadways cross over the land to be insured, this exception
need not be raised. In that case, consider the possibility of an access problem.
The title search, abstract, or other evidence may disclose a dedication of part of the land
by a recorded instrument. Until recently, many conveyances to the public were by right-
of-way deed which recited that the conveyance was for highway purposes. It is possible
that such conveyance amounted to a grant of easement and not a conveyance of fee
simple title. If such a conveyance is disclosed, raise the following exception on Schedule
B of the OMC and policies:
Rights of the public, the State of Illinois, and the municipality in and to so
much of the land dedicated for road purposes by instrument dated * and
recorded * as Document No. * (in Book *, Page *).
If, on the other hand, the conveyance is of fee simple title, even though the land conveyed is
apparently being used as a road, the legal description on the OMC and policy should be amended
to exclude the property conveyed since title no longer resides in the grantor. For example, if the
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east ten feet of Lot 1 is conveyed to the city in order to widen a road, and the conveyance is of
fee simple title, the new legal description would be Lot 1, except the east ten feet thereof.
II. EASEMENTS BENEFITING TITLE OF LAND TO BE INSURED
Frequently you will be requested to insure not only the fee simple title ownership of a tract of
land but also an easement appurtenant to that tract. The most typical type of easement insured is
that of ingress and egress to the dominant tenement. Such insurance may be given in appropriate
circumstances in accordance with this section. If you are requested to insure title to an easement
in gross or an easement appurtenant without insuring the dominant tenement, please contact the
ATG underwriting department for instructions.
A. Requirements to Insure an Easement
The question of whether ATG will be willing to insure an easement depends on whether
it was validly created and whether it was destroyed, limited or otherwise impaired since
created.
1. Creation of an Easement
An easement may be created by grant, deed, reservation in deed, agreement and
even by a mortgage. In any of these situations, examine the chain of title and prior
title evidence not only for the dominant tenement to be insured, but for the
servient tenement as well, and the instrument creating the easement to make sure
that:
a. title was or is vested in the grantor whose conveyance or agreement
created or will create the easement;
b. the instrument contains all elements required for a valid conveyance
including signature by the grantor and an acknowledgement;
c. the instrument contains a waiver of homestead and the signature of the
grantors spouse if homestead property;
d. the instrument contains a description of the purpose of the easement;
e. the instrument contains a legal description of the easement and legal
description of the dominant tenement;
f. title in the grantees is held in the same way the grantees hold title to the
dominant tenement, e.g., joint tenancy;
g. mortgagee, lienholders, and other holders of interests in the servient
tenement consent to or join in the instrument creating the easement; and
h. the instrument has been or will be recorded.
In addition, easements may be created by implication, necessity, and prescription.
However, since the creation of easements by these means requires a factual
determination and the application of statutory and case law to the facts, you may
insure easements created by these means only with the prior approval of the ATG
underwriting department.
ATG Basic Underwriting - Illinois Page 5A-7
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2. Termination of Easement
Even though an easement may have been validly created, it may be terminated
during its existence by various means. If the title search, abstract or other
evidence discloses that one or more of the following events has occurred since the
creation of the easement, decline to insure the easement unless and until a new
instrument is properly executed, delivered and recorded re-establishing the
easement.
a. Termination by Agreement
Since an easement may be created by agreement, it follows that it may be
terminated by agreement. In order to be valid, the termination agreement
must be executed by all holders of any interest in both the dominant and
servient tenements. However, in insuring the validity of an easement, you
must not disregard an agreement to terminate an easement because of a
defect in it. Any attempt to terminate an easement, even if invalid, will
render such easement uninsurable.
b. Termination by Merger
The doctrine of merger holds that if the ownership of the servient
tenement becomes vested in the owner of the dominant tenement, the
easement will merge into the fee simple title of the servient tenement and
be destroyed. Thus if A, who owns Lot 1 and has an easement over Lot 2,
acquires title to Lot 2 while still owning Lot 1, the easement upon Lot 2
merges into As fee simple title in Lot 2. In a merger, the smaller right of
an easement merges into the greater right of fee simple title. Thus, if your
examination discloses that title to both the dominant and servient tenement
was vested in the same person or persons at any time subsequent to the
creation of the easement, he or she must decline to insure the easement
unless and until the easement is created again.
c. Termination by Foreclosure
If the servient tenement is burdened by a lien created prior to the creation
of the easement, the foreclosure of the lien will terminate the easement.
For this reason, one of the requirements noted above to insure an easement
is that all senior lienors join in or consent to the creation of the easement.
If you are requested to insure an easement and you discover that a senior
lienholder on the servient tenement has not joined in the easement or
consented to it, an exception must be raised on Schedule B as follows:
The easement created by instrument dated * and recorded
* as Document No. * (in Book *, Page *) was not executed
by * a senior lienholder on the servient tenement. In the
absence of such execution or other consent to the creation
of the easement, this commitment and all policies issued
pursuant hereto shall be subject to the consequences of
such absence of lienholder execution or consent.
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Of course, if the senior lien has been released or discharged other than by
foreclosure, the exception need not be raised. Finally, if the senior lien has
been foreclosed and sold without redemption by a defendant in the
foreclosure action, the easement may not be insured unless and until the
easement is created again by action of the owner of the land over which
the easement passes.
Since August 7, 1967, the issuance of a tax deed on the servient tenement
does not affect an easement.
2
If the title search, abstract or other evidence
discloses a tax deed for the servient tenement issued prior to August 7,
1967, but subsequent to the creation of an easement upon the servient
tenement, decline to insure the easement.
No search of taxes need be conducted upon the servient estate since a tax
sale will not affect the easement. A possible exception to this general rule
is where the easement covers the entire parcel which is assessed for taxes,
e.g., a private road. In that situation, the owner of the servient tenement
and the easement owners would have little incentive to pay taxes since a
tax buyer could not destroy the easements. However, a court might find
that the parcel has no use outside of the easement and therefore allow a tax
buyer to eliminate the easement. If you discover such an easement, a tax
search on the servient tenement must be conducted. If such a search
discloses a tax sale, please contact the ATG underwriting department.
B. How to Insure an Easement
If you are requested to insure an easement appurtenant, and the easement meets the
requirements set forth above, the legal description in Schedule A of the OMC and
policies should be set up as follows:
Parcel 1: [DOMINANT TENEMENT LEGAL DESCRIPTION]
Parcel 2: Easement for the benefit of Parcel 1 as created by deed from *
to * dated * and recorded * as Document No. * (in Book *, Page *) for the
purpose of ingress and egress over the following described land: [LEGAL
DESCRIPTION OF EASEMENT].
The description of Parcel 2 must be amended where the easement is not one created by
deed for the purpose of ingress and egress. You may amend the language to comport with
the nature of the easement being insured. In addition, please note that if the land
described in Parcel 1 is larger than the parcel intended to be benefited by the easement,
the description of the benefited parcel in the easement description must be amended.
Thus, the words Parcel 1 would be deleted and the legal description of the parcel
benefited by the easement would be substituted therefor.
In addition to the language insuring the easement on Schedule A, raise the following
exceptions on Schedule B of the OMC and policies:
1. Terms, provisions, and conditions relating to the easement described as
Parcel No. 2 contained in the instrument creating such easement.
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2. Rights of the adjoining owner or owners to the concurrent use of the
easement described as Parcel No. 2.
If the easement is exclusive to the owner of the dominant tenement, exception number 2
above need not be raised.

1
Chicago Burlington & Quincy Railroad Co. v. People ex rel Grimwood, 212 Ill. 103, 110, affirmed 200 U.S. 551, 26 S.Ct.
341, 50 L.Ed. 596
2
35 ILCS 205/266(b)












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CHAPTER 5B EASEMENTS AND ACCESS:
ACCESS


Paragraph 4 of the insuring provisions of the 1987 ALTA policies affirmatively insures the Insured
against loss or damage sustained or incurred by reason of Lack of a right of access to and from the
land. Accordingly, ascertain that the premises to be insured has insurable access.
The fourth paragraph of the insuring provisions insures legal access rather than physical access. ATG
does not insure, for example, that the insured will be able to reach the top of a steep hill covered by ice
during the winter. It does insure that the insured has the legal right to reach the top of the hill, if not the
physical ability to do so. On the other hand, certain cases have held that the legal right of access that is
insured must be reasonable within the context of the transaction. For example, where commercial real
estate could be accessed by pedestrian traffic only and not by vehicles (because of a narrow street), the
title insurance company insuring access was held liable. You should observe the distinction between
legal and physical access and raise the exceptions set forth below where legal access is unavailable or in
some way limited.
In most situations, it will be clear that no access problem exists. For example, a sale of a lot in a certain
block in a certain subdivision will almost invariably be adjacent to a platted street. However, certain
situations may arise wherein a part of a tract of land is sold from a larger tract and the smaller portion
does not adjoin a highway or street, and is not served by a private easement of access. In such situations
and in other situations where the examination involves land that is landlocked, the following exception
should be raised on the commitment:
Attention is directed to the fact that the public records do not show any means of ingress
or egress to or from the land, and, by reason thereof, this commitment and our policy, if
and when issued, should not be construed as insuring against any loss or damage by
reason of lack of access to and from the land.
On the final policy or policies issued, if the access question has not been resolved to your satisfaction,
the relevant Schedule B exception is as follows:
Notwithstanding the insuring clauses of this policy, ATG does not insure against any loss
or damage by reason of lack of access to and from the land.














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CHAPTER 6 ENCROACHMENTS AND EXTENDED COVERAGE


ATGs Owner Policy contains Standard Exception No. 2, which excludes coverage for any form of
encroachment by an improvement from the insured property onto neighboring property or vice versa.
Exception No. 2 provides as follows:
This policy does not insure against loss or damage by reason of the following
exceptions (2) encroachments, overlaps, boundary line disputes, and any matters which
would be disclosed by an accurate survey and inspection of the premises.
Furthermore, the definition of land in paragraph 1(d) of the Conditions and Stipulations defines the
property insured under the policy as the land described in Schedule A and improvements affixed
thereto which by law constitute real property; provided, however, the term land does not include any
property beyond the lines of the area specifically described or referred to in Schedule A. Therefore,
the standard Owner Policy does not provide any coverage for encroachments. On the other hand, by
reason of the deletion of all Standard Exceptions, including paragraph 2, the Mortgagee Policy
automatically provides coverage for any encroachment, unless a specific exception for an encroachment
is raised in Schedule B of the Mortgagee Policy. This chapter will look at those situations where some
type of encroachment coverage is provided to the Insured under the Mortgagee or Owner Policies and
will analyze the distinction between an encroachment from the insured property onto neighboring
property and the other situation where an encroachment from neighboring property comes onto the
property to be insured.
I. THE MORTGAGEE POLICY
A. Requirements for Issuance of the Mortgagee Policy
To issue a Mortgagee Policy, you must be assured that there are no encroachments from
or upon the insured property. To have this assurance, the following requirements must be
met for commercial (residential buildings with more than four units, industrial property,
office buildings, commercial condominiums, vacant land, farm property) and residential
(all non-commercial) properties:
Commercial Property in any County
Provide a survey of the property that is no more than six months old at the time of
closing.
Residential Property in Cook, Lake, McHenry, DuPage, Kane, and Will Counties
Provide a survey of the property that is no more than six months old at the time of
closing or a survey that is less than five years old with an affidavit from the
owner/seller indicating that there have been no new improvements on the property
since the date of the provided survey.
Residential Property outside of Cook, Lake, McHenry, DuPage, Kane, and Will
Counties
Page 6-2 ATG Basic Underwriting - Illinois
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May rely on an Affidavit in Lieu of Survey executed by all owners/sellers of the
property.
Copies of the Affidavit of No New Improvements and the Affidavit in Lieu of Survey are
set forth at the end of this chapter. Remember, these forms are used only for the issuance
of a Mortgagee Policy on residential property. If the property involved is commercial,
industrial, farm, or other non-residential property, obtain a current survey. Likewise,
neither the Affidavit in Lieu of Survey nor the Affidavit of No New Improvements can be
used for an Owner Policy.
If the survey or Affidavits disclose no problems, the Mortgagee Policy may be issued
without any reference to encroachments. If the survey or Affidavits disclose an
encroachment, either from the insured property onto neighboring property or vice versa,
one of the following exceptions must be included in the Commitment and final policy:
Over Lot Line
A survey discloses that the (e.g., northwest corner) of the (e.g., garage, house)
located upon the insured premises encroaches upon the (e.g., southwest corner) of
the adjoining lot by (e.g., ten feet).
Over Building Line
A survey discloses an encroachment by the (describe premises), of (e.g., ten feet)
over the (e.g., south) building line.
Over Easement
A survey discloses that the (e.g., southwest corner) of the (e.g., garage)
encroaches upon the utility easement by (e.g., ten feet).
Onto Insured Premises
A survey discloses an encroachment by (e.g., neighbors improvement, fence,
garage, etc.) onto the insured premises by approximately (e.g., ten feet).
1. Encroachments onto Adjoining Property
ATG is more liberal in insuring over encroachments onto adjoining property for
Mortgagee Policies than for Owner Policies. There is less risk for a claim to be
presented by a lender than an owner since the Mortgagee Policy is primarily
designed to insure the validity and priority of the mortgage lien. For an
encroachment-based claim to arise under a Mortgagee Policy, there must be a
default on the mortgage, a foreclosure action filed, and a sale of the property at a
price below market value by reason of the encroachment. Therefore, there is less
risk that a mortgagee will bring a claim based on an encroachment problem than
the risk of an owner claim.
For Mortgagee Policies only, you have the authority to insure over any
encroachments onto adjoining premises, including public property, by a house,
garage, fence, driveway, walkway, shed, overhanging eave, concrete stoop or
ATG Basic Underwriting - Illinois Page 6-3
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porch without foundation, regardless of the length of time the encroachment has
existed.
2. Building Line Violations
For issuing a Mortgagee Policy, you are authorized to insure over building line
violations if the following conditions are met:
a. The encroachment is less than twenty percent of the required setback; and
b. The encroachment has been in existence for at least five years. For
example, if the setback requirement is thirty feet and the violation has
been in existence for five years or more and is less than six feet (30 feet
times 20 percent equals six feet. You are authorized to issue an
Encroachment Note Endorsement without contacting ATG. In all other
situations, contact the ATG underwriting department for authority to issue
this endorsement.
3. Encroachments onto Easements
For Mortgagee policies only, you are authorized to insure over all encroachments
onto utility easements by permanent and non-permanent improvements (fences,
driveways, sheds) regardless of the degree of encroachment or length of time it
has existed.
4. Encroachments onto Insured Premises
As will be discussed later, no encroachment endorsement may be issued for an
Owner Policy when an improvement from adjoining property encroaches onto the
insured property. However, for Mortgagee Policies, a different form of
encroachment endorsement may be issued for minor encroachments of
neighboring improvements onto the insured property. You are authorized to issue
an Endorsement against Loss Encroachment Endorsement when the
encroachment onto the property to be insured is five feet or less. This
endorsement protects the Insured from any loss or damage by reason of the
encroachment, which must be disclosed in Schedule B of the Mortgagee Policy.
Again, this endorsement can be used only for Mortgagee Policies. If the
encroachment is more than five feet, contact an ATG underwriter for
authorization to issue the endorsement.
B. Proper Endorsement Procedure
Any time an Encroachment Note Endorsement or Endorsement against Loss -
Encroachment is to be used, first raise the encroachment as an exception in Schedule B of
the Policy using the language suggested in this chapter. Attach an appropriate
endorsement form to the Policy. In order to complete an Encroachment Note
Endorsement, insert the number or numbers of the Schedule B exceptions in the blanks
on the endorsement form.
Page 6-4 ATG Basic Underwriting - Illinois
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1. Coverage Provided
A copy of the standard Encroachment Note Endorsement is set forth at the end of
this chapter. Please note that this endorsement insures only the right of the Insured
to maintain the improvement in its present location. The endorsement provides
that ATG is providing insurance only against the following:
Actual loss that the Insured shall sustain by reason of any final
judgment or decree by a court of competent jurisdiction denying
the right to maintain the improvements as now located on the land
covered by this policy, beyond the boundaries of the property
described in Schedule A hereof, or in violation of any building set-
back line or easement mentioned in Schedule B hereof because of
the encroachment noted in Schedule B as Exception No. *.
Please note that the same Encroachment Note Endorsement form is used for any
encroachment by a permanent or temporary improvement onto adjoining property
or a violation of any building set-back line. Also note that the reference to the
Schedule B exception is for the number of the exception for the specific
encroachment that has been listed as an exception to coverage.
As can be seen, the above endorsement would be meaningless for those situations
where an improvement from neighboring property encroaches onto the insured
property. Therefore, the language of the Endorsement against Loss
Encroachment is much broader in that it insures against the following:
Actual loss that the Insured shall sustain by reason of the
encroachment noted on Schedule B as Exception No. *.
Because the coverage is much broader, this endorsement can be used only for
Mortgagee Policies.
II. THE OWNER POLICY
A. Requirements for Issuance of Owner Policy with Extended Coverage for Residential
Property
The Owner Policy contains Standard Exception No. 2, which deletes any encroachment
coverage from the policy. In certain situations, you may be authorized to issue an
extended coverage policy wherein all five Standard Exceptions, including the survey
exception, are deleted. For any Owner Policy on residential property in any county, it is a
requirement that a current survey (six months or less) be obtained before Standard
Exception No. 2 can be waived. For any Owner Policy on commercial property in any
county, it is a requirement that a survey made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys as adopted by American Land Title
Association Congress on Surveying and Mapping, dated within six months of the date of
the Commitment and naming ATG as an addressee, be provided before the Standard
Exception Waiver Endorsement can be issued. It is also possible to issue a Standard
Exception Waiver Endorsement even if there are encroachments, provided, of course, that
the specific encroachments are listed as Schedule B exceptions. Again, in all situations
where encroachments are discovered on the survey, those encroachments must be listed
as Schedule B exceptions per the language set forth in Section I. A. of this chapter. It may
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then be possible to insure over the encroachment provided the requirements in Section II.
A (1-5) are met. Also note that for extended coverage, an ALTA Statement must be
obtained.
Various factors enter into the underwriting determination as to whether or not an
encroachment can be insured over. When you are required to contact the ATG
underwriting department for authority to issue an Encroachment Note Endorsement,
obtain the following information before calling:
The size of the encroachment;
The length of time the encroachment has been in existence;
Whether other similar encroachments exist in the neighborhood;
Whether the encroachment was intentional in its inception; and
Any other special considerations.
1. Encroachments onto Adjoining Property
ATG is more conservative in insuring encroachments for Owner Policies due to
the greater likelihood that animosity between the neighbors could lead to a claim.
Therefore, in many situations it will be necessary to discuss the issuance of an
encroachment endorsement with a staff attorney. However, the following are
situations where you are authorized to issue an Encroachment Note Endorsement
for an Owner Policy without contacting the underwriting department.
You have the authority to insure over encroachments onto adjoining premises by a
permanent driveway, walkway, or permanent improvement, such as a house or
garage, where the encroachment is one foot or less and the improvement has
existed without permission of the adjoining landowner for more than 20 years.
This authority applies only for residential property. For commercial and other
non-residential property, it will be necessary to contact the ATG underwriting
department for approval to insure over any encroachment onto adjoining property.
2. Encroachments onto Adjoining Public Property
Always call the ATG underwriting department for approval to insure over any
encroachment onto public property.
3. Encroachments onto Easements
For an Owner Policy, you are authorized to insure over encroachments onto utility
easements by permanent improvements, such as a house or garage, when that
encroachment is one foot or less. In the event the encroachment onto the easement
is larger than one foot or if the encroachment is by a non-permanent improvement
(driveway, shed), obtain prior authorization from an ATG underwriter. ATG is
very reluctant to insure any non-permanent improvement encroachment onto an
easement for an Owner Policy. However, if the encroachment onto easement is by
a chain link fence, you do not have to raise the encroachment as an exception.
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4. Building Line Violations
For issuing an Owner Policy on residential property, you are authorized to insure
over encroachments by improvements over building setback lines if the following
conditions are met:
a. The encroachment is less than twenty percent of the required setback; and
b. The encroachment has been in existence for at least five years.
In other situations, contact the ATG underwriting department.
5. Encroachments onto Insured Premises
An encroachment endorsement can never be issued for an encroachment by an
improvement on neighboring property coming onto the insured property. To
provide any form of insurance would allow the Insured to submit an immediate
claim. Therefore, the exception must be raised on Schedule B of the Owner Policy
and cannot be insured over or waived. The buyer must accept the policy with the
encroachment listed as an exception or the seller must force the neighbor to
remove the encroachment or a license agreement must be entered into with the
neighbor giving permission for the encroachment to exist. If a license agreement
is executed with the adjoining owner either by the seller or the buyer, an
exception would be listed on Schedule B for the license agreement in addition to
the encroachment exception.
B. Requirements for Issuance of OPA with Extended Coverage for Commercial
Property
ATG has more stringent requirements for the issuance of extended coverage and
encroachment endorsements for an Owner Policy on commercial property. Before issuing
any encroachment endorsement on commercial property, it will be necessary to contact
the ATG underwriting department for approval.
When requested to issue an extended coverage Owner Policy, the following information
must be set forth on Schedule B of the Commitment:
1. In order to waive Standard Exception No. 1 (Right or claims of parties in
possession not shown by the public records) from the Owner Policy, supply ATG
with an ALTA Statement. In addition to matters disclosed by the ALTA Statement,
the following will appear in lieu of Standard Exception No. 1, unless satisfactory
disposition thereof is otherwise made:
a. Rights of public or quasi-public utilities, if any, in the land.
NOTE: If it is desired to establish the nonexistence of such rights,
obtain letters from the utilities serving the area in which the land is
located stating that they have no easements, equipment, etc., on said
land. Also, obtain a letter from the official of the municipality in
charge of water mains, sewers, etc., such as the village engineer,
stating that there are no water mains, sewers, etc., in said land.
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b. Existing leases.
NOTE: All existing unrecorded leases affecting the land should be
produced for our inspection, and this Commitment is subject to such
further exceptions, if any, as may then be deemed necessary. If there are
no unrecorded leases affecting the land, furnish ATG with an affidavit to
this effect by the owner of the land.
2. In order to waive Standard Exception No. 2 (Encroachments, overlaps,
boundary line disputes, and any matters which would be disclosed by an accurate
survey and inspection of the premises) from the Owner Policy, furnish ATG with
a land survey made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys as adopted by American Title Association
Congress on Surveying and Mapping, dated within six months of the date of the
Commitment and naming ATG as an addressee. This Commitment is also subject
to such further exceptions, if any, as may then be deemed necessary.
3. In order to waive Standard Exception No. 3 (Easements, or claims of easement,
not shown by the public records) from our Owner Policy, supply ATG with a
survey in compliance with the requirements noted at 2., above. In addition to
matters disclosed by the survey, the following exceptions will appear in lieu of
Standard Exception No. 3 unless satisfactory disposition thereof is otherwise
made:
a. Rights of public or quasi-public utilities, if any, in the land.
NOTE: If it is desired to establish the nonexistence of such rights,
compliance should be had with requirements noted at 1(a) above.
4. In order to waive Standard Exception No. 4 (Any lien, or right to a lien, for
services, labor, or material heretofore or hereafter furnished, imposed by law,
and not shown by the public records) from our Owner Policy, we note the
following:
a. Furnish ATG with an ALTA Statement executed by all parties holding title
to the land during the six months preceding the date of the policy.
b. Furnish ATG with satisfactory evidence of the payment in full of the cost
of furnishing services, labor, and materials in connection with any
improvement made to the land within six months of the date of the policy.
c. Satisfactory indemnification may be required as a condition precedent to
the waiver of Standard Exception No. 4.
5. In order to waive Standard Exception No. 5 (Taxes or special assessments which
are not shown as existing liens by the public records), you must provide a
current special assessment search.

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EXHIBIT 6-1: ENDORSEMENT AGAINST LOSS - ENCROACHMENT

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EXHIBIT 6-2: ENCROACHMENT NOTE ENDORSEMENT

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EXHIBIT 6-3: ENDORSEMENT AGAINST LOSS LIENS OR ENCUMBRANCES

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EXHIBIT 6-4: AFFIDAVIT IN LIEU OF SURVEY FOR EXTENDED COVERAGE

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EXHIBIT 6-5: AFFIDAVIT OF NO NEW IMPROVEMENTS






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CHAPTER 7A ENTITIES:
ASSOCIATIONS


An association is an unincorporated group of persons organized for a specific purpose or purposes. The
authority of such organizations to take, hold, and convey title to real estate in the name of the
associations is governed by 765 ILCS 115/1, 2, 3. If you determine that an organization purporting to
acquire, hold, or convey real estate is not incorporated, then call for the production of appropriate proof
of authority to so act, as set forth herein.
If the title search, application for title insurance or other evidence discloses that an unincorporated
association has acquired or is about to acquire title to real estate, show title in *, an unincorporated
association, and raise the following exceptions on Schedule B of the OMC:
1. A certified copy of the charter and amendments thereto, if any, and of the bylaws
of *, an unincorporated association, should be furnished, and this Commitment is
subject to such forth exceptions, if any, as we may then deem necessary.
2. Upon a conveyance or mortgage of the land, a certified copy of a resolution
passed by the members of the party in title or acquiring title authorizing the
execution or acceptance of the instrument of conveyance or execution of the
mortgage should be furnished, together with a certificate by the custodian of
records establishing (1) the identity of the president and secretary of the
association; (2) proof of proper notice of the meeting to consider the question of
conveying or mortgaging the land was given to all members; (3) the number of
members present at such meeting; and (4) the number of ayes and nays voted
on such question.
Exception No. 1 above may be waived if the charter and bylaws establish that the association was duly
chartered by its grand lodge or other controlling entity, and that such charter and bylaws authorized
the association to acquire, hold, convey and mortgage real estate. The grand lodge or other controlling
entity must certify that the association is a valid and subsisting lodge or subordinate entity according
to its register.
1
Exception No. 2 above may be waived if the certificate of the custodian of records
discloses that the association has complied with 765 ILCS 115/3, in accepting or making the conveyance
or making the mortgage. That statutory section requires that the members of the association approve the
proposed action at a regular meeting and that notice of the meeting on the proposed action be given at
least ten days before such meeting to all members by mail at each members last known address. All
conveyances, leases, or mortgages must be in the name of the association, attested by the president and
secretary or other custodian of the records. The seal, if any, of the association should be affixed to the
instrument.

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CHAPTER 7B ENTITIES:
CORPORATIONS


A corporation is an entity created and authorized by state law. As such, its power to hold title to real
estate and to mortgage, dispose of, or otherwise deal with the same is governed by state law. In Illinois,
the applicable governing statute is Chapter 805 of the Illinois Compiled Statutes. Corporations created
under the laws of the State of Illinois shall be referred to herein as domestic corporations. Non-Illinois
corporations shall be referred as foreign corporations. The first part of the following discussion will
deal with existing corporations and the second section will deal with dissolved corporations. These
sections will analyze business and not-for-profit or religious corporations, both domestic and foreign.
The final section will address general and miscellaneous corporate problems.
I. EXISTING CORPORATIONS
A. Domestic Business Corporations
When the prior title evidence or title search discloses that a domestic business
corporation is or has been in title to a parcel of real estate, raise the following exceptions
on Schedule B of the OMC:
1. Franchise tax in favor of the State of Illinois against * *, an
Illinois Corporation.
2. Upon a conveyance or mortgage of the land, a certified copy of
proper resolutions passed by the stockholders and the directors of
the party in title authorizing the execution of the conveyance or
mortgage should be furnished.
These exceptions should also be raised where the proposed Insured is a domestic business
corporation and the corporation is going to obtain mortgage financing, which mortgage
ATG will be asked to insure.
The franchise tax exception may be waived when you have been supplied with proof that
the most recently due franchise tax has been paid. The tax becomes due on the first day of
the anniversary month of the creation of the corporation. The exception need not be
raised where the corporation is one that is recognized for financial stability e.g. General
Motors, Standard Oil, etc., or where the party in title is a financial institution regularly
doing business in the community.
The resolutions exception may be waived upon the production of a certified copy of
corporate resolutions authorizing the conveyance or mortgage. If the proposed
conveyance or mortgage does not constitute all or substantially all of the corporate assets,
delete the words the stockholders and. The exception need not be raised where
the corporation is one known to be organized for the purpose of acquiring, developing,
and selling real estate unless the conveyance constitutes all or substantially all of the
corporate assets. If a conveyance or mortgage to be insured involves all or substantially
all of the corporate assets and occurred prior to J uly 1, 1984, ascertain that the
requirements of former 157.72 and 157.73 of Chapter 32 of the Illinois Revised
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Statutes have been complied with by the corporation. If a conveyance or mortgage to be
insured involves all or substantially all of the corporate assets and occurred on or after
J uly 1, 1984, ATG member should ascertain that 805 ILCS 5/11.55 and 5/11.60 have
been complied with by the corporation.
If the title examination discloses that a domestic business corporation has been in title but
has since conveyed its interest, you need not raise the failure of the record to disclose
authorization in the form of corporate resolutions if the conveyance is signed and
acknowledged by corporate officers. The franchise tax exception should, however, be
raised in this situation unless three years have passed since the recording of the
conveyance.
B. Foreign Business Corporations
If the prior title evidence or chain of title discloses that a foreign business corporation is
in title to a parcel of real estate, raise the following exceptions on Schedule B of the
OMC:
1. Franchise tax in favor of the State of Illinois against *, a corporation of *.
2. Upon a conveyance or mortgage of the land, a certified copy of proper
resolutions, passed by the stockholders and directors of the party in title in
conformity with the laws of the State of *, authorizing the execution of the
deed of conveyance or mortgage should be furnished.
3. A certified copy of the charter and amendments, if any, and of the bylaws
of *, should be furnished, and this Commitment is subject to such further
exceptions, if any, as may then be deemed necessary.
4. The certificate of authority of * to do business in Illinois issued by the
Secretary of State should be produced, and in default thereof, our Owner
Policy will contain the following exception:
Consequences, if any, which may result because of the failure of the party in title to the
estate or interest in the land described in Schedule A to comply with the applicable
doing business laws of the State of Illinois.
Exceptions 1-3 should also be raised where the proposed Insured is a foreign business
corporation and the corporation is going to obtain mortgage financing, which mortgage
ATG will be asked to insure. Exception 4 should be raised where the owner or proposed
Insured is a foreign business corporation regardless of whether mortgage financing is
contemplated.
The State of Illinois imposes a franchise tax on all corporations doing business in the
state, whether domestic or foreign. The franchise tax exception may be waived in the
same way that franchise taxes are waived for domestic business corporations, supra.
Similarly, corporate resolutions must be obtained in substantially the same manner as
domestic business corporations. However, as Exceptions Nos. 2 and 3 indicate, also
examine the laws of the state of incorporation and the corporate charter and bylaws to
ascertain corporate authority to acquire and deal with title to real estate. Also consider the
effect of the laws of the state of incorporation which would govern conveyances or
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mortgages other than in the ordinary course of business, which might require stockholder
approval.
Exception No. 4 limits ATGs potential liability where no certificate of authority to do
business appears of record. The foreign corporation need not acquire this certificate in
order to acquire, hold, or convey real estate. However, the failure to acquire it would
deprive the corporation of the right to maintain a lawsuit in Illinois courts, thus also
depriving ATG of its subrogation rights under the policy in that forum. This exception
may be waived when the corporation produces the certificate or has conveyed its title, but
the franchise tax exception must be cleared separately.
C. Domestic Not-For-Profit and Religious Corporations
If the prior title evidence or chain of title discloses that a domestic not-for-profit
corporation is in title to a parcel of real estate, raise the following exception on Schedule
B of the OMC:
Upon a conveyance or mortgage of the land, a certified copy of proper
resolutions passed by the members and directors of the party in title
authorizing the execution of the deed of conveyance or mortgage, together
with a properly certified copy of the bylaws of said corporation, should be
furnished.
This exception should also be raised where the proposed Insured is a domestic not-for-
profit corporation, and the corporation is going to obtain mortgage financing, which
mortgage ATG will be asked to insure.
This exception may be waived upon the production of a certified copy of corporate
resolutions authorizing the conveyance or mortgage. If the proposed conveyance or
mortgage does not constitute all or substantially all of the corporate assets, delete the
words members and. If the conveyance of mortgage to be insured involves a
transfer of all or substantially all of the corporate assets other than in the regular conduct
of the corporations affairs, examine the corporate bylaws to determine whether members
have voting rights, and if so, he or she should ascertain that the corporation has complied
with the requirements of 805 ILCS 110. For sales of all, or substantially all, of the
corporations assets in the regular course of its affairs consult 805 ILCS 105/111. If the
title examination discloses that a domestic not-for-profit corporation has been in title but
has since conveyed its interest, you need not raise the failure of the record to disclose
authorization in the form of corporate resolutions if the conveyance is signed and
acknowledged by corporate officers and the conveyance is more than 20 years old.
A domestic religious corporation may be in title or may be the proposed Insured with
mortgage financing. In either event, raise the following exception on Schedule B of the
OMC:
Upon any conveyance or mortgage of said land, a certified copy of the
bylaws and a resolution passed by the members of the party in title
authorizing the execution of the instrument of conveyance or mortgage
should be furnished, together with a certificate by the custodian of records
establishing: (1) the names of all persons elected members of the board of
trustees at the last election; (2) the form of notice for the election; (3) the
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total number of members entitled to vote on corporate matters; (4) proper
notice of the meeting to consider the questions of conveying or mortgaging
the land was given to all members; (5) the number of members present at
such meeting; and (6) the number of the ayes and nays voted on such
question.
Your attention is directed to 805 ILCS 110/35 through 110/46 and 805 ILCS 110/46a
through 110/46k, which govern religious corporations. Each group of sections deals with
a separate and distinct type of religious corporation and you must decide which type
holds title to the real estate before insuring title derived from such an entity. Any
questions regarding this matter may be directed to the ATG underwriting department.
D. Foreign Not-For-Profit or Religious Corporations
If the prior evidence or chain of title disclosed that a foreign not-for-profit or religious
corporation is in title to a parcel of real estate, raise the following exceptions on Schedule
B of the OMC:
1. A certified copy of the charter and amendments thereto, if any, and
of the bylaws of the following corporation should be furnished, and
this Commitment is subject to such further exceptions, if any, as
may then be deemed necessary: *.
2. Upon a conveyance or mortgage of the land, a certified copy of
proper resolutions, passed by the stockholders and directors of the
party in title in conformity with the laws of the State of *,
authorizing the execution of the deed of conveyance or mortgage
should be furnished.
3. The certificate of authority of * to do business in Illinois issued by
the Secretary of State should be produced, and in default thereof,
our policy will contain the following exception:
Consequences, if any which may result because of the failure of the party in title to the
estate or interest in the land described in Schedule A to comply with the applicable
doing business laws of the State of Illinois.
Exceptions Nos. 1 and 2 should also be raised where the proposed Insured is a foreign
not-for-profit or religious corporation and the corporation is going to obtain mortgage
financing, which mortgage ATG will be asked to insure. Exception No. 3 should be
raised where the owner or proposed Insured is a foreign not-for-profit or religious
corporation regardless of whether mortgage financing is contemplated.
Corporate resolutions must be obtained in substantially the same manner as foreign
business corporations, and you must also examine the laws of the state of incorporation
and the corporate charter and bylaws to ascertain corporate authority to acquire and deal
with real estate. Also consider the effect of the laws of the state of incorporation which
would govern conveyances or mortgages other than in the ordinary course of business,
which may require member or congregation approval.
Exception No. 3 limits ATGs potential liability where no certificate of authority to do
business or conduct affairs appears of record. The foreign corporation need not acquire
ATG Basic Underwriting - Illinois Page 7B-5
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this certificate in order to acquire, hold, or convey real estate. However, the failure to
acquire it would deprive the corporation of the right to maintain a lawsuit in Illinois
courts, thus also depriving ATG of its subrogation rights under the policy in that forum.
This exception may be waived when the corporation produces the certificate or has
conveyed its title.
II. DISSOLVED CORPORATIONS
A. Domestic Corporations
Under Illinois law in effect prior to J uly 1, 1984, upon the voluntary or involuntary
dissolution of an Illinois business corporation, title to real estate owned by the
corporation passed, by operation of law, to its stockholders in the same proportions as
their ownership of stock in the corporation. However, on and after J uly 1, 1984, the
dissolution of an Illinois business corporation does not transfer title of its assets. On or
after J anuary 1, 1987, the dissolution of a not-for-profit corporation likewise does not
transfer title of its assets.
If the title search or other evidence discloses that an Illinois business corporation
formerly holding title to real estate has been dissolved, prior to J uly 1, 1984, or that a not-
for-profit corporation has been dissolved prior to J anuary 1, 1987, ATG member should
show title in The stockholders/members of *, a dissolved Illinois corporation (Delete
inapplicable reference), and raise the following exceptions on Schedule B of the OMC:
*, an Illinois corporation, was dissolved by *, on *. We note the following
with respect thereto and this Commitment is subject to:
1. Rights of the creditors of said corporation including the United
States of America;
2. We should be furnished a duly certified list of all of the
stockholders/members of said corporation and this Commitment is
subject to such further exceptions, if any, as may then be deemed
necessary;
3. Franchise tax in favor of the State of Illinois against *, an Illinois
Corporation.
If the stockholders/members are known to you prior to the issuance of the OMC, show
title in them according to their proportionate ownership in the corporation. In addition, a
search must be conducted against them whenever their identity becomes known, to
determine whether judgments or other liens have attached to the real estate.
If the title search or other evidence discloses that an Illinois business corporation holding
title to real estate has been dissolved on or after J uly 1, 1984 or a not-for-profit
corporation has been dissolved on or after J anuary 1, 1987, show title in *, a dissolved
Illinois corporation and raise the following exceptions on Schedule B of the OMC:
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*, an Illinois corporation, was dissolved by *, on *. We note the following
with respect thereto and this Commitment is subject to:
1. Rights of the creditors of said corporation including the United
States of America;
2. Right, title and interest of the stockholders/members of said
corporation and those claiming under them.
3. Franchise tax in favor of the State of Illinois against *, an Illinois
corporation.
No search need be done against the names of the shareholders and exception #2 may be
waived where the corporation, after dissolution, conveys the property to third parties
pursuant to winding up its affairs. The remaining exceptions are dealt with in the
following paragraphs.
Creditors of a corporation must be satisfied out of the assets of a dissolved corporation
before the corporation distributes assets to its stockholders or members and before the
stockholders/members may use or dispose of them as personal assets. Accordingly, you
must be assured that all such potential claims have been satisfied before insuring title.
This assurance may come in the form of affidavits from corporate officers and/or your
personal knowledge if you were an attorney for the corporation and handled the
dissolution procedure. In addition, you must require a personal undertaking from
financially responsible corporate officers and/or stockholders/members for the claims of
such creditors.
The franchise tax exception need not be raised upon the dissolution of a not-for-profit
corporation since such corporations do not pay franchise taxes. It also need not be raised
upon the voluntary dissolution of an Illinois business corporation since the Secretary of
State will not approve the articles of dissolution if the tax is unpaid. In all other cases, it
must be raised until proof of payment is supplied.
If the title search or other evidence discloses a Statement of Intent to Dissolve or other
proceeding indicating that a dissolution is contemplated or pending, contact the ATG
underwriting department for appropriate exceptions and clearance procedures. Similarly,
if a conveyance is disclosed which is closely followed by a dissolution, contact the ATG
underwriting department. It is possible that such a conveyance was part of the dissolution
procedure. ATG must ascertain that all interested parties, including creditors, were
protected.
B. Foreign Corporations
The devolution of title upon the dissolution of a foreign corporation is controlled by the
law of the state of incorporation. Accordingly, if you encounter such a situation, examine
that states law to determine its affect. Contact the ATG underwriting department for
assistance in this regard. In the meantime, show title in The successor or successors in
title to *, a dissolved * corporation, and raise the following exceptions on Schedule B
of the OMC:
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*, a corporation of *, was dissolved by *, on *. We note the following with
respect thereto and this Commitment is subject to:
1. Rights of the creditors of said corporation including the United
States of America.
2. We should be furnished a duly certified list of all of the successors
in title to the real estate of said corporation and this Commitment
is subject to such further exceptions, if any, as may then be deemed
necessary.
3. Statutory conditions and limitations, if any, imposed by the laws of
the State of * upon conveyances by the successors in title to the
real estate of said corporation.
4. Franchise tax in favor of the State of Illinois against *, a
corporation of *.
If the successors in title are known to you prior to the issuance of the OMC, show title in
them according to applicable law. In addition, a search must be conducted against them
whenever their identity becomes known to determine whether judgments or other liens
have attached to the real estate.
Most states provide protection for creditors of dissolved corporations. Therefore, you
must be assured that all such potential claims have been satisfied before insuring title.
This assurance may come in the form of affidavits from corporate officers and/or your
personal knowledge if you were the attorney for the corporation and handled the
dissolution procedure. In addition, require a personal undertaking from financially
responsible corporate officers and/or successors in title to the real estate for the claims of
such creditors.
The franchise tax exception need not be raised upon the dissolution of a not-for-profit
corporation since such corporations do not pay franchise taxes. It also need not be raised
upon the voluntary withdrawal of the corporations authority to transact business in the
State of Illinois, at the same time as its dissolution in the state of incorporation, since the
Secretary of State of Illinois will not approve the withdrawal if the tax is unpaid. In all
other cases, the exception must be raised until proof of payment is supplied.
Contact the ATG underwriting department where proceedings are pending for dissolution
of a foreign corporation or where a conveyance is made prior to dissolution but close
enough in time to indicate that is was part of the dissolution procedure.
III. GENERAL AND MISCELLANEOUS CORPORATE PROBLEMS
A. Corporate Conveyance to Trustee
Since the directors of a corporation are charged, by statute, with the duty to conduct
corporate affairs, it is doubtful that a conveyance by a corporation to a trust is a proper
delegation of directors authority. If such a conveyance is encountered in the chain of
title, raise the following exception on Schedule B of the OMC:
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The trust agreement, under which title to the land is held, properly
identified in writing by the settlor, the trustee, and the beneficiaries of the
trust, should be submitted for examination, and this Commitment is subject
to such further exceptions, if any, as may then be deemed necessary.
B. Corporate Conveyance to Officer or Director
It is possible in a conveyance by the corporation to an officer or director of the
corporation that shareholders or creditors can claim fraud. Raise exceptions in such a
situation calling for both stockholder and director resolutions, and providing for creditor
claims and franchise taxes. See the preceding sections for appropriate language.
C. Hospital Corporations
If a hospital or other health care or training facility is or has been in title since the
enactment of the Hill-Burton Act (August 17, 1946) or the Illinois Hospital Construction
Act (August 8, 1947) raise the following exception on Schedule B of the OMC:
Rights of the United States of America and the State of Illinois, or either of
them, to recover any public funds advanced under the provisions of one or
more of various federal statutes relating to health care or the Illinois
Hospital Construction Act.
This exception may be waived upon proof that no such funds have been advanced or that
the provisions of the various acts would be inapplicable to the proposed transaction or the
institution holding title.
D. Colleges or Universities
If a college or university is or has been in title since the enactment of the Higher
Education Facilities Act (December 16, 1963), raise the following exception on Schedule
B of the OMC:
Rights of the United States of America to recover any public funds
advanced under the provision of the Higher Education Facilities Act of
1963 (20 U.S.C.A. 1132a et seq.).
This exception may be waived upon proof that no such funds have been advanced or that
the provisions of the Act are inapplicable to the proposed transaction or the institution
holding title.

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CHAPTER 7C ENTITIES:
LAND TRUSTS


The Illinois land trust is a special trust device wherein title to the real estate is held by a trustee under a
trust agreement reserving to the beneficiaries the full management and control of the property, including
the right to direct its conveyance, mortgage, lease and anything else normally done by owners of real
estate. The only duties of the trustee are to execute deeds or otherwise deal with the property upon the
direction of the beneficiary. The Illinois courts have construed the land trust as an active trust and
therefore, not affected by the Statute of Uses. Under the trust agreement, title to the real estate, both
legal and equitable, is held by the trustee and the beneficiaries have rights based upon the trust
agreement, which rights have been recognized as personal property.
If your title search discloses a full power deed in trust, he or she can assume that an Illinois land trust
holds title to the real estate, and he or she need not make further examination. If the deed in trust does
not recite the powers of the trustee, examine the trust agreement. If this examination discloses that, in
fact, an Illinois land trust agreement governs this trustee, require evidence of the beneficiaries consent
to the proposed conveyance or mortgage.
Since the interest of the beneficiary under the Illinois land trust agreement is deemed to be personal
property, you need not conduct a search against the names of the beneficiaries during the period in
which title is held by the trustee under such a trust. Of course, the names must be searched during
periods when such beneficiaries do have title to the real estate. If the names of the beneficiaries are
searched and judgments or other liens are disclosed, contact the ATG underwriting department for
further instruction.











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ATG Basic Underwriting - Illinois Page 7D-1
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CHAPTER 7D ENTITIES:
LIMITED LIABILITY COMPANIES


I. CHARACTERISTICS OF AN LLC
The limited liability company (LLC) offers corporate limited liability, the pass-through treatment
of a partnership for income tax purposes, and flexibility. It is similar to a general partnership
with limited liability, or to a limited partnership where all owners participate in management and
all have limited liability, or to an S Corporation without the ownership restriction. It is not a
corporation and it is not a partnership. It is an alternative entity crated by state statute. It is an
unincorporated association having two or more members organized under a state statute
authorizing the LLC. It is more clearly related to the corporation than the partnership because,
like a corporation, its essence is the entity. This distinguishes it form a partnership where,
because of unlimited liability, the essence is the individual.
The entity is not subject to the corporate restrictions as to finance and management. Most LLC
statutes contain no special requirements for management. The members can be individuals,
partnerships, trusts, corporation, etc. Their liability is limited to their investment. Because the
entity is not a corporation, the owners will receive flow-through tax treatment like a partnership.
However, to be recognized as a non-corporate entity, for tax purposes, the LLC can have no
more than two of the following four corporate characteristics:
A. Continuity of Life
B. Centralization of Management
C. Limited Liability
D. Free Transferability of Interest
By definition, the LLC has limited liability. The Illinois statutes do not allow the free
transferability of interest (805 ILCS 180/30-5) or continuity of life (805 ILCS 180/35-1).
Therefore, it may be free to have centralization of management. Drafting attempts to get around
the duration restriction or the transferability restriction while retaining centralization of
management would jeopardize the tax treatment.
An LLC is more flexible than an S Corporation by accommodating various forms of ownership.
Unlike the limited partnership, it protects all owners and allows all the right to participate in
management.
Delegation of management, if desired, is possible. Yet, there may be disclosure requirements in
the articles and the operating agreement that will need to provide details concerning the
delegation and actual authority in buying the company. With delegated management, additional
attention must be given to the remaining corporate characteristics.
Membership in an S Corporation is limited to no more than 35 shareholders. Its membership is
also limited in that no member can be a corporation, partnership, trust, or non-resident alien. It
will lose its pass-through status is a shareholder by testamentary or other conveyance passes
Page 7D-2 ATG Basic Underwriting - Illinois
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shares to others causing the number of shareholders to exceed 35. Similar problems occur when
the shareholder passes the shares to a non-qualified holder, for example an inter vivos trust. The
S Corporation may not have an 80% subsidiary.
The LLC does not limit the number of owners or restrict their type. It does not restrict
membership status.
A Corporation will have free transferability of interest, continuity of life, and centralization of
management. These advantages may outweigh the advantage of flow-through tax treatment
provided by the LLC. But an entity with a large number of shareholders may not be practical for
LLC status.
The LLC is most like a general partnership with limited liability, or a limited partnership where
all partners have limited liability and the ability to participate in management. The LLC is a
distinct statutory entity and can hold property and transact business in its own name. Since it is a
creature of statute, the LLC requires more formality in its formation than a partnership.
The LLC dissolves upon the death, resignation, bankruptcy, or other withdrawal of an owner.
However, this solution is not by itself termination; it is just a change in the relationship of the
parties. They can decide to reform or terminate or take other action that may be appropriate.
A limited partner may lose his or her limited liability if he or she participates in the control of
the partnership business. Unless otherwise set forth in the agreement, no member of an LLC will
be personally liable for its obligation and all members may participate in the control of the
business.
II. DOMESTIC LIMITED LIABILITY COMPANIES
A. In General
The Illinois Limited Liability Company Act was passed September 11, 1992 and became
effective J anuary 1, 1994.
1

The Illinois law is different in that the act does not place a specific time limitation on the
period of existence of an LLC. Section 5-5(a)(6) states that the articles must simply state
the latest date on which the LLC is to dissolve. Other triggering events of dissolution, if
any, may be agreed upon by the members under 35-1, which sets for the events of
dissolution.
Section 10-10 limits the liability of members and managers. Members are personally
liable for any act, debt, obligation, or liability of the LLC or of another member or
manager, to the extent that a shareholder of an Illinois business corporation is liable in
similar circumstances under Illinois law (e.g., piercing the corporate veil, etc.). A
manager of an LLC is personally liable to the extent that a director of an Illinois business
corporation is liable (e.g., breach of fiduciary duties, etc.).
Section 20-10 states that the profits and losses of an LLC shall be allocated among the
members in the manner provided in the articles of organization or the operating
agreement. If those documents are silent, profits and losses shall be allocated to a
member on the basis of the book value of the members membership interest.
ATG Basic Underwriting - Illinois Page 7D-3
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B. Articles of Organization
The articles are similar to the articles of incorporation for a business corporation. The
Illinois act uses an opt-in provision that allows the drafter to be creative in preparing
the articles. Care must be taken that the opt-in provisions do not give too many corporate
characteristics to the LLC.
The name of the LLC must include the words limited liability company or the
abbreviation LLC.
If the LLC is managed by managers, then the articles must contain the names and
business addresses of those managers. If the members reserve the rights of managers to
themselves, the articles must contain the names and addresses of the initial members.
As previously noted, section 5-5(a)(6) requires that the articles state the latest date upon
which the limited liability company is to dissolve and other events of dissolution, if any,
that may be agreed upon by the members under 35-1. Section 35-1 sets forth
mandatory provisions for dissolution of the LLC. This includes the death, retirement,
resignation, bankruptcy, or declaration of incompetence, of any member, unless within 90
days after the event there are at least two remaining members and all the remaining
members agree to continue the business of the LLC. Continued existence is an important
concept to maintain the partnership flow-through federal tax benefits. The IRS has
indicated that a provision allowing for the remaining members to continue the business
does not establish continuity of life of the organization if, under local laws, the death or
withdrawal of any member causes a dissolution of the organization.
2

C. Operating Agreements
Operating agreements are similar to corporate bylaws or partnership agreements and
serve the same purpose. They provide for the internal operation of the entity and can be
used to establish the relationships between the members and their interests in the
company. Operating agreements cannot be inconsistent with the articles of organization.
Unlike corporations, where the bylaws are within the providence of directors, LLC
members can have significant and binding power over daily management decisions, if
allowed under the operating agreement and articles of organization.
D. Record Keeping
Compared with a corporation, the LLC is required to maintain only nominal records.
Section 1-40 of the act requires that the following documents be maintained and be
subject to inspection and copying at the reasonable request and expense of any member:
1. True and full information regarding the state of the business and financial
condition;
2. Complete copies of the articles and operating agreements;
3. Names and business addresses of members and their contributions and
contribution obligations;
4. Records that allow determination of voting rights of members;
Page 7D-4 ATG Basic Underwriting - Illinois
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5. All tax returns for the past three years, including financial statements; and
6. Unless otherwise contained in the operating agreement, the conditions or events
relating to any of the following matters:
a. capital contributions;
b. distributions; and
c. a members right to make an assignment of his or her interests.
E. Conveyance or Mortgage by LLC
If the prior title evidence, title search or other evidence discloses that a limited liability company
is in title to the real estate, Schedule A of the commitment should show title vested in * , an
Illinois limited liability company and the following exceptions should be raised on Schedule B:
1. Terms, provisions, and limitations of the articles of organization
and the operating agreement of *, an Illinois limited liability
company.
2. The articles of organization and the operating agreement
establishing the limited liability company of *, together with all
amendments thereto, properly identified in writing by all of the
members as being the terms and provisions of the articles and
agreement under which the limited liability company acquired and
[holds title], [held title until *] should be furnished and this
commitment is subject to such further exceptions, if any, as may
then be deemed necessary.
3. A Certificate of good standing issued by the Secretary of State
should be produced, and in default thereof, the final policy or
policies will contain the following exception. Consequences, if
any, that may result by reason of the failure of the party in title to
the estate or interest in the land described in Schedule A to comply
with the applicable doing business laws of the State of Illinois.
4. Upon a conveyance or mortgage of the land, a certified copy of the
proper resolutions authorizing the execution or mortgage by *, an
Illinois limited liability company should be produced to ATG for
examination.
If the proposed Insured is an LLC, the above exceptions should be prefaced by the
following language:
The following exceptions will appear on all policies issued pursuant to
their commitment except to the extent the same are cleared to ATGs
satisfaction.
Anytime that an LLC is in title, the first exception, above, must be raised on the
commitment and final policies to reflect the fact that the ability of the LLC to use,
convey, and mortgage the real estate is limited by the articles of organization and the
ATG Basic Underwriting - Illinois Page 7D-5
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operating agreement. Once it has been determined that the mortgage has been made in
compliance with the articles and operating agreement, the exception may be deleted on
the Mortgagee Policy.
If the articles of organization and the operating agreement have been recorded or were
previously supplied to ATG, the following exception should be raised in lieu of the
second exception:
Upon conveyance or mortgage of the land, ATG should be furnished with
satisfactory proof of compliance with the terms of the articles of
organization and the operating agreement governing * , an Illinois limited
liability company and this commitment is subject to such further
exceptions, if any, as may then be deemed necessary.
III. FOREIGN LIMITED LIABILITY COMPANIES
A foreign LLC is governed by the laws of the jurisdiction under which it is organized or
purposes of determining its organization, internal affairs, and the liability of its member.
3
In
order to transact business in Illinois the foreign LLC must submit an application to the Secretary
of State for admission as a foreign LLC.
4
Failure of the foreign LLC to register with the
Secretary of State will prevent it from maintaining a civil suit in any court in Illinois.
5
Since the
title insurance policy allows ATG to seek reimbursement in the name of the Insured from the
responsible parties in the event of a claim, if the Insured is a foreign LLC, it is imperative that
the LLC be registered to in order to preserve ATGs subrogation rights.
If the prior title evidence or chain of title discloses that a foreign LLC is in title, the following
exceptions must be raised on Schedule B of the commitment:
1. A certified copy of the articles of organization and the operating
agreement, if any, of * should be furnished for examination, and this
commitment shall be subject to such further exceptions as may then be
deemed necessary
2. Upon a conveyance or mortgage of the land, ATG must be furnished with
a certified copy of proper resolutions, passed by the members and
managers of the party in title, in conformity with the laws of the State of *
, authorizing the execution of the deed of conveyance or mortgage of the
land, and
3. The certificate of authority of * , to do business in Illinois issued by the
Secretary of State must be furnished to ATG for examination, and in
default thereof, the final policy or policies will contain the following
exception:
Consequences, if any, that may result by reason of the failure of the party
in title to the estate or interest in the land described in Schedule A to
comply with the applicable doing business laws of the State of Illinois.
All three exceptions must be raised if the policy to be issued is a Mortgagee Policy for a
mortgage executed or to be executed by the foreign LLC, or a policy insuring a purchaser from a
foreign LLC. Exception 3 only need be raised for a policy insuring the interest of the foreign
LLC.
Page 7D-6 ATG Basic Underwriting - Illinois
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As contemplated by exceptions one and two, an examination of the foreign jurisdictions laws
and the articles of organization and operating agreement must be made. It must be determined if
the LLC has authority to acquire and convey or mortgage land and the authority of the manager
or managers to sign deeds or mortgages without the consent of all of the members.
Exception 3 is necessary to preserve ATGs subrogation rights. The exception may be waived
once the LLC has produced the certificate of authority.
IV. DISSOLVED LIMITED LIABILITY COMPANIES
A. Domestic LLCs
A limited liability company is dissolved upon the happening of one of the following
events:
1. The happening of an event or events specified in the articles of organization;
2. The unanimous agreement of the members, unless a lesser number is specified in
the articles;
3. Unless otherwise provided in the articles, upon the happening of one of the
following events to any member:
a. death;
b. retirement;
c. resignation;
d. bankruptcy
e. court-adjudicated incompetence;
f. court-adjudicated dissolution;
g. any other event that terminates the membership;
4. The entry of a decree of judicial dissolution under the LLC Act; or
5. Administrative dissolution under the LLC Act.
6

If dissolution is voluntary, once all of the requirements of the LLC Act have been satisfied, and
the articles of dissolution have been filed, the remaining managers at the time of dissolution are
deemed to be trustees for the benefit of the members and creditors of the LLC. As such trustees,
the managers have authority to convey or distribute the property of the LLC.
7
Unfortunately, the
Act is silent as to the effects on the title to property in the event of an involuntary dissolution.
Since the interest of each member in the LLC is personal property (805 ILCS 180/30-1), it would
appear that title to property in the LLC remains in the LLC upon dissolution. In either event,
upon voluntary or involuntary dissolution of an LLC, the following exceptions must be raised on
Schedule B of the commitment:
*, an Illinois limited liability company, was dissolved on *, and this commitment
is subject to the following matters:
ATG Basic Underwriting - Illinois Page 7D-7
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1. Rights of the creditors of the limited liability company, including the
United States of America;
2. Right, title and interest of the members of the limited liability company
and those claiming under them.
Creditors of the LLC must be satisfied out of the assets of the dissolved LLC before the members
may use or dispose of the assets. Thus, you must be assured that all potential claims have been or
will be satisfied before insuring title. This assurance may be in the form of affidavits from the
managers or members of the LLC and/or your personal knowledge. Additionally, a personal
undertaking must be obtained from financially responsible managers or members of the LLC
indemnifying ATG from such claims of creditors.
If the title search and examination reveal that a conveyance by the LLC was closely followed by
a dissolution, it may be possible that the conveyance was part of the dissolution, and, therefore, it
must be determined if all of the creditors have been satisfied. Contact an ATG underwriting
attorney to discuss the appropriate exceptions and clearance procedures.
B. Foreign LLCs
Since devolution of title upon dissolution of a foreign LLC is governed by the laws of the
foreign jurisdiction, examine the laws of that jurisdiction. In the meantime, show title
vested in The successor or successors in title to *, a dissolved * limited liability
company, and raise the following exceptions on Schedule B of the commitment:
*, a limited liability company of *, was dissolved on *. We note the
following and this commitment is subject to:
1. Rights of the creditors of said limited liability company, including
the United States of America.
2. Statutory conditions and limitations imposed by the laws of the
State of * upon conveyances by the successors in title to the real
estate of said limited liability company.
3. We should be furnished with a duly certified list of all the
successors in title to the land of said limited liability company and
this commitment is subject to such further exceptions as may then
be deemed necessary.
If you have information as to the identity of the successors in title, the commitment may
show title in such successors according to applicable law. Additionally, a search must be
conducted for judgments or other liens against such successors.
Since most states provide for protection of creditors, you must be assured that all such
potential claims have been satisfied before insuring title. That assurance may be in the
form of affidavits from the managers or members of the LLC, or your personal
knowledge. Additionally, a personal undertaking must be obtained from financially
responsible managers or members of the LLC indemnifying ATG from the claims of such
creditors.
Page 7D-8 ATG Basic Underwriting - Illinois
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If there are proceedings pending for dissolution of a foreign LLC, or if a conveyance was
followed closely by a dissolution, contact an ATG underwriting attorney to discuss the
appropriate exceptions and clearance procedures.

ATG Basic Underwriting - Illinois Page 7D-9
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1
805 ILCS 180/1-1, et seq
2
Rev. Rul. 88-76. 1988 to C.B. 360
3
805 ILCS 180/45-1
4
805 ILCS 180/45-5
5
805 ILCS 180/45-45
6
805 ILCA 180/35-1
7 805 ILCA 180/35-1












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ATG Basic Underwriting - Illinois Page 7E-1
ATG
CHAPTER 7E ENTITIES:
MUNICIPAL CORPORATIONS


BACKGROUND INFORMATION
Municipalities and other units of local government hold property for the public, essentially as the trustee
for the public good. Thus, if the municipality wishes to mortgage or sell its property, the theory is that
the public must be notified and given a chance to object.
I. PROCEDURES FOR THE SALE OF MUNICIPAL PROPERTY
The procedures for the sale of municipal property are statutory. The Illinois Municipal code
allows a municipality to sell municipal real estate when the municipality determines it is no
longer necessary, appropriate, required for the use of, profitable to, or for the best interest of the
city.
1
The property is conveyed by a deed stating the consideration for the sale and containing
the seal of the municipality.
2

The power to sell real estate may be exercised only through an ordinance passed by three-fourths
of the corporate authorities holding office.
3
The bids should be opened and the ordinance passed
at a regular meeting of the corporate authorities. The ordinance should specify the location and
the use of the property, and any conditions on future use.
4

Notice of the proposed sale, containing an accurate description of the property, its use, and when
the bids will be opened, should be published for three weeks in a newspaper in the city in which
the property is located. The municipality must accept the highest bid.
5

A municipality may also sell surplus public real estate.
6
The sale may be conducted by one of
the following: (a) the staff of the municipality; (b) a licensed real estate agency; or (c) a public
auction. The citys resolution to sell the real estate should be published in a newspaper within the
city and should contain information about the size, use, and zoning of the property, as well as the
terms of the sale. The sale price cannot be less than eighty percent of the propertys assessed
value as determined by a written MAI Certified Appraisal or by a licensed real estate appraiser.
An alternative procedure for the sale of surplus property is available for municipalities with a
population of less than 20,000 in a county with an unemployment rate higher than the national
unemployment average.
7

The sections of the municipal codes dealing with the sale of municipal property do not
distinguish between home rule and non-home rule municipalities, and are applicable to any
city or village incorporated under any general or special law.
8

II. VACATION OF PUBLIC RIGHTS-OF-WAY
A unit of local government has an interest in its highways and roads. Once a roadway has been
dedicated to the public and accepted by the unit of local government, said roadway is the
property of the unit of local government. In fact, even if the unit of local government does not
accept the dedication, it may still obtain ownership of the public way for vehicular travel if it has
been used by the public for at least 15 years.
9

Page 7E-2 ATG Basic Underwriting - Illinois
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Often, the unit of local government is asked not to sell the property to neighboring landowners,
but simply to vacate the public right-of-way, whether a road or an alley. The act sets forth the
applicable procedures to follow including a determination of public interest, a passage by three-
fourths vote, a vote by ayes and nays on the public record, and certain publication
requirements.
10
Title now automatically reverts to the appropriate neighboring landowners and
passes with each subsequent conveyance of the land. However, before October 3, 1969, the
transfer to subsequent landowners was not automatic and a deed to the vacated portion of the
property was needed for each subsequent transfer.
ATG Basic Underwriting - Illinois Page 7E-3
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1
65 ILCS 5/11-76-1
2
65 ILCS 5/11-76-3
3
65 ILCS 5/11-76-1
4
65 ILCS 5/11-76-2
5
Templeman v. City of Rochelle, 52 Ill.App.2d 201, 201 N.E.2d 862 (Ill.App. 2 Dist. 1964)
6
65 ILCS 5/11-76-4.1
7
65 ILCS 5/11-76-4.2
8
65 ILCS 5/11-76-1
9
605 ILCS 5/2-202
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65 ILCS 5/11-91-1




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ATG Basic Underwriting - Illinois Page 7F-1
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CHAPTER 7F ENTITIES:
PARTNERSHIPS


A partnership is a group of two or more persons organized to conduct a business. Two types of
partnerships are utilized in Illinois: general partnerships and limited partnerships. The rules governing
general partnerships are set forth in the Uniform Partnership Act, 805 ILCS 205/1 et seq. (hereinafter
UPA) and the rules for limited partnerships are set forth in the Uniform Limited Partnership Act, 805
ILCS 205/44 et seq. (hereinafter ULPA). In this chapter we will examine how a partnership is created
and how a partnership deals with its assets during its existence and upon dissolution.
I. PARTNERSHIP CREATION
The creation of a general partnership is controlled by the intent of the parties and Paragraph 7 of
the UPA sets forth rules to be applied in determining whether such a partnership exists. A limited
partnership, on the other hand, must comply with statutory requirements to organize, and must
contain at least one general partner and one limited partner.
The existence of a partnership may be disclosed to the examining attorney in many ways. For
example, the partnership may take title in the partnership name, (e.g., Reliable Repair Center, a
partnership). Title may also be taken in the name of one or more partners doing business under
an assumed name, (e.g., Edward J ohn and Nicholas Michael, d/b/a Reliable Demolition
Service). Finally, the record may not disclose that the premises in question is partnership
property but you may have or acquire such knowledge which would require that the exceptions
set forth in the following paragraph be raised.
If the prior title evidence, title search, or other evidence discloses that a partnership is in title to
the real estate, or that the real estate is partnership property though titled in the names of the
partners, raise the following exceptions on Schedule B of the OMC:
1. Terms, provisions and limitations of the partnership agreement for *
partnership.
2. The partnership agreement establishing the partnership of * together with
all amendments thereto, properly identified in writing by all the partners
as being the terms and provisions of the agreement under which the
partnership, or the partners thereof, acquired and hold title, should be
furnished; and this Commitment is subject to such further exceptions, if
any, as may then be deemed necessary. Note: This Commitment is subject
to such further exceptions, if any, which may be disclosed after a name
search has been made for judgments and other matters against all the
members of the partnership of *.
3. Rights of *, partners composing the firm of *, and of all persons claiming
thereunder.
Exception No. 2 must also be raised in the situation where a partnership had previously been in
title but had purportedly conveyed prior to the examination date. The language of the exception
Page 7F-2 ATG Basic Underwriting - Illinois
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should, in this situation, be modified by deleting the words holds title and substituting
therefor the words held title until * and inserting the date of the conveyance in the blank.
If the proposed Insured is a partnership, then the above exceptions must be raised and prefaced
by the following language:
The following exceptions will appear on all policies issued pursuant to this
Commitment except to the extent the same are cleared to our satisfaction:
Finally, if the party in title, former owner, or proposed Insured is a limited partnership but no
Certificate of Limited Partnership appears of record, raise the following exception:
The public records do not disclose the existence of a Certificate of Limited
Partnership for *.
Unless the Uniform Limited Partnership Act (805 ILCS 205/44 et seq.) is
complied with, this Commitment and our policy, if and when issued, shall be
subject to the consequences of the failure to comply with the Act.
II. DEALING WITH PARTNERSHIP ASSETS
At any time that a partnership is in title, Exception No. 1 above must be raised on the
commitment or Owner Policy to reflect the fact that the ability to use, convey, and mortgage the
real estate by the party in title is limited by the partnership agreement. These limitations apply
regardless of whether title is held in the name of the partnership or in the name of one or more of
the partners. Of course, Exception No. 1 should not be raised when insuring a mortgagee of or a
purchaser from the partnership when such a conveyance or mortgage is made pursuant to and in
accordance with the provisions of the partnership agreement.
In order that you may ascertain the provisions of the partnership agreement, Exception No. 2
calls for the production of a certified copy of the agreement. This Exception need not be raised
where the agreement appears of record or has previously been supplied. In those cases, raise the
following Exception in lieu of No. 2 above:
Upon a conveyance or mortgage of the land, we should be supplied with
satisfactory proof of compliance with the terms of the agreement governing *, a
partnership and this Commitment is subject to such further exceptions, if any, we
may then deem necessary.
In addition, at the time you have obtained a copy of the agreement or if such agreement appears
of record, all the names of the partnership members must be searched for judgments and other
liens.
Since general partners are personally liable for partnership debts, judgments against any general
partner which are recorded in the county where the land is located become a lien on the real
estate owned by the partnership if the judgment is based upon a partnership debt or obligation.
Such judgments against general partners may be waived where it is conclusively determined by
you that the obligation or debt was personal to the partner and in no way connected to the
partnership. J udgments against limited partners are not liens since limited partners have no
personal liability for partnership debts but rather can only lose the amount of their investment in
the limited partnership.
ATG Basic Underwriting - Illinois Page 7F-3
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The authority to execute deeds and mortgages must be ascertained from the partnership
agreement. If title to the real estate is held in the name of the partnership, it may be conveyed
only in the firm name. If no partnership agreement exists, or if the authority to convey real estate
is not set forth, the safest procedure is to require that all partners join in the execution of the
instrument. Section 10 of the UPA sets forth the standards to follow in the conveyance of title to
real estate where no agreement controls and where less than all of the partners join in the
conveyance or mortgage. Please contact the ATG underwriting department with pertinent
information if the conveyance or mortgage to be insured is executed pursuant to this statutory
section.
Finally, if the partnership is a limited partnership, the authority to make a conveyance or
mortgage resides only in the general partners and is controlled by the partnership agreement.
While it would be unusual for no such agreement to exist or for the agreement not to provide for
the authority to convey or mortgage land, such situations may occur. In that event, the ULPA
provides that a general partner in a limited partnership has the same rights and powers, with
certain exceptions, that a general partner would have in a partnership without limited partners.
Therefore, all general partners must sign or the ATG underwriting department must be contacted
in order to rely on Section 10 of the UPA.
Exception No. 3 above must be raised on the commitment of the Owner Policy whenever title is
held in the partnership name or in the name of less than all of the partners. This Exception should
not be raised where all partners are in title and may be waived where a conveyance or mortgage
is made by the partnership in compliance with the partnership agreement.
III. DISSOLUTION AND TERMINATION OF PARTNERSHIP
Dissolution of a partnership is defined in the UPA as a change in the relation of the partners
caused by any partners ceasing to be associated in the carrying on as distinguished from the
winding up of the business.
1
At the end of the winding up process, the partnership is
terminated and title to all assets passes to the partners in the same proportions as their ownership
interest in the partnership.
During the winding up process the authority of the partnership to use, convey, or mortgage real
estate it owns is limited to those acts appropriate for winding up the partnership or completing
transactions unfinished at dissolution. Other types of transactions may be valid if the other party
is without notice of the dissolution.
The most common example of an event which would trigger a dissolution is the death of a
partner. However, the partnership agreement may provide that no dissolution occur in this
situation and that business be continued. This amounts to the formation of a new partnership
among the remaining partners and they may deal with property without the consent of the
deceased partners heirs or devisees; subject, of course, to any limitations imposed by the
partnership agreement.
If, however, the partnership is liquidated and distribution in kind is made to the partners, title to
the real estate passes to the heirs or devisees of a deceased partner, is subject to the jurisdiction
of the probate court, and is subject to claims, death taxes, and other statutory provisions in
probate.
Other events which would trigger a dissolution include bankruptcy of a partner, retirement,
decree of court, or other events as set forth in Section 31 of the UPA. Further, upon dissolution,
creditors must be satisfied before distribution to partners. The complexities involved in
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dissolution and termination of a partnership require that you give close attention to the statutory
framework in order to properly insure title. If your examination of the title to the real estate
discloses a dissolved or terminated partnership, please contact the ATG underwriting department
for instructions before insuring title.
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CHAPTER 7G ENTITIES:
TRUSTS


A trust is an arrangement wherein property is held by one or more persons, called the trustee, for the
benefit of another person or persons, called the beneficiaries. It is also possible for a person to hold title
as trustee for his own benefit under a self- declaration of trust. In any event, the powers and duties of the
trustee are set forth in a trust agreement between the creator of the trust, called the settlor, and the
trustee. Because of the possible limitations and conditions imposed upon the trustee by the trust
agreement, you must, in appropriate circumstances, examine the trust agreement, which governs the
trustees power to deal with real estate held in trust. However, many times the trustee will hold title
under a full power deed (described herein), thus obviating the necessity of examination of the trust
agreement. In this chapter, we will examine ATG requirements to insure title in or passing from a trustee
holding title under a full power deed and under a deed where the trustees powers are not recited or
are incompletely recited.
I. TRUSTEE UNDER FULL POWER DEED IN TRUST
When the title search discloses that title to the real estate to be insured is held by a trustee under
a full power deed in trust, described herein, show title in *, as trustee under Trust Agreement
dated *, and known as Trust No. * and raise the following exception on Schedule B of the
OMC:
Terms, powers, provisions, and limitations of the trust under which title to the
land is held.
This exception may be waived upon a conveyance by the trustee to any party not holding title in
trust.
A full power deed in trust is a deed of conveyance to a trustee that contains two types of
provisions relating to the trustees power to deal with the real estate. The first provision
empowers the trustee to sell, mortgage, or otherwise deal with the real estate. The second
provides that third parties who purchase or take mortgages of the real estate from the trustee need
not look to the trust agreement for authority to convey nor do such parties need to look to the
application of the sale or mortgage proceeds. When both provisions are included in the deed in
trust from an individual to a trustee, you need not require production of the trust agreement and
can insure title conveyed by the trustee. However, any time title is held by a trustee, the above
and foregoing terms of the trust exception must be raised. If the deed in trust is from a
corporation, trustee, or other fiduciary, see, Limitations on Reliance on Full Power Deed,
infra.
II. TRUSTEE IN TITLE: NO POWERS DISCLOSED
When the title search discloses that the title to the real estate to be insured is held by a trustee
under a deed which fails to disclose the terms of the trust or does not contain both provisions
necessary to establish a full power deed in trust, show title in *, as Trustee under Trust
Agreement No. *, and raise the following exceptions on Schedule B of the OMC:
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1. Terms, powers, provisions, and limitations of the trust under which title to
the land is held.
2. The deed from * to * recorded * as Document No. * (in Book *, Page *)
does not disclose the terms and conditions of the trust. The trust
agreement under which title is held, properly identified in writing by the
grantor, the trustee and the beneficiaries of the trust, should be submitted
for examination, and this Commitment is subject to such additional
exceptions, if any, as may then be deemed necessary.
Upon examination of the trust agreement, raise appropriate exceptions calling for evidence of
compliance with conditions and requirements imposed by the agreement upon the trustee in
dealing with the real estate.
If the examination of the trust agreement discloses that the property is not held under an Illinois
land trust (see, infra.) then search the names of all of the beneficiaries for judgments and other
liens. Any such liens or judgments disclosed by the search must be raised as exceptions since
they would attach to the beneficiaries equitable interest in the real estate.
If the trust agreement is incomplete regarding the authority of the trustee, consult the Trusts and
Trustees Act, 760 ILCS 5/1 et seq., which sets forth the statutory powers of a trustee under a trust
created after October 1, 1973. These powers include the power to sell or mortgage real estate.
When examining a trust created after that date, without express powers, you may rely on the
statutory authority to convey or mortgage if the trust agreement or a court order does not attempt
to limit the trustees power. The provisions of the Act do not apply to an Illinois land trust,
discussed infra, unless the land trust agreement makes specific reference to the Act or certain
provisions thereof.
It is also important to ascertain that the trust has not terminated by its terms upon the passage of
time or the happening of a contingency. Typical examples of termination events are: the death of
a party, the attainment of a certain age by a beneficiary or the passage of a certain term of years.
If the evidence would tend to indicate that the trust has terminated, then a search must be
conducted against the beneficiaries, even if the trust is an Illinois land trust, since title, both legal
and equitable, may have vested in them by reason of the termination.
III. MISCELLANEOUS TRUST CONSIDERATIONS
A. Limitations on Reliance on Full Power Deeds
It is doubtful whether, in the absence of statutory authority, a corporation, trustee,
executor, administrator, guardian, or other fiduciary, is able to create a trust arrangement.
Accordingly, if the conveyance in trust is made by one or more of these types of grantors,
show title in the trustee, but raise the following exceptions on Schedule B of the OMC
even if the deed in trust recites the powers of the trustee and purports to protect third
parties:
1. Terms, powers, provisions, and limitations of the trust under which
title to the land is held.
2. The trust agreement under which title to the land is held, properly
identified in writing by the settlor, the trustee, and the beneficiaries
of the trust, should be submitted to be filed of record, and this
ATG Basic Underwriting - Illinois Page 7G-3
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Commitment is subject to such further exceptions, if any, as may
then be deemed necessary.
Follow the procedures outlined in, Trustee in Title: No Powers Disclosed, supra, in
insuring a conveyance from the trustee.
A land trust agreement may provide for a trustee to trustee conveyance. When you
examine the trust agreement under which the grantor-trustee made his conveyance, you
need not call for the production of the trust agreement of the grantee-trustee, as long as
the conveyance was by a full power deed.
B. Testamentary Trusts
If the title search indicates the death of a non-joint tenant party in title and a will of said
decedent which creates a trust for real estate owned by said decedent, find title in the
trustee and raise the terms of the trust exception on Schedule B of the OMC. You need
not call for the production of the trust agreement, since it is contained in the will, unless
the will pours over into an inter vivos trust. For all other purposes, see, Trustee in
Title: No Powers Disclosed, supra, for a discussion of the major considerations in
insuring title passing from a trustee. It should also be noted that all estate exceptions must
be cleared separately upon a conveyance by a trustee.
C. Successor Trustees
In the situation where you know that the original trustee has died or is otherwise unable
or unwilling to serve, or where the title search discloses a conveyance by a trustee other
than the original with no intervening conveyances, the following must also be examined:
1. The original deed in trust, which may provide for a successor; or
2. The trust agreement, which may so provide; or
3. If an Illinois land trust, the declaration filed pursuant to 765 ILCS 410/1.
The successor trustee must consent to the appointment as trustee prior to insuring title in
him or her. However, if the successor trustee has already conveyed, no consent need be
obtained.
Where neither the deed in trust nor trust agreement provide for a successor trustee or the
manner in which a successor shall be appointed, you must ask that appropriate steps be
taken for the appointment of a successor. If the trust is an Illinois land trust, the
provisions of 765 ILCS 410/1 must be followed. If the trust is not an Illinois land trust,
require that a proceeding in equity be instituted for the appointment of a successor.
In any event, the successor trustee has all of the power and authority of the original
except to the extent limited by the trust agreement or court order and except to the extent
any powers of the original trustee were personal to or vested in the sole discretion of the
original trustee.
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D. Co-Trustees
Where more than one trustee is in title, require proof of authority where a conveyance or
mortgage is made by less than all trustees. This will require, at the least, production of the
trust agreement and proof of the existence of the conditions that would authorize such a
conveyance or mortgage.
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CHAPTER 8A ESTATES:
DISABLED PERSONS


Although decedents estates are the most commonly occurring estates, ATG members regularly
encounter other kinds of estates. In this chapter we will cover the underwriting procedures for disabled
persons estates.
Article XI.a. of the Probate Code (755 ILCS 5/11a-1 et seq.) governs disabled persons estates.
Paragraph 11a-3 sets forth the procedure to appoint a guardian for the person. Basically, as with any
estate, a petition must be filed seeking an adjudication of the persons disability and appointing a
guardian. There may be separate guardians for the person and for the estate of the disabled person, or
there may be one guardian for both.
A report of the disabled persons condition should accompany the petition, otherwise an evaluation will
be ordered by the court and a report filed, prior to the hearing on the petition. The disabled person, if he
is the respondent, must be served with summons and the petition at least 14 days prior to the hearing. All
other persons named on the petition (the disabled persons relatives, the guardian and the person or
facility with whom the disabled person is residing) who do not waive notice, must be given notice of the
hearing at least 14 days prior to the hearing.
After the hearing on the petition, if the court determines that the person lacks sufficient understanding or
capacity to make or communicate responsible decisions concerning his own care, or is unable to manage
his estate or financial affairs, then the court will appoint a plenary guardian for the person or the estate
or both. If the person is not totally incapacitated under the foregoing standard, then a limited guardian
will be appointed, and the court will set forth in its order the limitations on the powers and duties of the
guardian.
Since the guardian is not given specific powers to sell the disabled persons property without court
order, a petition to sell the real estate must be filed. Article XX of the Probate Code allows for the sale
or mortgage of the disabled persons real estate or any interest therein when the court determines it is
necessary or expedient for the support and education of the ward, for the payment of debts or for
reinvestment.
1

The guardian must file a petition seeking sale or mortgage of the property, setting forth the facts and
circumstances surrounding the petition, a description of the real estate or interest therein, the
approximate value thereof, the interest of the disabled person therein, and the nature and extent of all
liens upon and other interests in the real estate as are known to the petitioner. A copy of the proposed
mortgage or proposed contract of sale, if any, must be attached to the petition.
All lienholders, parties in possession, and persons having an interest in the real estate, except the ward,
whose guardian is making the petition, must be made parties defendant to the petition. If any party to the
proceeding is a ward and is not represented by a guardian, then the court must appoint a guardian ad
litem for the ward.
After the court obtains jurisdiction of the parties and all issues have been adjudicated, the court may
order the real estate of the disabled person sold or mortgaged if the court finds one of the foregoing

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standards have been met. The representative will also be required to file the bond required under 12-9
of Probate Code.
If the title examination or other evidence discloses or it is otherwise revealed that a guardian has been
appointed for the title holder who has been adjudicated a disabled person, raise the following exceptions
on the title commitment:
1. Proceeding pending in the Circuit Court of * County entitled Estate of *, a
disabled adult, under Case No. *.
2. Statutory right, powers and duties of the guardian of the Estate of *, a disabled
adult.
3. Any conveyance of the land must be made by the guardian of the Estate of *
pursuant to a proper order entered in Case No. * and such conveyance should
recite that the same is executed pursuant to a proper order entered in Case No. *
ordering the conveyance and should recite therein the full consideration for
which it is given. In addition, the guardian should file the bond required by 12-9
of the Probate Act.
If the title examination reveals an existing disabled persons estate, and a court order has already been
entered ordering the sale or mortgage of the wards property, then the following exceptions must be
raised:
1. Right, title, and interest of the purchaser under court order entered in Case No. *
ordering that the land be sold to purchaser.
2. Right of any interested party, in the time allowed by law, to have modified, set
aside, or reversed the orders entered in Case No. *.
3. Any conveyance of the land must be made by the guardian of the Estate of *
pursuant to a proper order entered in Case No. * and such conveyance should
recite that is executed pursuant to a proper order entered in Case No. * ordering
the conveyance, and should recite therein the full consideration for which it is
given. In addition, the guardian should file the bond required by 12-9 of the
Probate Act.
If a public sale of the wards property is held, notice of the sale must be published once each week for
three successive weeks, the first publication to be made at least 25 days prior to the sale. Once the sale is
completed, the representative must file a verified report of the sale with the court, describing the
property, stating the name of the purchaser, date and terms of the sale, and the manner in which the
terms of the order of sale were executed. Notice of hearing of the report of sale must be given to all
persons who have filed an appearance in the proceeding, as the court directs. After the hearing, if the
court approves and confirms the sale, the representative must execute and deliver a deed to the purchaser
within 30 days after approval of the sale. If the court disapproves the report of sale, the court may order
the property to be resold. If the sale was made pursuant to a contract approved by the court a petition
under 20-5, no report of sale is required.
Always examine the estate proceedings to determine that a proper petition was filed, that all necessary
parties were properly served or have submitted to the courts jurisdiction, and that orders were entered
appointing the guardian and ordering the sale of the real estate. Ascertain that the orders have not been
ATG Basic Underwriting - Illinois Page 8A-3
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appealed, modified, or set aside within the time allowed by law, and that the guardian filed the bond
required under 12-9.
Finally, be aware that under the new Illinois Power of Attorney Act, (755 ILCS 45/1-1, et seq.), unless
an earlier termination date is stated in the agency, a durable power of attorney continues until the death
of the principal despite appointment of a guardian for the principal after the agency is signed. Thus, even
though a guardian has been appointed for the principal, an agent may still execute a deed on behalf of
the principal if the durable power of attorney was executed prior to the appointment of the guardian.
In most situations, a disabled persons estate should present no insurmountable problems for the
examining attorney. The court proceedings will have to be examined to ensure that all jurisdictional
requirements have been met, and that the sale has been approved. This will ensure that the guardians
deed will validly transfer good title to the purchaser.


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CHAPTER 8B ESTATES:
MINORS


Minors estates, in general, are governed by Article XI of the Probate Act, 755 ILCS 5/11-1 et seq. The
Article begins by defining a minor as anyone who has not attained the age of 18 years. As with other
estates, the proceeding is initiated with the filing of a petition. The petition for appointment of the
guardian must state, if known:
1. The name, date of birth, and residence of the minor;
2. Names and addresses of the following and in this order:
a. spouse;
b. parents and adult brothers and sisters; and,
c. nearest adult kindred.
3. The name and address of the person having custody of the minor;
4. The value of the personal estate;
5. The amount of the anticipated gross annual income and other receipts; and,
6. The name and address of the proposed guardian, and in addition, if the proposed
guardian is an individual, the individuals age and occupation. If the testamentary
guardian, the facts concerning admission of the will to probate and a copy of the
will.
1

The petition must be made by a reputable citizen of Illinois, or the appointment may be made on the
courts own motion. The court may in either case appoint a guardian of the person of the estate of the
minor, or both, whenever it appears necessary or convenient. The petition must be filed in the county
where the minor resides if the minor is an Illinois resident, or in the county where the minors real or
personal property is located if a nonresident.
Article XI also spells out who may nominate and who may act as the guardian of the minor. Section 4-3
specifies that a guardian must be at least 18 years of age, and of sound mind, must not be an adjudged
disabled person, must not have been convicted of an infamous crime, and, if he or she is to be guardian
of the estate, must be a resident of Illinois. One person may be appointed guardian of the person and of
the estate or separate guardians may be appointed for each. If the minor is a patient in a State mental
hospital or a resident in a State institution and the personal estate is less than $1,000, then, with court
approval, the Department of Mental Health and Developmental Disabilities or the Department of
Children and Family Services may designate one of its employees as guardian of the estate. Such
employee is not entitled to any fee as guardian.
2

No person may be appointed as guardian of the person whom the court has determined has caused or
substantially contributed to the minor becoming a neglected or abused child as defined in the J uvenile
Court Act.
3
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Page 8B-2 ATG Basic Underwriting - Illinois
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proven incident of abuse or neglect and the court determines that the appointment is in the best interests
of the child.
4

If the minor is 14 years or older, he or she may nominate the guardian of his or her person and his or her
estate, subject to court approval. If the minor is a nonresident, or if he or she fails to nominate a guardian
after being served with notice to do so, or his or her nominee is not approved by the court, the court may
appoint a guardian without nomination.
5

The parent of an unmarried or unborn child may nominate a guardian by will. Such nomination in the
parents will, however, does not deprive the surviving parent of the care and custody of the child if the
surviving parent is otherwise fit and competent.
6

In any petition for guardianship, if the parents of the minor are alive and are otherwise fit and
competent, they are, or the surviving parent is, entitled to the custody of the minor and the direction of
his or her education. If the parents live apart, the court may give custody to one of the parents or to some
other person.
7

The petitioner must give notice of the hearing on the petition to the minor if he or she is 14 years old or
older, and to the minors relatives listed on the petition, at least three days before the hearing, unless
excused for good cause shown. Failure to give notice to a relative is not jurisdictional. A guardian ad
litem may be appointed to represent the minor.
8

The guardian of the person is responsible for the custody, nurturing, and education of the ward and his
or her children. The guardian of the estate is responsible for the care, management, and investment of
the estate and shall apply the principal and income for the support and education of the ward, his or her
children, and persons related by blood or marriage to the ward who are dependent upon or otherwise
entitled to support from the ward. The court may authorize the guardian to execute and deliver deeds,
bills of sale, or other instruments.
9

Since the guardian is not given specific powers to sell the minors property without court order, the
guardian must file a petition to sell the real estate. Article XX of the Probate Code provides for the sale
or mortgage of the minors real estate or any interest therein when the court determines it is necessary or
expedient for the support and education of the persons entitled thereto under the Act, for payment of the
debts of the minor, or for reinvestment.
10

The guardian must file a petition seeking sale or mortgage of the property. The petition sets forth the
facts and circumstances surrounding the petition, describes the real estate or interest therein, gives the
approximate value thereof, the interest of the minor therein, and the nature and extent of all liens upon
and other interests in the real estate as are known to the petitioner. A copy of the proposed mortgage or
proposed contract of sale, if any, must be attached to the petition.
11

All lien holders, parties in possession, and persons having an interest in the real estate, except the minor
whose guardian is making the petition, must be made parties-defendant to the petition. If any party to the
proceeding is a ward and is not represented by a guardian, then the court must appoint a guardian ad
litem for the ward.
12

If the title examination or other evidence discloses or it is otherwise revealed that guardian has been
appointed for the title holder who is a minor, raise the following exceptions on the OMC:
1. Proceeding pending in the * Judicial Circuit entitled Estate of *, a Minor, in Case
No. *.
ATG Basic Underwriting - Illinois Page 8B-3
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2. Statutory rights, powers and duties of the guardian of the Estate of *, a Minor.
3. Any conveyance of the land must be made by the guardian of the Estate of *, a
Minor, pursuant to a proper order entered in Case No. *. Such conveyance should
recite that the same is executed pursuant to a proper order entered in Case No. *
ordering the conveyance and should recite therein the full consideration for
which it is given. In addition, the guardian must file the bond required by Section
12-9 of the Probate Act.
If the title examination reveals an existing minors estate, and a court order has already been entered
ordering the sale or mortgage of the minors property, raise the following exceptions:
1. Right, title, and interest of the purchaser under court order entered in Case No. *
ordering that the land be sold to purchaser.
2. Right of any interested party, in the time allowed by law, by motion, appeal,
petition, or other direct proceeding to have modified, set aside, or reversed the
orders entered in Case No. *.
3. Any conveyance of the land must be made by the guardian of the Estate of *, a
Minor, pursuant to a proper order entered in Case No. *. Such conveyance should
recite that the same is executed pursuant to a proper order entered in Case No. *
ordering the conveyance and should recite therein the full consideration for
which it is given. In addition, the guardian must file the bond required by Section
12-9 of the Probate Act.
If a public sale of the minors property is held, notice of the sale must be published once each week for
three successive weeks, the first publication to be made at least 25 days prior to the sale. Once the sale is
completed, the representative must file a verified report of the sale to the court. The verified report must
describe the property, and state the name of the purchaser, date and terms of the sale, and the manner in
which the terms of the order of sale were executed. Notice of hearing on the report of sale must be given
to all persons who have filed an appearance in the proceeding as the court directs.
13
If the court
approves and confirms the sale, the representative must execute and deliver the deed to the purchaser
within 30 days following approval of the sale.
14
If the court disapproves the report of sale, the court
may order the property to be resold. If the sale was made pursuant to a contract approved by the court on
a petition under Section 20-5, no report of sale is required.
15

Always examine the estate proceedings to determine the following:
A proper petition was filed;
All necessary parties were properly named and served or have submitted to the courts jurisdiction;
and,
Orders were entered appointing the guardian and ordering the sale of the real estate.
Ascertain that the orders have not been appealed, modified, or set aside within the time allowed by law,
and that the guardian filed the bond required under Section 12-9 of the Probate Act.

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In most situations, a minors estate should present no insurmountable problems. The court proceedings
will have to be examined to ensure that all jurisdictional requirements have been met and that the sale
has been approved. This will ensure that the guardians deed will validly transfer good title to the
purchaser.
ATG Basic Underwriting - Illinois Page 8B-5
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1
755 ILCS 5/11-8
2
755 ILCS 5/11-3
3
705 ILCS 405/2-3
4
755 ILCS 5/11-5(d)
5
755 ILCS 5/11-5(c)
6
755 ILCS 5/11-5(b)
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755 ILCS 5/11-7
8
755 ILCS 5/11-10.1
9
755 ILCS 5/11-13
10
755 ILCS 5/20-3
11
755 ILCS 5/20-5
12
755 ILCS 5/20-5(b),(d)
13
755 ILCS 5/20-9
14
755 ILCS 5/20-10
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CHAPTER 8C ESTATES:
DECEDENTS


One of the most common problems which ATG member will encounter in the examination of title to
real estate is the death of one or more of the parties in title or a predecessor in title. At this point, we will
examine ATGs requirements to insure title subsequent to the death of a sole owner or tenant in
common. Please see materials elsewhere in this manual for information on the death of a joint tenant.
I. THE UNPROBATED ESTATE
ATG may be willing to insure title based upon a conveyance from all of the heirs and devisees of
a decedent, without requiring formal probate proceedings. The attorney should be cautioned,
however, to use discretion in availing himself of this authority since it depends, to a large extent,
on the attorneys personal knowledge of the decedent, his or her heirs and devisees.
When the title search or other evidence discloses the death of a party in title, ATG member
should find title in The heirs and devisees of *, deceased and raise the following exceptions in
Schedule B of the OMC:
A satisfactory table of heirship and proof of the death, testacy or intestacy, and of the value of
the estate of *, deceased, should be furnished; and this Commitment is subject to such further
exceptions, if any, as may be then deemed necessary.
In the meantime, the following are noted and this Commitment is made subject to:
1. Claims against the estate of *, deceased.
2. Federal and Illinois estate taxes which may be charged against the estate.
3. Statutory rights, powers, and duties of the personal representative of the said
decedent, when appointed.
This exception may be modified or eliminated when such evidence has been supplied, in whole
or in part, prior to the issuance of the OMC. In addition, the title finding may be modified to find
title in the heirs at law, if known to the ATG member prior to the issuance of the OMC.
The evidence called for in the exception must be supplied to the attorney in the form of an
affidavit with attached exhibits. The following analysis also points out potential problem areas
for the attorney to consider. If such problems arise, contact the ATG underwriting department for
appropriate exceptions or clearance procedures.
A. Table of Heirship (also known as the Affidavit of Heirship)
The first step involved in insuring title in an unprobated estate is the same as that required
when probating a decedents estate (that is, ascertaining the heirship of the decedent).
This is necessary for the reason that all heirs must join in any conveyance, even if the
decedent may have disinherited some or all of them under his or her unprobated will. Of
course, if even one heir refuses to cooperate, then probate of the will is necessary to cut

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off his or her rights in the real estate. If the affidavit of heirship discloses unknown heirs
or if a known heir cannot be located, then probate will be necessary in order that the
statutory provisions for publication of notice to such heirs may be used in order to deal
with the interest of the unknown or missing heirs.
The following constitute the elements of a proper affidavit of heirship, which we need for
insurance purposes:
1. An affidavit is a form that is signed and sworn to by a person in a position to
know the facts (a close relative or close acquaintance). The affidavit must be
notarized and the affiants address should appear on the instrument.
2. Where the affiant claims to be the sole heir, then a corroborative affidavit by a
disinterested person may be necessary.
3. The affidavit should contain the following facts:
a. The date of death, with an attached copy of the death certificate;
b. a recital that the decedent was the owner of land;
c. the value of the decedents estate for federal or state tax purposes;
d. whether the decedent died testate or intestate with an attached copy of the
will, if testate;
e. the number of times the decedent was married, the names of each spouse,
and the reason for the termination of each marriage;
f. the number of children born to each marriage, the name of each child, and
his or her age and marital status;
g. a positive statement that only the children listed were born of each
marriage;
h. a positive statement that only the children listed were born to the
deceased;
i. whether the decedent did or did not adopt any children, and, if so, his or
her name, age and marital status;
j. whether any child of the decedent has died, if so, the date of death and all
of the information necessary to determine whether there may be heirs or a
per stirpes distribution;
NOTE: If a child or spouse died after the deceased owner, that heirs
share will pass through the heirs estate. Therefore, the heirs estate
will have to be examined separately to determine the devolution of that
share. If the heirs estate is not probated, a separate table of heirship
should be provided.
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k. where the decedent left no descendants or spouse, the affidavit must
affirmatively so state before listing ancestors or collaterals.
It should be noted at this point that the law in effect at the decedents date of death
governs heirship. If the attorney has a question regarding the applicable law, or any other
question arising out of the affidavit of heirship, contact the ATG underwriting
department.
B. Proof of Death
ATG members must be supplied with a certified copy of the death certificate of the
decedent. The reason for this requirement is two-fold: first, title will not pass until death
occurs and second, the cause of death may bar the heir or devisee from acquiring any
interest in the decedents estate. Under Illinois Revised Statutes, c. 110 1/2, 2-6, a person
who intentionally or unjustifiably causes the death of another shall not receive any
property by reason of the death. Accordingly, if the death certificate discloses that the
decedent died from other than natural causes, the ATG member must examine further
evidence as to who may have caused the death.
C. Testacy or Intestacy
If the affidavit of heirship or some other proof establishes that the decedent died intestate,
the attorney may accept the same at its face value and find title in the heirs without
further objection relative to the possibility of a will, unless the existence of a will is
otherwise indicated. If there is proof that a will exists, a copy of said will must be
provided for examination together with an affidavit stating that the will is, to the best of
the affiants knowledge, the true last will and testament of the decedent. Ideally, this
evidence will be incorporated in the affidavit of heirship and the will attached thereto as
an exhibit.
In examining the will, the attorney must consider the various problems that arise under
the Probate Act and the terms of the will. The following analysis, while not exhaustive of
the potential problems, sets forth the most common situations:
1. Devisees - if the heirs are not identical to the devisees or if the heirs do not take
the same fractional share as the devisees that would be as heirs, then the following
exception must be raised:
Right, title and interest of *, devisee(s) under the unproven will of *, deceased.
This exception cannot be waived unless all heirs and devisees join in the
conveyance to a person or persons using a deed sufficient to pass after-acquired
title (e.g., statutory form warranty deeds).
2. Testamentary oversight sections of the Probate Act:
a. 4-10 - Child born after execution of will;
b. 4-11 - Anti-lapse Statute;
c. 4-7(b) - Dissolution of marriage subsequent to the execution of the will
and the effect on devise to former spouse;

Page 8C-4 ATG Basic Underwriting - Illinois
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d. Article III - Simultaneous death.
3. Rights of legatees and devisees to contribution - general and specific bequests
must be satisfied before the residuary real estate can be conveyed free of claims to
such legatees and devisees.
4. Equitable charges - a testator may attempt to change the statutory order of
abatement by making a general legacy of cash a lien on specifically devised real
estate. This legacy must be satisfied before insuring title.
5. J oint and mutual wills - such a will may give rise to a contract, enforceable
against a surviving testator, and his or her heirs and assigns, to devise the property
to the ultimate takers under the will. If the examining attorney encounters such a
will, he or she should raise the following exception:
Right, title and interest of *, as ultimate beneficiary(s) under the unproven
will and mutual will of *, deceased and * and all of the persons claiming
by and through them.
This exception may not be waived unless the beneficiary or beneficiaries join in a
conveyance to a third person or persons, using a deed sufficient to pass after-
acquired title (e.g., statutory form warranty deeds).
D. Claims
Claimants have priority over heirs, devisees, legatees, and those claiming under or
through them, with respect to assets of the estate. Thus, before we can insure title free of
claims, we must be assured that no unpaid claims exist and we must be indemnified by
satisfactory guarantors against known or unknown claimants. Under the Probate Act,
claims may be barred in one of two ways:
1. 18-12(b) - if no probate proceeding is instituted, claims are barred if three years
have passed since the date of death.
2. 18.12(a) - if proper probate proceedings are instituted, claims are barred unless
filed with the period provided in the Probate Act. See discussion on Probated
Estates, infra.
The claims process does not, however, affect secured claims to the real estate, e.g.,
mortgages, judgment liens, taxes, etc.
Where the decedents estate has not been probated, and three years have not passed since
the date of death, the examining attorney may nevertheless insure over claims in certain
situations. If we can obtain a satisfactory personal undertaking from all heirs and devisees
and we can obtain proof that all of the obvious claims (funeral bill, grave marker,
expenses of last illness, etc.) have been paid, we can insure a bona fide purchaser for
value. A satisfactory personal undertaking is one that is made by people known to ATG
member to be financially responsible persons in the community. Alternatively, ATG
member may require audited financial statements showing the guarantors ability to pay.
Finally, in the absence of the foregoing, ATG member may require a surety bond for the
personal undertaking from a surety company.
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It is the area of insurance over claims that requires the greatest amount of attorney
discretion and care in handling an unprobated estate. If the ATG member has any doubt
about insuring over claims, contact the ATG underwriting department for instructions and
authorization.
E. State Death Taxes
Effective J anuary 1, 1983, the Illinois inheritance tax was eliminated except to the extent
that the decedents estate would be eligible for the credit for state death taxes under
federal estate tax law. Therefore, for decedents dying after December 31, 1982, if the
ATG member has eliminated the possibility of federal estate taxes (see infra), he may
waive Illinois death taxes as an exception upon a conveyance to a bona fide purchaser or
mortgagee. For decedents dying prior to J anuary 1, 1983, contact the ATG underwriting
department if you have any questions regarding Illinois inheritance tax liens. Please note
that for decedents dying on or after J anuary 1, 1983, the Illinois death tax is called the
Illinois Estate Tax. If the decedent died before that date, all Schedule B exceptions
herein, relative to state death taxes, should be modified to refer to Illinois inheritance
taxes.
F. Federal Estate Taxes
The federal estate tax is imposed upon the net value of a decedents estate. Each decedent
is entitled to a lifetime credit from the unified state and gift tax. For decedents dying in
1987 and thereafter, the exemption equivalent to the allowable lifetime credit is
$600,000.00, assuming that no fiats had been made during the decedents life that had
reduced the credit. In prior years, the exemption equivalent was smaller. If the ATG
member ascertains that the estate of the decedent was of such size that no estate tax
would be due, he may waive the exception for tax.
The area of insurance over federal and Illinois death taxes is another area where attorney
discretion and care is required. The attorney should acquire information relative to the
size of the decedents estate from a person in a position to know the nature and extent of
the decedents estate. In addition, the ATG member must obtain a satisfactory personal
undertaking for these taxes.
G. Rights, Powers and Duties of the Personal Representative
If all other matters have been disposed of to the satisfaction of the ATG member, he may
waive this exception. Of course, the heirs and devisees must give a personal undertaking
for this exception, which undertaking would be included with claims and death taxes.
An ATG member is reminded that the above and foregoing discussion assumes that a
conveyance will be made to a bona fide purchaser for value. It is not ATGs practice to
insure heirs and devisees under an unprobated will based upon their Personal
Undertaking. The acceptable procedure is to find title in the heirs and devisees and to
reflect applicable exceptions in Schedule B, including but not limited to claims, death
taxes and powers and duties of the personal representative. This procedure will reduce
confusion about the extent of ATG liability to such heirs and devisees. The policy should
also contain a note for information to the effect that all estate exceptions will be waived
upon a conveyance to a bona fide purchaser and such affidavits and undertakings as ATG
might require.

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II. THE PROBATED ESTATE
A decedents estate may be probated for many reasons: the value of his or her personal property
may be in excess of the maximum amount under which small estate affidavits may be used;
unknown heirs may exist or the address of known heirs may be unknown; the beneficiaries may
desire to bar claims under the shorter time limits of administered estates; or one of many other
reasons. For whatever reason, the ATG member may discover a probated estate in his
examination of the title to a particular parcel of real estate. This section will examine ATG
requirements to insure title passing through such an estate.
The first and perhaps most important step in examining a probate proceeding is to ascertain that
all necessary parties have been brought within the jurisdiction of the court, either by giving
notice to such persons or by their entry of appearance. Generally, this notice is provided by
mailing notice, in accordance with statutory requirements, of the commencement of a probate
proceeding to all heirs, devisees, and legatees of a decedent. The Probate Act also provides for
publication notice to unknown parties or to known parties whose whereabouts are unknown.
After an ATG member has determined that all necessary parties have been properly brought
before the probate court, he should then follow the two-step procedure outlined below:
1. Examine the proceeding based upon the type of administration and
whether the decedent was testate or intestate.
2. Determine the party or parties that made or will make the conveyance to
be insured in order to determine whether the statutory procedures have
been followed.
The following analysis will help to guide the examining attorney through this procedure.
A. Type of Administration
1. Supervised Intestate
If the title search, application for title insurance or other evidence discloses the
existence of supervised probate proceedings for an intestate decedent who died
owning the land or an undivided interest thereof as a tenant in common, the ATG
member should examine the estate proceedings, show title in the heirs as
disclosed by the order of heirship entered therein, and raise the following
exceptions on Schedule B of the OMC:
(1) Claims against the estate of *, deceased.
(2) Federal and Illinois estate taxes, which may be charged
against the estate of *, deceased.
(3) Statutory rights, powers and duties of the administrator of
the estate of *, deceased. In addition other matters may be
disclosed by the attorneys examination for which
exceptions must be raised. The following analysis will more
fully explore the above-described exceptions and will point
out some of the other areas the attorney must consider
when examining the estate.
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a. Claims
The procedure for dealing with claims will differ depending on the date on
which letters of office are first issued for the decedents estate. If letters
were issued prior to J anuary 1, 1980, claims are barred if:
i. An inventory that includes the land was filed within six months
after letters issued;
ii. Six months have passed since letters issued; and
iii. No claims were filed with the court.
If letters were issued after December 31, 1979, an inventory no longer
need be filed in order to bar claims. Further, where letters issued after
December 31, 1979, claims may be filed with the court or with the
representative, or both.
Two special types of claims require the attention of the attorney. Expenses
of administration of an estate are liens even though not filed. Thus, the
attorney must make sure that all such expenses are paid before insuring
title in the beneficiaries of the estate or insuring title in grantees of said
beneficiaries. Similarly, surviving spouse and child awards, if applicable,
must be paid before claims can be waived.
b. Federal and Illinois Death Taxes
Please see the section on The Unprobated Estate for a preliminary
discussion of federal and Illinois death taxes. If the ATG members
examination of the decedents estate discloses that federal and Illinois
death taxes may be due, then he or she must require proof of payment of
the same. In certain circumstances, ATG may be willing to insure title in a
bona fide purchaser for value prior to the payment of taxes. For example,
if the examining attorney is also attorney for the decedents estate and is
confident that sufficient, liquid assets exist or will be available to pay the
taxes, he can waive federal and Illinois death taxes. Similarly, a sufficient
personal undertaking may be used to waive these taxes. Please see the
section on federal and Illinois death taxes under The Unprobated Estate
for discussion of a sufficient personal undertaking.
c. Statutory Rights of the Administrator
Article XX of the Probate Act confers substantial managerial authority
upon the Administrator over real estate in the decedents estate. Most
important among these, for title insurance purposes, are 20-4 and 20-5,
which allow the Administrator to petition the court to sell real estate.
Please see Sale by Representative - No Power, infra.
If the conveyance to be insured is by the heirs to a third party, an order
must be entered to divest the administrator of his rights and powers. See,
also, Sale by Heirs, infra.

Page 8C-8 ATG Basic Underwriting - Illinois
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d. Miscellaneous Considerations
i. Dower
Dower may only be a problem where the decedent died before
J anuary 1, 1972. Dower may also be ignored where there was no
surviving spouse or if the spouse has died since the death of the
decedent.
ii. Homestead
The homestead rights of a decedent continue in his or her surviving
spouse and children under 1eight years of age. ATG members
should determine whether the spouses or childrens homestead
rights are applicable to the parcel to be insured.
2. Supervised Testate
If the title search, application for title insurance or other evidence discloses the
existence of supervised probate proceedings for a testate decedent who died
owning the land or an undivided interest thereof as tenant in common, the ATG
member should examine the estate proceeding, show title in the devisees under
the decedents will, and raise the following exceptions on the OMC:
1. Claims against the estate of *, deceased.
2. Federal and Illinois estate taxes, which may be charged
against the estate of *, deceased.
3. Statutory rights, powers, and duties of the
Executor/Administrator with will annexed of the estate of *,
deceased. (Delete incorrect reference).
An analysis of the above and foregoing exceptions is set out in the preceding
section on Supervised Intestate Estates. Please see that section for ATG clearance
requirements.
In addition, other matters may be disclosed by the attorneys examination of the
estate for which exceptions must be raised. The following analysis, while not
intended to be exhaustive, will point out some of the other areas the attorney must
consider when examining the estate.
a. Testamentary oversight sections of the Probate Act - these sections may
require that the title finding in the named devisees or class of devisees in
the will be changed:
i. 4-10: effect of child born after execution of will;
ii. 4-11: legacy to deceased legatee;
iii. 4-7(b): effect of dissolution of marriage upon legacy to former
spouse;
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iv. Article III: simultaneous death.
b. Renunciation of Will by Spouse - if the statutory period has not passed for
a spouse to renounce the will, the attorney should raise the following
exception:
Statutory rights of *, surviving spouse of the decedent, to
renounce the will of deceased and take statutory share.
If the spouse has renounced, the title finding should show the spouses 1/3
share if there are descendants of the decedent and 1/2 if there are not. Of
course, if there is no spouse surviving, the exception need not be raised.
c. Dower - If the decedent died prior to J anuary 1, 1972, the attorneys
examination may disclose an election to take dower which should be
reflected on the Commitment if the surviving spouse is still alive.
d. Homestead - the surviving spouses homestead right need not be raised if
the spouse does not renounce within the statutory period.
e. Right of Interested Persons to Contest - the examining attorney should
raise an exception if the statutory period to contest has not elapsed. The
exception should read as follows:
Right of any person interested to contest the will of *,
deceased, within the time allowed by law.
f. Formal Proof of Will - for testate decedents estates upon which letters
originally issue after J anuary 1, 1980, the attorney must raise the
following exception:
Right of any person to demand formal proof of the will of *,
deceased, within the time provided in 6-21 of the Probate
Act.
This exception need not be raised where more than 42 days have passed
since the will was admitted to probate.
g. Power of Sale - the attorney should raise the following exception where
the will contains a power of sale:
Power of sale conferred upon *, Executor, by terms of the
will of *, deceased.
If the executor named in the will was not able or willing to serve and an
administrator with will annexed was appointed, then he or she can exercise
the power of sale unless otherwise provided in the will. The ability of the
administrator with will annexed to exercise the power of sale does not
apply to a decedent who died prior to October 1, 1973. Please see Sale by
Representative - Power of Sale in Will, infra, for further discussion.
h. Miscellaneous Considerations

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i. Rights of legatees and devisees to contribution - See Unprobated
Estate, supra.
ii. Equitable charges - See Unprobated Estates, supra.
iii. J oint and Mutual Wills - See Unprobated Estates, supra.
iv. Doctrine of Election - See Section III. B., Chapter 18, J oint
Tenancy.
v. Trusts created by Will - See Chapter 25, Trusts
3. Independent Administration
The granting of a petition for independent administration empowers a
representative to act without the extensive supervision of ordinary administration.
Effective September 1985, independent administration was ordered in all cases,
except where the will, if any, directs supervised administration or where an
interested person objects. (Ill. Rev.
Stat., c. 110 1/2, 28-2). It is available for both testate and intestate estates.
Independent administration does not affect the substantive right of heirs and
devisees, claims, proof of will, notice, etc. It does, however, reduce filing
requirements and allows the representative to sell and dispose of assets of the
estate without court intervention.
If the title search, application for title insurance or other evidence discloses the
existence of independent administration proceedings for a testate or intestate
decedent who died owning the land or an undivided interest thereof as a tenant in
common, ATG member should examine the estate proceedings, show title in
either the heirs as disclosed by the order of heirship entered therein if intestate, or
the devisees under the decedents will, if testate, and raise the following
exceptions on Schedule B of the OMC:
1. Claims against the estate of *, deceased.
2. Federal estate and Illinois estate taxes, which may be
charged against the estate of *, deceased.
3. Statutory rights, powers and duties of the Independent
Executor/Administrator of the estate of *, deceased. (Delete
incorrect reference).
An analysis of the above and foregoing exceptions is set out in the preceding
sections on Supervised Testate Estates and Supervised Intestate Estates. Please
see those sections for ATG clearance requirements. The attorney should also
consider the other substantive provisions of those sections and raise appropriate
exceptions.
Independent administration status may be granted regardless of the size of the
estate unless the will specifically forbids it or specifically requires supervised
administration. An interested person may request termination of independent
ATG Basic Underwriting - Illinois Page 8C-11
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administration status and the court must grant this request unless the will
specifically requires independent administration or unless the objector is a
creditor or distributee of a specific gift if such a party might otherwise be
protected.
Please see Sale by Representative - Independent Administration, infra, if the title
to be insured will be derived from the representative. Please see Sale by Heirs or
Devisees, infra, if title to be insured will be derived from the heirs or devisees. In
the event we are asked to insure the heirs or devisees, the representative must
deliver an instrument of distribution and release to the distributee which releases
the property from claims by the estate. This instrument must be obtained and
merely closing the estate is not a sufficient distribution. Finally, it is essential
that the instrument be recorded. In any event, title in the heirs or devisees cannot
be insured without exceptions for claims, death taxes, and other substantive rights
of third parties in the real estate until the estate is closed. Upon the closing of the
estate and the recordation of the instrument of distribution, title in the heirs or
devisees can be insured, assuming that claims and taxes have been paid, with
Special Exceptions.
B. Party to Convey
1. Sale by Heirs or Devisees/Notice of Probate
Upon the death of a decedent, title to real estate that he or she owned or had an
interest in passes to his or her heirs or devisees. However, as we have seen in the
preceding sections, this title is subject to claims, death taxes, rights of the personal
representative and various other statutory limitations imposed by the Probate Act.
Therefore, a purchaser from the beneficiary of an estate will take title subject to
these matters unless properly cleared.
If the estate of the decedent has been closed, examine the proceeding to ascertain
that all necessary notices have been given, that statutory time periods have
elapsed, and that all death taxes, if due, have been paid. The Probate Act now
provides that in decedents estates (supervised or independent) where there is an
interest in real estate which is not sold or conveyed by the representative, the
representative is required to sign and record a notice of probate. The notice
shall include the decedents name, address, and date of death, together with the
legal description and exact street address of the real estate. In addition, the notice
shall contain the court name and case number to identify the estate, the date the
representative was appointed and the representatives name and address. The
notice must be recorded in the county where the real estate is located before the
representative is discharged.
In the event that any heir or legatee claims title to real estate from a decedents
estate where no notice was recorded, that person may record a notice in
substantially the same form of that required of the decedents representative.
A representative acting in independent administration is allowed to combine the
notice of probate and the 28-10 release in one instrument.

Page 8C-12 ATG Basic Underwriting - Illinois
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Of course, also evaluate the language of the will, if applicable, and consider the
effect of various actions taken by heirs, surviving spouse, and other beneficiaries
during the pendency of the estate. Assuming that all estate matters have been
properly handled, ATG members can insure title in the purchaser from the heirs or
devisees without further requirements. It should also be noted at this point that the
names of all the beneficiaries of the estate should be searched and appropriate
exceptions raised where liens appear.
If, on the other hand, the estate has not been closed, an additional step must be
taken. In addition to his examination of the estate as discussed above, the attorney
must also raise the following exception:
If title is to be derived through a deed by one other than the
personal representative of the estate of *, deceased, during the
pendency of said proceeding, a proper order should be entered
divesting said personal representative of the right and powers
granted under the Probate Act.
For an estate under independent administration the exception should be modified
to read as follows:
If title is to be derived through a deed by one other than the
Independent Representative, an instrument of distribution and
release should be recorded pursuant to 28.10 of the Probate Act
of 1975, as amended.
The bona fide purchaser or mortgagee from a distributee under independent
administration takes his interest free and clear of all claims against the estate,
except death taxes, as long as the instrument of distribution and release has been
recorded and no challenge to the distribution is filed in the probate court. This is
in direct contrast to the situation of beneficiaries of supervised estates who can
convey no greater rights than they have in the land. Thus, in the case of
supervised administration there must be separate clearance for each estate
exception. In independent administration, only death taxes must be cleared
separately (assuming a proper distribution).
2. Sale by Representative: Power of Sale in Will
If the proposed sale is to be made by the personal representative of the decedent
pursuant to a power of sale in the will, ATG member should raise the following
exception on Schedule B of the OMC:
Any conveyance of the land by the Executor/Administrator with
will annexed should recite that the same is executed pursuant to
the power and authority vested in said representative by the Last
Will and Testament of *, deceased, and should recite therein the
full consideration for which it is given. In addition, the aforesaid
personal representative should file the bond required by 12-9 of
the Probate Act. (Delete incorrect reference).
ATG Basic Underwriting - Illinois Page 8C-13
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The bond called for in the second sentence of this exception need not be filed and
the sentence may be deleted where the personal representative is a corporation
qualified to administer trusts in the state of Illinois. Note that the will cannot
relieve the personal representative from the obligation to file the bond but can
waive the surety requirement. However, recent amendments to the Probate Act
provide that where the bond or security is excused by the will, the bond of the
representative shall be increased without writing by double the value of the
personal estate coming from time to time into the hands of the personal
representative from the proceeds of such sale or mortgage, unless the court
requires a written or additional bond to be filed. (Ill. Rev. Stat., c. 110 1/2, 12-
9(d)). Be aware of the following limitations and complications involved in
insuring title through a deed under a power of sale:
a. Death Taxes - 20-15 of the Probate Act accords substantial protection to
purchasers under a power of sale. Such purchasers take title free and clear
of claims against the estate and of the possibility that the will might later
be set aside or the power of the personal representative otherwise later
impaired. However, death taxes must be cleared separately, pursuant to the
procedures set forth under Type of Proceeding, supra.
b. Terms of Will - the will may limit the manner in which the representative
may dispose of the property. Such limiting conditions must be noted and
complied with by the representative.
c. J udgments and Other Liens Against Devisees - these may be waived on a
sale by the personal representative pursuant to a power of sale since title
conveyed relates back to date of death of decedent.
d. Mandatory Power of Sale - when a mandatory power of sale appears in a
will, the title to the realty does not pass to the devisees individually since
the testator intended that they receive only the proceeds of sale. To reduce
confusion ATG member should find title as follows: The Devisees under
the Last Will and Testament of *, deceased and raise the following
exception on Schedule B of the OMC:
This Commitment is made on the assumption that title to
land is to be derived through a conveyance by *,
Executor/Administrator with will annexed, pursuant to the
power of sale conferred under the last will and testament of
*, deceased. (Delete incorrect reference).
After the conveyance is recorded, the exception may be waived.
The beneficiaries or distributees of the proceeds of a mandatory sale may
unanimously agree to take the property rather than the proceeds. While
this arrangement is not binding upon the representative, his consent to it
would allow ATG member to waive the power of sale.
e. Formal Proof of Will - 6-21 of the Probate Act allows an interested party
to demand formal proof of the will within 42 days of the admission of the
decedents will to probate. Since the will is admitted without prior notice

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to the interested parties, it is ATGs position that no purchaser with a deed
pursuant to a power of sale can be insured free and clear of the right to
demand formal proof of will and the consequences thereof. Only if 42
days have passed can ATG member waive the exception set forth at
Supervised Testate, Section (f), supra.
f. Miscellaneous - ATG member must examine the estate to determine that
prior to the exercise of the power of sale and deed that no petition has
been filed to contest the will, that no renunciation has been filed by a
surviving spouse, and that no action has been taken which limits or
challenges the authority of the representative to convey the land.
3. Sale by Representative: Independent Administration
If the proposed sale is to be made by the independent executor/administrator of
the decedent pursuant to 28-8 of the Probate Act, raise the following exception
on Schedule B of the OMC:
If the conveyance is to be made pursuant to 28-8 of the Probate
Act, it should so recite and the full consideration for the same
should be recited.
An independent executor/administrator has powers similar to an
executor/administrator with power of sale under a decedents will. He or she can
sell real property without court approval, even if the decedent died intestate or
died testate with a will containing no power of sale. The power so conferred upon
the independent representative is not unlimited, however. The will itself can limit
the power. If the real estate is specifically bequeathed, no sale, lease or mortgage
can occur without the consent of the devisee. Please see 28-8 of the Probate Act.
ATG members may waive all estate exceptions, except death taxes and the right
to require formal proof of will, upon a conveyance pursuant to 28-8, unless some
other action has been or is taken prior to the conveyance which limits or
challenges the representatives power. Death taxes must be cleared separately and
42 days must elapse subsequent to the admission of the will, if any, to probate.
There is an additional bond for proceeds of sale or mortgage or real estate
required by 12-9 where the independent representative sells pursuant to the
powers of 28-8, unless the bond or security has been excused by the will. Where
the bond has been excused, however, the original bond will be increased, without
writing, to double the amount of the personal estate in the representatives hands,
from time to time, as a result of the sale proceeds. Also, the court may order a
written bond upon such terms as appropriate. (Ill. Rev. Stat., c. 110 1/2, 12-9).
4. Sale by Representative: Decedents Prior Contract to Convey
Paragraph 20.17 of the Probate Act allows a representative to issue a deed to a
purchaser under a contract entered into by the decedent prior to his or her death
upon petition to the probate court. The court must decide on the necessity of
notice to interested parties. If an ATG member encounters such a petition and an
order for deed, he can waive all estate objections, except death taxes and right to
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demand formal proof. Again, death taxes must be cleared separately and 42 days
must elapse subsequent to the admission of the will, if any, to probate.
5. Sale by Representative: No Power of Sale
The above and foregoing sections dealing with sale by representatives all involve
the statutory and testamentary shortcuts available to personal representatives in
dealing with the decedents real estate. If none of these procedures are available,
the representative must file a petition pursuant to 20-4 and must follow the
procedures set forth in 20-5. The following analysis set forth ATGs
requirements to insure title derived through such a proceeding. We will assume
that the decedents death occurred after J uly 1, 1966. If you have any questions
regarding insuring title where title was derived through a sale by a representative
pursuant to court order and the decedent died prior to that date, contact the ATG
underwriting department.
If the ATG members examination of the decedents estate discloses an order of
sale of a parcel of real estate in which the decedent had an interest at the date of
his or her death, then, in addition to normal estate exceptions, the following
exceptions on Schedule B of the OMC must be raised:
1. Order entered on * in Case No. * providing that the land
be sold as provided in said order.
2. Right, title, and interest of *, purchaser of the land as
disclosed by said order.
The attorney must then examine the proceeding in order to determine that the
order of sale was properly entered and must raise appropriate exceptions where
necessary. If all matters are properly disposed of, and a deed of conveyance to a
third-party bona fide purchaser is recorded, all estate exceptions may be waived,
except death taxes. Death taxes must be cleared separately. The following
requirements must be met to insure title through such a sale:
a. Substantive Provisions: 20-4(a) provides that a representative may sell or
mortgage a decedents real estate when necessary for the proper
administration of the decedents estate. 20-4(b) imposes limitations on
this authority by providing that specifically devised real estate or real
estate directed by the testator not to be sold, cannot be sold unless
necessary for the payment of claims, expenses, taxes, or proper
distribution of the estate. Thus, such realty cannot ever be sold for the
management and preservation of the estate. ATG member should also note
24-3, which provides for a statutory priority of gifts and would require
that lower priority gifts be exhausted prior to sale of higher priority assets
for claims, expenses, taxes, and proper distribution.
b. Procedural Steps:
i. Parties
All parties having an interest or lien in the realty must be made
parties. This would include heirs and their lien creditors if the

Page 8C-16 ATG Basic Underwriting - Illinois
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decedent died intestate. If the decedent died testate, the devisees
and their lien creditors are the necessary parties and heirs must be
made parties only if the period to contest the will has not elapsed
or if a will contest complaint has been filed. However, the lien
creditors of the heirs in the testate estate would not be necessary
parties unless and until the will was set aside.
Mortgages and other liens in existence at decedents death must be
satisfied out of the proceeds of the sale or they will not be affected
by the sale. Mortgagees and lien claimants claiming through heirs
or devisees will be eliminated if they are made parties, even if they
are not paid. Persons with unsecured claims against the decedents
estate need not be made parties. ATG members should also be
aware of the special procedures for joining minors, persons under
disability and persons not in being.
Since the petition to sell real estate is a separate proceeding from
the probate of the will, the statute provides that process shall be
issued, served, and returned as in other civil cases. This process is
in addition to the notice mailed to interested parties at the
commencement of the probate proceeding. Generally, service must
be personal unless proper affidavits are filed which would support
service by publication. Of course, necessary parties may choose to
enter their appearance as in other cases.
ii. Petition
The statute requires certain allegations for a proper petition. It
must state the facts and circumstances upon which it is founded,
and it must describe the real estate to be sold. It also must state the
approximate value of the land, describe the interest of the decedent
therein and the nature and extent of all liens and other interest
therein. Finally, the proposed contract of sale or mortgage, if
available, must be attached.
iii. Lis Pendens
Ill. Rev. Stat., c. 110, 405 provides for the filing of a lis pendens
notice in a proceeding to sell real estate of a decedent to pay debts.
Although the filing of a lis pendens is not essential to the validity
of the proceeding, a proper filing will cut off creditors of heirs or
devisees, among others, who take their interest after the filing.
Therefore, these parties need not be made parties to the
proceeding, where a proper lis pendens is filed prior to the
perfection of the lien.
iv. Bond
The statute also provides that a 12-9 bond be filed on or before
the entry of an order authorizing a sale or mortgage. Again, that
bond need not necessarily be a written bond. If the bond was
ATG Basic Underwriting - Illinois Page 8C-17
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excused by the will, then the original bond will be automatically
excused. (See 12-9(a)). The requirements for this bond are the
same as that for the bond required when a power of sale is
exercised. Please see Sale by Representative: Power of Sale in
Will, supra.
v. Order
The court has authority to do any number of things in its order
including but not limited to, determining questions or conflicting
claims to title between parties to the action, removing clouds on
title, providing payment of existing mortgages, determining the
place and manner of sale, public or private, and the terms of
financing.
vi. Report of Sale
No report of sale is necessary where the proposed contract of sale
was part of the petition to sell. If the sale was a public sale, it must
be in compliance with 20-7(b) and must be confirmed by the
court upon hearing, with such notice as the court may direct.
vii. Deed
As with any deed executed by a personal representative, the
conveyance by the representative should recite the source of the
power and authority of the representative to convey and it should
recite the actual consideration for sale.
viii. Right to Appeal
If the property is purchased by a third party bona fide purchaser
(not a party to the proceeding), ATG member need not raise an
exception for rights of appeal if thirty days have elapsed since the
last order in the proceeding and no appeal has been filed. This
would usually be the order confirming the sale, if there had been a
public sale. ATG members should also note that parties served by
publication do not have the extended period to re-open a default
judgment available in other civil cases. See 1-6 of the Probate
Act.






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CHAPTER 9A FINANCING AND SECURED INTERESTS:
FUTURE ADVANCES


NOTE: This subchapter, Financing and Secured Interests: Future Advances, is reserved.








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CHAPTER 9B FINANCING AND SECURED INTERESTS:
INSTALLMENT CONTRACTS


I. INTRODUCTION
Often a party will purchase real estate on contract from the owner. The parties will enter into a
long-term installment contract, often called articles of agreement, which will permit the
purchaser to go into possession of the real estate while the seller retains the fee simple title. Such
a contract will call for periodic payments and upon completion of the payment schedule, a deed
will then be delivered conveying the property from the seller to the buyer. There are numerous
variations in the terms of such contracts, but the concept of the seller retaining title while the
buyer takes possession is the essential element of such transactions.
II. INTERESTS OF SELLER AND BUYER
It is clear under Illinois law that the buyer obtains a real property interest in the land through the
doctrine of equitable conversion.
1
The real property interest of the contract purchaser is subject
to the imposition of liens. Therefore, a commitment or policy must disclose any liens filed
against the contract purchaser such as judgment liens, state and federal tax liens, mechanics
liens, mortgages, and other encumbrances. Naturally, since the contract seller remains the fee
simple titleholder, all liens imposed against him also become liens against the subject property.
Since the agreement for deed establishes a real property interest in the contract purchaser, it is in
the contract purchasers best interest to see that the contract or a memorandum thereof is
recorded. Such a memorandum would give constructive notice to third parties of the contract
purchasers interest and, therefore, will have the effect of subordinating most later liens filed
against the contract seller to the interest of the contract purchaser. Exceptions would be
mechanics liens, taxes, and special assessments, which would be superior to the contract
purchasers interest. Actual physical possession of residential real estate by the contract
purchaser also constitutes constructive notice of his interest in the real estate.
III. PREPARATION OF THE POLICY
In preparing a policy for a transaction involving an agreement for deed, ATG only insures the
interest of the contract purchaser. It is not appropriate to prepare a policy insuring both the
contract seller and contract purchaser, as their interests may appear. Instead, the following
guidelines should be used in the preparation of contract purchasers commitments and policies:
A. In Schedule A, Item 1 of the title insurance commitment or policy, after the name of the
Insured, the following words should be added, as contract purchaser(s).
B. In Item 2 of Schedule A of the policy the words is a fee simple should be marked out
and the following should be inserted: are the rights of [a] contract purchaser(s).
C. Do not issue a contract purchasers policy in the names of the contract seller and contract
purchaser as their interests may appear. Only the contract purchaser should be the
named Insured.

Page 9B-2 ATG Basic Underwriting - Illinois
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D. All agreements for deed or memoranda must be set out as exceptions in Schedule B of the
policy, regardless of whether recorded or unrecorded. The following language is
suggested where a memorandum has been recorded:
Terms and conditions of that Agreement for Deed dated * recorded on *
as Document No. * (in Book *, Page *).
If no recording takes place, the following language is suggested:
Terms and Conditions of an unrecorded Agreement for Deed dated *, by
and between *, as contract seller, and *, as contract purchaser.
An exception may also be included in Schedule B of a commitment for a contract
purchasers policy. This exception should refer to the agreement for deed or
memorandum to be executed and to be recorded.
E. ATG has prepared two contract purchasers endorsement forms which may be used in
appropriate circumstances when the purchaser requests such coverage.
1. Contract Purchasers Endorsement A is to be used only on residential real estate
and is only effective so long as the Insured contract purchaser is in the actual
physical possession of the residential property. Recording of the contract is not a
requirement for use of this form.
2. Contract Purchasers Endorsement B may be used on either residential or
commercial property but only where the contract, or a memorandum thereof, is
recorded.
3. If neither the contract nor a memorandum thereof is recorded and the property is
not residential property occupied by the purchaser neither of the endorsements
can be used and the following exception must be added to Schedule B:
Consequences, if any, by reason of the failure to record either the Agreement for Deed or
a memorandum thereof.
The contract purchasers endorsements provide additional coverage to the contract
purchaser and can only be used in strict compliance with the above rules. It is not
necessary to issue such an endorsement on each contract purchaser policy. However,
upon request, the appropriate endorsement may be issued.
Please note that all liens, encumbrances, and defects in existence as of the effective date
of the contract purchasers policy created or suffered by either the contract seller or the
contract purchaser must be disclosed as exceptions on Schedule B of the final policy.
Therefore, the title search must be conducted in names of both the contract seller and the
contract purchaser.
At the time of the closing on the contract to purchase, the contract purchaser is given a
title policy. Do not issue only a commitment and leave that commitment open until
completion of the contract. Instead, issue the contract purchasers policy and charge the
applicable rate as would be charged for a standard Owner Policy. Upon completion of the
contract, a new Owner Policy should be issued. This will be a standard policy now
insuring the contract purchaser as the fee simple title holder. Of course, such a policy
ATG Basic Underwriting - Illinois Page 9B-3
ATG
would be issued after delivery and recording of the deed from the contract seller to the
contract purchaser. The underwriting fee for such a policy is only the minimum policy
charge when the named Insured under the Owner Policy is the same person as the named
Insured under the contract purchasers policy and the Amount of Insurance remains the
same. An updated title search would have to be conducted from the date of the prior
contract purchasers policy through the date of the recording of the deed.
IV. TERMINATION OF THE CONTRACT
It sometimes happens that a contract purchaser is unable to keep up with the periodic payments
required under the contract. When this occurs, the seller will want to terminate the contract
generally in one of three ways. First, there can be a mutual rescission of the contract wherein the
seller and buyer agree to terminate the contract. In a true rescission, the parties are placed back in
the status quo ante as if the contract never existed. Therefore, the contract seller should refund
the monies paid less a reasonable rental value for the property. The contract purchaser would
then deliver a quitclaim deed or other document indicating the release of his interest in the
contract. If the contract was recorded, the quitclaim deed or other document of release should
also be recorded. If the contract was not recorded, then, likewise, the quitclaim deed or other
document need not be recorded.
Many times, however, there will be no refund by the seller of payment he has received from the
buyer. If the contract purchaser is agreeable, he may voluntarily execute a quitclaim deed and
relinquish possession of the property thereby evidencing the release of his interest in the
property. This is somewhat like a deed in lieu of foreclosure and the same dangers are apparent.
First, there may be a question as to the fairness of the transaction, which effectively forfeits the
contract purchasers interest in the property. Also, since this is a voluntary conveyance, any lien
that is attached to the contract purchasers interest in the real estate would remain as a lien on the
property subsequent to the reconveyance to the contract seller. Therefore, extreme caution should
be used anytime there is a voluntary reconveyance of the property by the contract purchaser to
the contract seller. Contact the ATG underwriting department to review the facts of the specific
case in order to receive authority to issue a policy in the event the contract seller wishes to
reconvey the property to a third party.
More often, the contract purchaser will not cooperate in the termination of the contract. In this
situation, the contract seller will attempt to forfeit the buyers interest in the contract. The seller
will first send a warning notice in accordance with the terms of the contract which will generally
provide for a 30day period for the contract purchaser to make payment. If payment is not made, a
declaration of forfeiture will then be sent to the buyer and also recorded. The warning notice and
declaration of forfeiture must be sent not only to the defaulting purchaser, but also to any party
claiming an interest under him. This would include a mortgagee, judgment creditor, or other
lienholder. Strict compliance with the terms of the contract is required and you must review the
contract, the warning notice, and the declaration of forfeiture. Since courts abhor forfeitures, the
procedures for termination of a contract will be strictly construed against the seller. Therefore,
any time you are dealing with the forfeiture of an installment contract, contact the ATG
underwriting department to discuss the matter fully.
The 1986 Illinois Mortgage Foreclosure Act requires that all real estate installment contracts for
residential real estate entered into on or after J uly 1, 1987 must be foreclosed under the Act if the
purchase price is to be paid in installments over a period in excess of five years and the amount
unpaid under the terms of the contract at the time of the filing of the foreclosure complaint is less
than 80 percent of the original purchase price as stated in the contract. Therefore, when these

Page 9B-4 ATG Basic Underwriting - Illinois
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facts exist, default notice procedures cannot be followed, and there must be a judicial action filed
under the Foreclosure Act in order to terminate the interest of the contract purchaser.
Furthermore, 9110 of the Forcible Entry and Detainer Act provides that if a contract of sale of
real estate was entered into after J uly 1, 1962, the court may stay the enforcement of the
judgment for possession of the property for a period not to exceed 60 days from the date of the
judgment. The statute further provides that if the unpaid balance of the contract is less than 75
percent of the purchase price, the court shall stay the enforcement of the judgment for a period of
180 days from the date of the judgment. Therefore, if possession of the property is not
relinquished to the seller and a forcible entry and detainer action must be brought to regain
possession, the court is free to grant a 60day redemption period in any contract sale situation and
must permit a 180day redemption period if the purchaser has paid more than 25 percent of the
purchase price. There is no case law indicating whether or not these redemption periods, which
exist under the Forcible Entry and Detainer Act, would apply if no such action has been filed.
However, ATG has taken a conservative position on the right of the contract seller to terminate
the interest of the contract purchaser where more than 25 percent of the purchase price has been
paid without extending a redemption period. Therefore, in the event that more than 25 percent of
the purchase price has been paid to the contract seller, the attorney must contact the ATG
underwriting department before issuing a title commitment or policy insuring the interest of a
third-party purchaser from the contract seller. Also, if the contract was entered into on or after
J uly 1, 1987, a foreclosure action may be required as outlined above.

1
See, Shay v. Penrose, 25 Ill. 2d 447, 185 N.E.2d 218 (1962)
ATG Basic Underwriting - Illinois Page 9B-5
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EXHIBIT 9B-1: INSTALLMENT CONTRACT PURCHASERS ENDORSEMENT A


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EXHIBIT 9B-2: INSTALLMENT CONTRACT PURCHASERS ENDORSEMENT B











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CHAPTER 9C FINANCING AND SECURED INTERESTS:
MORTGAGES

NOTE: This subchapter, Financing and Secured Interests: Mortgages, is reserved.














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ATG Basic Underwriting - Illinois Page 9D-1
ATG
CHAPTER 9D FINANCING AND SECURED INTERESTS:
REVOLVING CREDIT MORTGAGES


I. ENABLING LEGISLATION
Under Illinois law a bank may engage in making revolving credit loans secured by mortgages or
deeds of trust on real property or by security assignments of beneficial interest in land trusts.
1

The statute further provides:
Any mortgage or deed of trust given to secure a revolving credit loan may, and
when so expressed therein shall, secure not only the existing indebtedness, but
also such future advances, whether such advances are obligatory or made at the
option of the lender, or otherwise, as are made within twenty years of the date
thereof to the same extent as if such future advances are made on the date of the
execution of such mortgage or deed of trust, although there may be no advance
made at the time of execution of such mortgage or other instrument, although
there may be no indebtedness outstanding at the time any advance is made. The
total amount of indebtedness that may be so secured may increase or decrease
from time to time, but the total unpaid balance so secured at any one time shall
not exceed a maximum principal amount which must be specified in such
mortgage or deed of trust, plus interest thereon, and any disbursements made for
the payment of taxes, special assessments, or insurance on said real property,
with interest on such disbursements.
II. REVOLVING CREDIT - GENERALLY
With the above-cited enabling legislation, banks in Illinois are authorized to enter into revolving
credit mortgage transactions. In order to determine what constitutes an approved revolving credit
arrangement, the statute states that revolving credit:
means any arrangement,between lender and debtor pursuant to which it is
contemplated or provided that lender may from time to time make loans or
advances to or from the account of the debtor through the means of drafts, items,
orders for the payment of money, evidence of debt or similar written instruments,
whether or not negotiable, signed by the debtor which loans or advancements
are charged to an account in respect to which the lender is to render bills or
statements to the debtor at regular intervals the amount of which bills or
statements is payable by and due from the debtor on a specific date in such bill or
statement or at debtors option, may be payable by the debtor in installments. A
revolving credit arrangement which grants the debtor a line of credit in excess of
$5,000 may include provisions granting the lender a security interest in real
property or in a beneficial interest in a land trust to secure amounts of credit
extended by the lender
2

The lender must comply with the federal truth-in-lending legislation and the lender shall agree
to pay all expenses, including recording fees and otherwise, to release any such security interest
of record whenever it no longer secures any credit under revolving credit arrangements.
3


Page 9D-2 ATG Basic Underwriting - Illinois
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In order for revolving credit arrangements to be considered valid, the following conditions must
be met:
A. On or before the date when a bill or statement is first given to the debtor, the lender must
mail or deliver to the debtor a written description of the conditions under which the
charge for interest may be made and the method, including the rate, of computing these
interest charges. The rate of interest must be expressed as an annual percentage rate.
B. If during any billing cycle any debit or credit entry is made to the debtors revolving
credit account, and if at the end of the billing cycle there is an unpaid balance owing to
the lender from the debtor, the lender must give the debtor the following information
within a reasonable time after the date of the billing cycle:
1. The unpaid balance at the beginning of the billing cycle.
2. The date and amount of all loans or advances made during the billing cycle,
which information may be supplied by enclosing a copy of the drafts, items,
orders for payment of money, evidences of debt or similar written instruments
presented to the lender during the billing cycle.
3. The payments by the debtor to the lender and any other credit to the debtor during
the billing cycle.
4. The amount of interest and other charges, if any, charged to the debtors account
during the cycle.
5. The amount that must be currently paid by the debtor and the date on which the
amount must be paid in order to avoid a delinquency.
6. The total amount remaining unpaid at the end of the billing cycle and the right of
the debtor to prepay that amount in full without penalty.
7. The information required in (v) and (vi) must be set forth in type of equal size and
equal conspicuousness.
In addition, the lender is required to compute annually the total amount charged to the
debtors account during the year, including service charges, finance charges, later
charges, and other charges authorized by the Act. Upon request, the letter must furnish
such information to the debtor within 30 days after the end of the year, or, if the account
has been terminated, the lender may give such requested information within 30 days after
the termination. Also, the lender must annually inform the buyer of his right to obtain this
information.
No security interest is allowed under the Act, and if any exists it shall be released, if the
buyer pays the total outstanding balance and requests in writing to reduce the line below
the appropriate dollar amount.
III. INTEREST - GENERALLY
The statute provides that any contractual rate agreed upon by the parties would be appropriate.
However, that right is not unfettered. There are significant restrictions on variable rates, which
are set forth in the statute. In addition, the Illinois legislature is very clear that any hidden interest
ATG Basic Underwriting - Illinois Page 9D-3
ATG
charges will be penalized and considered usurious. The Mortgagee Policy does not provide
coverage for loss of priority due to usury law violations.
4
However, lenders sometimes require a
usury endorsement. If requested to issue a usury endorsement for a revolving credit loan, confirm
that no usury violation exists. Contact an ATG underwriter if this situation arises.
In addition, 12 C.F.R. 545.33(f) sets forth certain disclosure requirements that must be given not
later than three business days following the receipt of a written application for a loan that is to be
secured by property occupied by the borrower. The disclosure shall be in one or more documents
other than the loan document and shall be in plain language. The following items must be
addressed in the disclosure document:
A. If the loan contract contains a due-on-sale clause, what rights the bank has under said
clause.
B. If the loan contract authorizes the imposition of a late charge or prepayment penalty, the
amount of charge or penalty or the manner in which it is determined.
C. If the loan contract provides for escrow payments, a clear statement explaining the
purposes of requiring escrow payments.
D. The term to maturity, if known, or the manner in which the term will be established.
E. Initial interest rate, if known, or the manner in which the initial rate will be established.
F. The amount of the initial payment, if known, and an explanation of how the amount of
the payment was determined by reference to the initial loan, and an explanation of how
the amount of the payment is determined by reference to the initial loan balance, the
interest rate, and the term over which the balance is scheduled to be repaid.
G. If the interest rate, the payment, the loan balance, or the term to maturity may be
adjusted, a full explanation of how the adjustments may be made including identification
of the index to be used and how index values may be obtained by the borrower, and how
the adjustment of one item may effect the other.
H. What information will be contained in each notice of adjustment.
I. A description of all contractual contingencies, other than those arising from the
borrowers breach, under which the loan may become due or which may result in a forced
sale of the home.
J . A statement that a large payment will be due at maturity of the loan and the bank is under
no obligation to refinance the loan.
IV. VALIDITY AND PRIORITY OF MORTGAGE
With regard to the priority of such lien, the statute creates something of a dilemma for ATG in
insuring revolving credit transactions. The statute states as follows:
The lien of such mortgage or deed of trust, as to third persons without actual
notice thereof, shall be valid as to all such indebtedness and future advances at
the time said mortgage or deed of trust is filed for record in the office of the
Recorder of Deeds or the Registrar of Title of the county where the real property
described therein is located.
5


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In other words, the mortgage is considered valid between the obligor and obligee even though it
secures advances of money made subsequent to the day of its execution, and, with regard to third
parties, the mortgage is valid from the time it is recorded. Obviously, it is prudent to record these
types of mortgages as soon as possible.
A dilemma results from the ambiguity raised in the statute with regard to the priority accorded to
revolving credit mortgages when there is a subsequent sale of the real estate and the mortgage is
assumed. Specifically, the statute states, any such mortgage or deed in trust shall be valid and
have priority over all subsequent liens and encumbrances, including statutory liens, except taxes
and assessments levied on said property.
6
Since the legislature specifically stated that revolving
credit mortgages shall be valid and have priority over all subsequent liens and encumbrances,
except taxes and assessments, and seemingly excluded subsequent sales, conveyances, and other
dispositions of property, a serious question arises in cases where advancements are made after
the date of a sale, conveyance or other disposition of the property or any part of the property as
to the priority of the lien for such subsequent advances. It could be successfully argued that
subsequent advances are subordinate to matters arising after the sale or transfer of an interest in
the property. This statute specifically includes within the priority language encumbrances, and
presumably, that would include a subsequent mortgage. There is no help in the statutes nor in the
case law to date which aid us on this question of the validity and priority question herein raised.
To that extent, take special note that ATGs revolving credit endorsement specifically excludes
from coverage the priority of the lien therein secured for subsequent advances made (a) after a
sale or transfer of any part of the real estate, (b) ad valorem real estate taxes or assessments, (c)
mechanics liens, (d) bankruptcies, and (e) federal taxes.
V. ATG UNDERWRITING REQUIREMENTS
In order to issue a Revolving Credit Endorsement, acquire representative copies of the bank
forms for review. Specifically, a revolving credit agreement together with the note and mortgage
should be examined in accordance with the requirements for such instruments as set forth above.
If you have any doubt that the proposed Revolving Credit mortgage is insurable, contact the
ATG underwriting department for review.
ATG maintains a list of lenders whose documents have been approved for revolving credit loans.
Contact the ATG underwriting department to see if the lender involved in your transaction has
been approved. If not, you will be requested to send sample forms to ATG for review.


1
205 ILCS 5/5(d)
2
815 ILCS 205/4.1
3
815 ILCS 205/4.1
4
815 ILCS 205/6
5
205 ILCS 615/3-109
6
205 ILCS 615/3-109
ATG Basic Underwriting - Illinois Page 9D-5
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EXHIBIT 9D-1: REVOLVING CREDIT ENDORSEMENT 1


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EXHIBIT 9D-2: REVOLVING CREDIT ENDORSEMENT 2















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ATG Basic Underwriting - Illinois Page 9E-1
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CHAPTER 9E FINANCING AND SECURED INTERESTS:
VARIABLE RATE MORTGAGES


The statute provides that a state bank may receive or contract to receive and collect interest in any
amount or any rate agreed upon by the parties to the revolving credit arrangement. However, 815 ILCS
205/4 provides that no agreement, note, or other instrument evidencing the loan secured by a mortgage
on residential real estate may provide for a change in the contract rate of interest during the term thereof.
In other words, variable rates are not contemplated within the purview of the Illinois Revolving Credit
Act.
However, there is an exception to this prohibition against variable rate loans secured by residential real
estate. In subsection H of the same statute, the Illinois General Assembly states that if the Congress of
the United States authorizes any of its lenders to enter, within limitations, into such mortgage contracts
on residential real estate in which the rate of interest may be changed, then any person, firm, corporation
or entity, not otherwise prohibited by the Congress from entering into revolving credit arrangements
may enter into a contract in which the rate of interest may be changed during the term of the contract,
but with the same limitations. Variable rate home loans have been adopted by the Federal Home Loan
Bank Board in 12 C.F.R., 454.33. These loans must meet the following requirements (and according to
the Illinois exception, so must our revolving credit loans):
1. The loan shall not exceed 40 years with interest payable at least semi-annually.
2. For any home loan secured by the borrower-occupied property, adjustments to the interest rate
shall correspond directly to the movement of an interest rate index on a national or regional
index that measures the rate of inflation or the rate of change in consumer disposable income,
which index is readily available to and verifiable by the borrower and is beyond the control of
the bank.
3. In the case of an open-end line-of-credit loan, notice of a change in the interest rate permitted by
the loan contract (and any resulting change in the payment) need not be given to the buyer.
4. Certain loan-to-value ratios must be maintained.
5. Finally, the loan contract may provide a bank with the right to call the loan due and payable
either after a specified number of years has elapsed following closing or upon the occurrence of a
specified event external to the loan.

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ATG Basic Underwriting - Illinois Page 9E-3
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ATG Basic Underwriting - Illinois Page 10A-1
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CHAPTER 10A LIENS:
ENVIRONMENTAL AND IRPTA


I. ENVIRONMENTAL PROTECTION LIEN ENDORSEMENT
A. General Coverage
Attorneys Title Guaranty Fund, Inc. offers an Environmental Protection Lien
Endorsement for those lenders who request them. The coverage is generally for
residential real estate and specifically insures against loss by reason of lack of priority of
the insured mortgage as it relates to any environmental protection liens which are either
recorded in the recorders office or filed with the records of the United States District
Court for the district where the real estate is situated. Furthermore, coverage is provided
over any such lien created by any state statute which will provide a so-called super lien
(a lien which automatically gains priority over any interest in all real estate owned by the
responsible party simply by reason of legislative fiat), unless the specific statute is
excepted from coverage on the endorsement.
B. Illinois Statutes
Public Act 85-1347, which became effective August 31, 1988 added 1020, 1021.3 and
1021.4 to c. 111 1/2 of Illinois Revised Statutes. This Act could be construed as
establishing a super lien in certain circumstances. These new provisions establish that the
State of Illinois shall have an environmental reclamation lien upon all real property for
which the state has incurred expenses as part of cleanup operations under the Act. The
environmental reclamation lien shall be effective upon the filing of a lien in the office of
the county recorder in the county in which the property lies. The Illinois Environmental
Protection Agency is also required to send notice to the owners of the property in order to
perfect the lien. An environmental reclamation lien shall be superior to all other liens and
encumbrances other than real estate tax liens, except that it shall not be valid as to any
subsequent bona fide purchaser, mortgagee, or other lienor whose rights in the property
arose prior to the filing of notice of the lien. The environmental reclamation lien may be
foreclosed under the same procedures as outlined in Ill. Rev. Stat., c. 110, 15-1501 et
seq.
Because of this statute, ATG has recently amended its Environmental Protection Lien
Endorsement to reflect these statutes under subparagraph (b). A copy of the
Environmental Protection Lien Endorsement is set forth at the end of this chapter.
C. Federal Lien
The federal government also has a statute that could adversely affect title and result in
losses, and subsection (a) of the endorsement provides the coverage which addresses this
concern.

Page 10A-2 ATG Basic Underwriting - Illinois
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1. CERCLA
The Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. Section 9601 et seq.) (hereinafter CERCLA) addresses the problem of
toxic waste and environmental hazards and provides for federal liens to secure
payment of all costs and damages for which a person is liable to the United States
for the cleanup of such wastes and hazards upon the real property (and rights to
such property) belonging to such persons which is subject to or affected by the
removal or remedial action provided for in the Act. (42 U.S.C. 9607(1)(1)).
2. Duration of Federal Lien
The CERCLA lien arises either at the time the costs are first incurred by the
United States acting pursuant to the statute, where the first time is the person
responsible under the Act is notified in writing by certified or registered mail. The
lien continues until the liability for the costs is satisfied or the lien becomes
unenforceable by operation of the statute of limitations described in the Act. (See
9613(g) of the Act, and 9612(d)). (42 U.S.C. 9607(1)(2)).
3. Priority of Federal Lien
These CERCLA liens are subject to the rights of any purchaser, holder of a
security interest, or judgment lien creditor whose interest in the property is
perfected under state law before the notice of the lien is filed. Any such purchaser,
holder of a security interest, or judgment lien creditor shall have the same
protection and defenses, against the CERCLA lien as are afforded under state law
against a judgment lien which arises as of the time of the filing of the notice of
lien imposed by CERCLA. (42 U.S.C. 9607(1)(3)).
4. Filing CERCLA Liens
The CERCLA statute provides for the filing of this notice of lien in the office
specifically designated for the receipt of such CERCLA lien notices as provided
for by state law. In the absence of any specific, designated statutory direction as to
the place of filing a CERCLA lien the notice shall be filed in the office of the
clerk of the United States District Court for the district in which the property is
located. 42 U.S.C. 9607(1)(3)). Governor Thompson signed House Bill 1218
(P.A. 530) which requires that all federal liens (CERCLA, tax and otherwise),
must be recorded in the recorders office for the county in which the property is
located, thereby creating a new federal lien index available to title searchers.
There was, however, a period of time between the enactment of this statute and
enactment of the CERCLA statute where a federal lien would be perfected simply
by placing notice in the clerks office for the U.S. District Court for the county
where the real estate was located. In other words, up until the effective date of the
Illinois statute creating the federal lien index, any CERCLA lien which came into
existence prior to that time would have to have been filed in the district clerks
office. We are not requiring members to search the district clerks office at this
time.
ATG Basic Underwriting - Illinois Page 10A-3
ATG
D. ATG Underwriting Requirements
1. Residential Mortgage Policies
ATG is requiring a judgment and lien search of the county records, which should
now include a review of the federal lien index. Federal environmental liens will
appear in this index, now, rather than in the Federal District Clerks office.
Member attorneys may issue this endorsement, when requested, on mortgagee
policies in residential real estate transactions.
ATG has the Environmental Protection Lien Endorsement available. Sometimes it
is referred to as Environmental Protection Lien Endorsement 8.1 (ALTA form
8.1). Environmental Protection Lien Endorsement 8.0 has been discontinued and
must not be used.
An ATG policy is a standard form American Land Title Association (ALTA)
policy where environmental risks are excluded from coverage generally under
paragraph one of the Exclusions from Coverage.
If an ATG member discovers an Environmental Lien at any point in the chain of
title, the lien must be raised in the commitment and policy, whether it is released
or not with the following exception:
Environmental lien filed by * against * on (date) as Document No.
* (in Book * Page *) in the office of the Recorder of * County,
Illinois, in the sum of $*.
The new 1987 ALTA form policies specifically exclude environmental protection
matters from coverage, except to the extent that a notice of a defect, lien, or
encumbrance resulting from a violation or alleged violation affecting the land has
been recorded at Date of Policy. This exception to the Exclusions from
Coverage is not limited in time or scope. Moreover, it is not limited only to title
matters that have been recorded, but is address to any defect, lien, or encumbrance
that affects the land. Therefore, we now require ATG members to search the
federal lien index for each property from 1987 (the date CERCLA and SARA
liens were required to be filed in recorders office) forward on each property.
State environmental liens have no special index, but any such lien should have
been previously recorded in the chain of title. An ATG member must closely
review the prior title evidence to determine the existence or absence of a state or
federal lien for environmental cleanup liability. If there is such a lien in the chain
of title, even if it is released, we must show it (because our new policies give that
assurance). By a special endorsement we may be able to insure over such a lien
that was released. Please contact an ATG underwriter for the language we will
approve for each such endorsement.
If such a lien appears at any point in the chain of title, and the mortgagee has
requested an Environmental Protection Lien Endorsement (ALTA 8.1), then raise
the lien on Schedule B of the commitment and contact an ATG underwriter so
that we can review the facts and approve the issuance of the endorsement on the
policy. This endorsement gives coverage against environmental liens except those

Page 10A-4 ATG Basic Underwriting - Illinois
ATG
shown on Schedule B. Obviously, then, if there is such a lien, we must raise it as a
special exception so as to limit our exposure.
If a lender requests an Environmental Protection Lien Endorsement and an ATG
member is aware of an environmental risk which has not yet created a lien of
record, contact an ATG underwriter for instructions. If the property was or is used
as commercial real estate, an ATG underwriter may approve the Environmental
Protection Lien Endorsement on a case-by-case basis.
2. Commercial Mortgage Policies
Keep in mind that the Environmental Protection Lien Endorsement is generally to
be used with mortgagee policies that insure residential real estate only. If the
endorsement is requested for use with mortgagee policies insuring commercial
real estate, contact an ATG underwriter for our underwriting requirements before
issuing the endorsement. Information will be needed on present and past uses of
the property. There will be an additional underwriting premium of $1/thousand
for the first $100,000 of coverage and .75/thousand above $100,000 for an
Environmental Protection Lien Endorsement for mortgagee policies on
commercial real estate. For policies above $250,000, contact An ATG for a rate
quotation.
There is no special environmental coverage available for owners policies beyond
the policy language itself, which is fairly expansive in the 1987 form policies. The
Environmental Protection Lien Endorsement insures the priority of a mortgage in
a Mortgagee Policy. The endorsement is not available for an Owner Policy.
II. ENVIRONMENTAL LIENS AND IRPTA DISCLOSURE DOCUMENTS
As a result of the Illinois Responsible Property Transfer Act (IRPTA, Ill. Rev. Stat., c. 30,
1901 et seq.) and various state and federal environmental laws, certain transfers of real property
will be affected by either an IRPTA disclosure document or a lien for clean up costs. These
documents will be discovered in the chain of title prior to the preparation of a commitment or
placed in the chain of title after the commitment is prepared, but before the policy is issued.
The American Land Title Associations title insurance policy excludes coverage for losses
relating to violations or alleged violations of environmental protection laws, except to the extent
that a notice thereof is recorded in the public records at the date of the policy. Title coverage is
expressly excluded for losses that occur due to the exercise of governmental police powers
generally, but expressly for the exercise of police powers in the enforcement of any
environmental law unless a notice of a lien or a notice of a violation or alleged violation is
recorded. Therefore, while a title company excludes liability for losses due to environmental
laws, it does accept the responsibility of reporting any notices of violations of environmental
laws found in the title records.
In that light, an IRPTA disclosure document presents two distinct problems. First of all, it is a
notice that the property is subject to the Illinois Responsible Property Transfer Act, and
presumably, has either underground storage tanks or has chemicals subject to reporting under the
Emergency Planning and Community Right to Know Act. In addition, the disclosure document
may give notice of the possibility of violation of state or federal environmental laws.
ATG Basic Underwriting - Illinois Page 10A-5
ATG
ATG requires that two separate exceptions be raised when a disclosure document is discovered at
any time in the chain of title. If an IRPTA disclosure document is recorded prior to the effective
date of the commitment, the following exceptions must be raised on Schedule B of the
commitment:
Environmental disclosure document for transfer of real property dated *, and
recorded *, as Document No. * [in Book * at Page *] in the Recorders Office of
* County, Illinois [the Disclosure Document Exception]
The bracketed language at the end of each exception should not appear on the commitment.
Both of these exceptions must appear on Schedule B of the Mortgagee and Owner Policy.
Neither exception may be waived or insured over on the Owner Policy. On the Mortgagee Policy
only, the disclosure document exception may be shown to be subordinate to the lien of the
insured mortgage by using Schedule B, Part II as follows:
SCHEDULE B
PART II
In addition to the matters set forth in Part I of this Schedule, the title to the estate
or interest in the land described or referred to in Schedule A is subject to the
following matters, if any be shown, but An ATG insures that these matters are
subordinate to the lien or charge of the insured mortgage upon the estate or
interest:
Environmental Disclosure Document for Transfer of Real Property dated * *, and
recorded *, as Document No. *, [in Book * at Page *] in the Recorders Office of
* County, Illinois.
Schedule B, Part II is prepared by using an ATG continuation sheet and adding this language.
The use of Schedule B, Part II for the disclosure document is only available for the Mortgagee
Policy.
Schedule B, Part II is the only approved method of assuring lenders that the insured mortgage is
superior to the recorded IRPTA document. The fact exception (that the disclosure document
may be notice of a violation of environmental laws) may never be waived, insured over, or
shown as subordinate in Schedule B, Part II at any time, for any reason. Once the IRPTA
document is recorded we are required to report it forever.
In the event that a disclosure document is recorded concurrently with the transaction sought to be
insured (and no other disclosure document or liens have been recorded), these exceptions would
not be shown in the commitment since the disclosure document has not been recorded. These
exceptions would, however, appear on any Mortgagee or Owner Policy issued after the
document was recorded. In this case, as above, Schedule B, Part II may be used in appropriate
circumstances.
III. ENVIRONMENTAL LIENS IN THE CHAIN OF TITLE
In the event that an ATG member finds a lien for environmental clean up in the chain of title, the
following exceptions must be raised on the commitment or on any policy issued thereafter:

Page 10A-6 ATG Basic Underwriting - Illinois
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Lien in favor of *, as disclosed by a lien dated *, and recorded *, as Document
No. *, [in Book * at Page *] in the Recorders Office of * County, Illinois for
expenses incurred in the clean up of the land pursuant to federal, state or local
environmental law [the lien exception]
The fact, as disclosed by the liens recorded *, as Document No. *, [in Book * at
Page *] in the Office of the Recorder of * County, Illinois, that some violation of
environmental protection laws may have or has occurred which may affect the
land. [The fact exception]
Because the title policy provides assurances that all notices of violations or alleged violations of
environmental laws be shown, both the lien exception and the fact exception noted above
must be raised since the lien may also be notice of a violation of an environmental law.
Recorded documents evidencing environmental law violations are not necessarily labeled as
such. For example, mechanics liens may, in effect, disclose environmental law violations by
virtue of clean up expenses claimed by a contractor. Fund members should review mechanics
liens for the type of work done and the name of the contractor. Either of these may give
important clues indicating an environmental law violation. For example, a lien by Acme
Environmental Clean Up Co., Inc. claiming a lien for removing PCBs is a notice of a possible
environmental law violation.
Once an environmental lien has been recorded, and if the lien has been released or foreclosed by
a judicial foreclosure, we must continue to show an exception in any commitment or policy
covering the property that was at one time encumbered by the environmental lien. In those cases,
ATG members must raise the following fact exception for released liens:
The fact, as disclosed by a lien filed by *, that some violation of the environmental
laws was alleged to have occurred which may affect the land. The lien, although
no longer effective as to the land, was recorded *, as Document No. *, [in Book *
at Page *] in the Recorders Office of * County, Illinois.
IV. ENVIRONMENTAL PROTECTION LIEN ENDORSEMENT
The Environmental Protection Lien Endorsement (ALTA 8.1) is designed for use with
Mortgagee Policies on residential real estate only. It is somewhat unlikely that environmental
protection liens or IRPTA disclosure documents will be recorded in a residential chain of title. If
an IRPTA disclosure document is recorded and there is no other lien or encumbrance disclosing
violations or alleged violations of environmental laws, then Fund members may issue the
Environmental Protection Lien Endorsement (ALTA 8.1). If a federal lien is discovered in the
chain of title at any time, an ATG member may issue the Environmental Lien Protection
Endorsement (ALTA 8.1) so long as the proper Schedule B exception is raised, as discussed
above. If an unreleased state lien is discovered, ATG members are not allowed to issue the
Environmental Protection Lien Endorsement (ALTA 8.1). If a released state or federal lien is
discovered, then an ATG member may issue an Environmental Protection Lien Endorsement
ALTA (8.1), so long as the appropriate Schedule B exception is raised as discussed above.
Without prior ATG approval, no ATG member is authorized to issue an Environmental
Protection Lien Endorsement on commercial property. An Environmental Protection Lien
Endorsement may be available for commercial property, even where there is a recorded lien or
disclosure document in the chain of title, but only with prior ATG approval, and with the
payment of an additional underwriting premium, if necessary.
ATG Basic Underwriting - Illinois Page 10A-7
ATG
If you have any questions about this, please contact the ATG underwriting department.

Page 10A-8 ATG Basic Underwriting - Illinois
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ATG Basic Underwriting - Illinois Page 10A-9
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ATG Basic Underwriting - Illinois Page 10B-1
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CHAPTER 10B LIENS:
ILLINOIS TAX AND MISELLANEOUS


I. ILLINOIS INCOME TAX LIENS (ILL. REV. STAT., C. 120, 11-1101 ET SEQ.)
The Illinois Income Tax Act creates a lien upon all real property of a delinquent taxpayer,
including real estate acquired after notice of the lien is filed. However, a notice of lien must be
recorded before the lien is effective against subsequent encumbrancers and purchasers. If the
name search of a party presently or previously in title, or the proposed Insured, discloses that a
notice of Illinois income tax lien has been recorded in the county where the land to be insured is
located, an ATG member must raise the following exception on Schedule B of the OMC:
Notice of Lien claimed by the State of Illinois under the provisions of the Illinois
Income Tax Act against * in the sum of $* which Notice was recorded * as
Document No. *, (in Book *, Page *).
This exception may be waived when the lien is released of record, has expired by lapse of time,
or is otherwise discharged.
The lien continues for a period of 20 years after the recording of the notice. However, any lien
recorded prior to September 13, 1979 may be ignored since the law in force prior to September
13, 1984 provided for a five-year lien period. The expanded limitation period under the
Amendatory Act of 1984 applies to all liens that have not expired prior to the effective date of
the Act (September 13, 1984). Of course, members may not waive a lien recorded at any time if
an attempt has been made to enforce the lien by a levy or foreclosure.
II. REPORTING REQUIREMENTS
The Act regulating title insurance companies (Ill. Rev. Stat., c. 73, 478 et seq.) has been
amended to impose new limitations and requirements on title insurers insuring title to land
subject to judgment liens or other liens arising under any tax act administered by the Illinois
Department of Revenue. The amendment adds new paragraph 486(b) to c. 73 of the Illinois
Revised Statutes and was effective on September 9, 1987.
The new paragraph prohibits a title company from establishing a trust fund or other similar
account to insure over or waive a lien in favor of the Illinois Department of Revenue. In other
words, no personal undertaking, title indemnity, or other hold harmless agreement may be used
to insure over or waive such a lien. The lien may now only be waived and only then after it has
been released by the Illinois Department of Revenue. Legislation has been introduced to allow
the creation of such indemnity funds, but has not yet been passed.
In addition, the new paragraph requires that the title company report to the Illinois Department of
Revenue whenever its search made pursuant to a request for application to insure title discloses a
judgment lien or other lien in favor of the Illinois Department of Revenue. A report to the
Department must disclose the name and address of the debtor-taxpayer and the address and legal
description of the property.

Page 10B-2 ATG Basic Underwriting - Illinois
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An ATG member who issues the commitment on land subject to an Illinois tax lien or judgment
lien must complete our form Report of Illinois Revenue Lien and forward it to ATG
Headquarters. A copy of the form is set forth at the end of this chapter. If multiple liens are
disclosed, please use a separate report form for each lien. The report must be mailed to ATG at
the same time that the commitment is issued. ATG will compile the reports and give the statutory
notice to the Illinois Department of Revenue at its Chicago office.
III. RETAILERS OCCUPATION TAX LIEN (SALES TAX - ILL. REV. STAT., C. 120, 444(A) ET SEQ.)
The Illinois Retailers Occupation Tax Act creates a lien upon all real property of a delinquent
taxpayer. However, a notice of lien must be recorded before the lien is effective against
subsequent encumbrancers and purchasers. If the name search of a party presently or previously
in title, or the proposed Insured, discloses that a notice of Illinois Retailers Occupation Tax Lien
has been recorded in the county where the land to be insured is located, an ATG member must
raise the following exception on Schedule B of the OMC:
Notice of Lien claimed by the State of Illinois under the provisions of the
Retailers Occupation Tax Act against * in the sum of $*, which Notice was
recorded * as Document No. *, (in Book *, Page *)
This exception may be waived when the lien is released of record, expired by lapse of time, or
otherwise discharged.
The lien may be enforced for a period of 20 years after the recording of the notice. Any lien
recorded prior to September 13, 1979, may be ignored for the same reason discussed above in
Section I, Illinois Income Tax Liens. However, neither the five-year nor the 20-year period will
run during any period of time in which a court order has the effect of enjoining or restraining the
Department of Revenue from commencing a foreclosure proceeding. Accordingly, an ATG
member should ascertain that the statutory time period has not been tolled by court order (for
example, bankruptcy) before waiving the exception on the basis of time.
IV. PUBLIC AID LIENS (ILL. REV. STAT., C. 23, 3- 10 ET SEQ.)
The Illinois Public Aid Code creates a lien upon all real property of recipients of grants under the
Code in order to secure payment. However, a notice of lien must be recorded before the lien is
effective against subsequent encumbrancers and purchasers. If the name search of a party
presently or previously in title, or the proposed Insured, discloses that a notice of public aid lien
has been recorded in the county where the land to be insured is located, an ATG member must
raise the following exception on Schedule B of the OMC:
Notice of Lien claimed by the State of Illinois under the provisions of Article 3 of
the Public Aid Code against * in the sum of $*, which notice was recorded * as
Document No. *, (in Book *, Page *).
This exception may be waived when the lien is released of record, has expired by lapse of time,
or is otherwise discharged.
This lien may be enforced for a period of four years after the recording of the notice and can be
extended for additional five- year periods upon recording a new notice prior to the expiration of
the current period. An ATG member may waive this exception if five years have passed since the
recording and if no renewal was filed within the five-year period and no attempt has been made
by the state to enforce the lien.
ATG Basic Underwriting - Illinois Page 10B-3
ATG
Unlike a judgment or other lien against a joint tenant, the lien of the Public Aid Act is not
divested by the death of the joint tenant. The filing and approval of an application for public aid
constitutes a severance of the joint tenancy, effective on the date of filing or recording of the
notice of lien. The lien continues on the undivided one-half interest formerly held by the
deceased joint tenant and must be raised as an exception until otherwise cleared. For purposes
other than the enforcement of the public aid lien, the joint tenancy remains in effect and is
unimpaired.
V. UNEMPLOYMENT COMPENSATION CONTRIBUTION LIENS (ILL. REV. STAT., C. 48, 720 ET SEQ.)
The Unemployment Insurance Act creates a lien upon all real property of an employer from
whom contributions are due. However, a notice of lien must be recorded before the lien is
effective against subsequent encumbrancers or purchasers. If the name search of a party
presently or previously in title, or the proposed Insured, discloses that a notice of unemployment
compensation contribution lien has been recorded in the county where the land to be insured is
located, an ATG member must raise the following exception on Schedule B of the OMC:
Notice of Lien claimed by the State of Illinois under the provisions of the
Unemployment Compensation Act against * in the sum of $* which Notice was
recorded * as Document No. *, (in Book *, Page *).
This exception may be waived when the lien is released of record or is otherwise discharged.
However, it may not be waived by reason of lapse of time.
The Unemployment Insurance Act provides that the lien expires three years after the employer
files a report of wages paid, or if no report is filed, three years from the date that the
determination of the amount due and assessment thereof by the Director of Unemployment
Compensation becomes final. Since the public record does not disclose when a report is filed or
when the assessment by the director becomes final, an ATG member cannot determine whether
the limitation period has elapsed. The lien must be satisfied before an ATG member can waive
the exception.
VI. MOBILE HOME PRIVILEGE TAX LIEN (ILL. REV. STAT., C. 120, 1208)
The Mobile Home Local Services Tax Act creates a lien upon the property of a mobile home
owner who fails to pay the tax assessed under the Act. The lien becomes effective as to property
other than the mobile home itself, only from the time of the filing of a notice of lien. If the name
search of a party presently or previously in title, or the proposed Insured, discloses that a notice
of mobile home privilege tax lien has been recorded in the county where the land to be insured is
located, an ATG member must raise the following exception on Schedule B of the OMC:
Notice of Lien claimed by the county of * under the provisions of the Mobile
Home Local Services Tax Act against * in the sum of $*, which Notice was
recorded *, as Document No. *, (in Book *, Page *).
This exception may be waived when the lien is released of record, expired by lapse of time, or
otherwise discharged.
The lien continues for a period of ten years after the recording of the notice. The county can
enforce its lien by civil action and sale. An ATG member may waive this exception if ten years
have passed since the recording and if no attempt has been made to enforce the lien.

Page 10B-4 ATG Basic Underwriting - Illinois
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VII. TORRENS DEPARTMENT OF REVENUE LIENS
Public Act 85-1212, effective August 30, 1988, amends the Torrens Act to make effective
Illinois Department of Revenue Liens that have been filed only with the recorder of deeds.
Illinois law now requires the Torrens office to search Cook County recorders records for
Department of Revenue liens for notices filed on or after J anuary 1, 1988. The Torrens Act
already required a search of the recorders records for federal tax liens.
ATG Basic Underwriting - Illinois Page 10B-5
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ATG Basic Underwriting - Illinois Page 10C-1
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CHAPTER 10C LIENS:
JUDGMENTS


A judgment is a determination by a court of law of the respective rights of the parties to a lawsuit. We
will address the specific type of judgment called a money judgment and the effect of such a judgment
on title to real estate. Other types of judgments (foreclosure, dissolution of marriage, and so on) may
also affect title to real estate but are dealt with elsewhere.
A money judgment arises when a court determines that a party is obligated to another for the payment of
a sum of money. Standing alone, a judgment does not give the judgment creditor rights to any specific
assets of the judgment debtor. In order to obtain rights in the assets of the debtor and to protect himself
or herself from transfers of those assets to third parties, the judgment creditor must convert the judgment
into a lien. In Illinois, a judgment is converted into a lien on real estate by: (1) recording a transcript,
certified copy, or memorandum of judgment or (2) recording a certificate of levy. Ill. Rev. Stat., c. 110,
12-101.
I. CREATION OF JUDGMENT LIENS
A. Transcript, Certified Copy or Memorandum of Judgment
If the name search of a party presently or previously in title or the proposed Insured,
discloses that a transcript, certified copy or memorandum of judgment has been recorded
in the county in which the land to be insured is located, an ATG member must raise the
following exception on Schedule B of the OMC:
Transcript/certified copy/memorandum of judgment recorded on * as
Document No. * (in Book *, Page *) for judgment rendered on * in the *
court of * County, in favor of * against *, in the amount of *.
(Delete inapplicable references.)
This exception may be waived when the judgment is released of record, has expired by
lapse of time, or is otherwise discharged. See, infra.
B. Certificate of Levy
If the name search of a party presently or previously in title, or the tract search, discloses
that a certificate of levy has been recorded in the county in which the land to be insured is
located, an ATG member must raise the following exception on Schedule B of the OMC:
Certificate of Levy recorded * as Document No. * (in Book *, Page *) by
*, pursuant to a judgment dated *, in Case No. *, in the * Court of *
County, in favor of * and against *.
This exception may be waived when the levy is satisfied and released of record, has
expired by lapse of time, or is otherwise resolved.

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II. DURATION OF JUDGMENT LIENS
The lien created by recording a memorandum, transcript, or certified copy of a judgment expires
seven years after the date that the judgment is entered. The judgment may be revised for
additional seven-year periods as long as the revival is made within 20 years of the date the
judgment is entered. The revived judgment is a lien on real estate from the time the
memorandum, transcript, or certified copy of the order of revival is recorded.
The lien created by a levy on the real estate can be enforced by a sale within eight years of the
date of entry of the judgment. This longer term of lien for a levy arises from the fact that the
statute provides that real estate levied upon within seven years, may be sold to enforce the
judgment at any time within one year after the expiration of the seven years. (Ill. Rev. Stat., c.
120, 12-108.) An ATG member should note that the lien of the judgment may be extended
beyond the above described time period upon the occurrences of certain events. For example, if
the judgment debtor dies, the creditor is barred from obtaining enforcement of the judgment for
one year after the death, thus extending the life of the lien. Other events that may toll the statute
of limitations on the judgment include:
A. Bankruptcy of the judgment debtor;
B. Reopening of a default judgment by an order which provides that the judgment entered
previously is to stand as security;
C. A supersedeas appeal.
An ATG member may waive the liens created by the recording of a memorandum, certified
copy, or transcript of judgment, if seven years have elapsed since the date of the entry of the
judgment, the debtor is still alive, and no evidence exists that other tolling events have occurred.
Of course, in either case, if the judgment has been revived, the lien continues for an additional
seven-year period and may not be waived.
III. TERMINATION OF JUDGMENT LIENS
The lien of a judgment may be terminated by lapse of time or by satisfaction, release, or
compromise. A satisfaction may occur by payment to the sheriff upon an execution or upon sale
under levy. The return of the certified copy of judgment, shown satisfied and filed with the clerk,
terminates the lien of the judgment. Payment to the clerk of the court of the amount of the
judgment does not constitute satisfaction. A release must be obtained from the judgment creditor
and his attorney, or an order of satisfaction must be obtained in court.
The attorney of record for the judgment creditor may execute a release as agent for the creditor if
the judgment is paid in full. If any lesser amount is paid, the release must be made by both the
attorney and creditor unless special authority appears of record for the attorney alone to execute
the release. The authority of the attorney to execute a release upon payment in full is terminated
by the death of the client and may be revoked by the client during his or her lifetime. In any
event, the attorney of record must join in the release since he or she may have a lien on the
judgment under the Attorneys Lien Act. (Ill. Rev. Stat., c. 13, 14.)
IV. MISCELLANEOUS JUDGMENT PROBLEMS
A. Similar or Common Names
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If the name search of a party presently or previously in title, or the proposed Insured,
discloses judgments, liens, court proceedings or other matters potentially effecting title to
the real estate, but, due to lack of identifying information, it cannot be determined
whether the matters involve a party in title or in interest, An ATG member should raise
the following exception on Schedule B of the OMC:
We find judgments, liens, and other matters of record involving a person
or persons whose names are similar to *. Relative thereto, a Personal
Information Affidavit establishing the identity of the above described
person must be supplied in order to facilitate the exclusion, if possible of
those items.
If the information disclosed by the affidavit can affirmatively exclude the possibility of
judgments or other matters against the part in title or in interest, the exception may be
waived. It may be necessary for an ATG member to make further inquiry relative to the
name, address, and place of business and so on of the judgment or lien debtor (as
disclosed by the lien document or court proceeding) in order to determine whether he or
she is the party in title or interest under an ATG Commitment. The Personal Information
Affidavit should not be used in lieu of a judgment and name search against a party in title
for interest. A Personal Information Affidavit form is set forth at the end of this chapter.
A related problem is the doctrine of idem sonans. This doctrine holds that not every
variation in the spelling of names is material. Idem sonans depends on pronunciation and
not on spelling. Thus, for example, a memorandum of judgment against J ohn Smith
would be constructive notice as to J ohn Smythe even though the former spelling of the
name was incorrect. An ATG member should be aware of the consequences of the
doctrine and must not waive judgments or other liens solely on the basis of a minor
difference in the spelling of names or even on the basis of major differences if the name
is idem sonans to the name of the party in interest.
B. Federal Court Judgments
Under Federal and Illinois law, the lien of a judgment entered in a United States District
Court in Illinois is created, terminated and revived in the same manner as a judgment
entered in an Illinois state court. The language set forth above may be used to raise an
exception for federal judgments disclosed by the name search.
C. Foreign Judgments
A foreign judgment, as discussed herein, is a judgment rendered outside of the state of
Illinois, but within the United States, which is entitled to full faith and credit. Such a
judgment has no force or effect within the state unless and until it is registered in a court
in Illinois. Registration is accomplished by the filing of a verified petition for registration.
Levy is available immediately upon such a filing, but sale under the levy is postponed
until service of process upon the debtor and his/her opportunity to contest the
enforcement of the judgment.
The registered judgment becomes a lien on real estate when a certified copy of the
verified petition for registration is recorded in the recorders office in the county where
the land is located.

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The judgment creditor has the option of obtaining a new judgment in the Illinois court
based upon the foreign judgment and this judgment is converted to a lien in the same way
as an ordinary money judgment (that is, recording a certified copy, transcript,
memorandum, or certificate of levy).
A judgment rendered by a court outside of the United States (and certain possessions) is
enforceable in the same manner as a foreign judgment outlined above as long as it is
final, conclusive, and enforceable. The statute provides standards to determine whether a
judgment rendered outside of the United States shall be recognized in Illinois. Ill. Rev.
Stat., c. 110, 12- 621.
D. Judgments against Joint Tenants
A judgment entered against one joint tenant may be effective as a lien, in the manner set
forth above, against that joint tenants interest in the real estate. However, on the death of
the debtor joint tenant, the survivor will take the property free of the lien.
The only exception to this rule is the situation where the joint tenancy has been severed
prior to the debtor joint tenants death. Please refer to Chapter 18, II. infra. It might be
noted at this point, however, that neither the attachment of the lien to the debtor joint
tenants interest nor the levy and sale pursuant to the judgment will act as a severance.
Only the execution and delivery of a valid sheriffs deed pursuant to the levy and sale
will effect a severance.
E. Title through Sheriffs Sales
On rare occasions, an ATG member may be requested to insure title passing by reason of
a sheriffs deed subsequent to levy and sale upon a judgment. Such transactions must
conform to highly technical statutory requirements and for that reason, ATG will usually
require that the documentation and proof of compliance with the statute be supplied to the
ATG underwriting department for co-examination before such title may be insured.
F. Torrens
Section 85 of the Torrens Act (Ill. Rev. Stat., c. 30, 122) provides that no judgment shall
be a lien upon or effect Torrens property unless and until a transcript, certified copy or
memorandum of said judgment is filed in the office of the registrar and is entered as a
memorial upon the register of the last certificate of title effected.
G. Judgments and Bankruptcy
A person against whom a judgment or judgments has been entered may very often also be
a party to a bankruptcy proceeding. An ATG member may be requested to waive the lien
of a judgment based upon the fact that the judgment debtor has filed bankruptcy. The
authority of an ATG member to waive or insure over such a judgment depends, first of
all, on the time the discharge was granted in bankruptcy relative to the time the judgment
became a lien on the real estate.
1. Discharge after judgment becomes a lien
If the discharge in bankruptcy was granted after the judgment has attached to the
real estate as a lien, the judgment lien may not be waived or insured over on the
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basis of the discharge. While the personal liability of the debtor may be avoided,
the judgment lien continues to stand as security for the debt and may be enforced
against the real estate during the term of the judgment lien (subject, of course, to
the stay in bankruptcy).
2. Discharge before judgment becomes a lien
If the discharge in bankruptcy was granted before the judgment became a lien (for
example, before the debtor acquired his or her interest in the premises in question)
the judgment lien may be waived if all of the following conditions have been met:
a. The debt underlying the judgment is one dischargeable in bankruptcy;
b. The judgment was properly scheduled in the proceeding;
c. The judgment creditor was given timely notice of the application for
discharge;
d. An order of discharge was entered by the bankruptcy court; and
e. One year or more has elapsed since the later of the date when the
bankruptcy case was closed or the discharge granted.
The requirements of paragraph (a) will be met if the underlying debt is not one of
the types covered under Section 523 of the Bankruptcy Reform Act, exceptions to
discharge. Non-dischargeable obligations include, but are not limited to: (1) taxes;
(2) fraudulently obtained money, property, services or extensions, renewals or
refinances of prior debt; (3) alimony, maintenance or support of a spouse, former
spouse or child; (4) willfully caused injury; (5) educational loans from
government or non-profit institutions of higher education; (6) fines; or (7) fraud or
defalcation while acting in a fiduciary capacity or any embezzlement or larceny.
An ATG member must obtain proof of the nature of the debt and determine its
dischargeability before waiving the judgment.
Paragraphs (b), (c), and (d) are self-explanatory and the bankruptcy file must be
consulted to see that such actions have been taken. Paragraph (e) arises from
Section 727(e) of the Bankruptcy Act, which allows revocation of a discharge
within one year of the closing of the case or the discharge if the debtor failed to
disclose assets or failed to comply with court orders in bankruptcy. The
subsection also allows the discharge to be revoked within one year after it is
granted if the discharge was obtained through the fraud of the debtor and the
creditor was unaware of the fraud when the discharge was granted.













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CHAPTER 10D LIENS:
MECHANICS


I. MECHANICS LIEN ACT
By statute, parties supplying labor or materials for construction of improvements to real property
are granted special lien priority rights under the Mechanics Lien Act. Ill. Rev. Stat., c. 82, 1-
39. All rights accruing to contractors, subcontractors, and suppliers are created by statute. There
is no common law right to a mechanics lien. Paragraph 1 of c. 82 provides that any person who
has a contract, expressed, or implied, with the owner or the owners authorized agent to furnish
materials, to improve a tract of land or manage a structure thereon shall have a lien upon the
entire tract of real estate for the amount of such work or materials. The Act specifically grants
mechanics lien rights to those who in addition to providing labor or materials for the
construction of improvements also provide landscaping or excavation work, perform services as
an architect, structural engineer, professional engineer, land surveyor, or property manager. The
significance of the lien is that it attaches as of the date of the contract with the owner of the
property. Ill. Rev. Stat., c. 82, 1. Perfection of the lien, however, may occur anytime up to four
months after completion of work on the project. Ill. Rev. Stat., c. 82, 7. Therefore, there is an
extreme danger that a mortgage or transfer of the property could occur at a time when no lien is
of record, but a subsequently filed lien could have priority over the intervening transfer mortgage
or other interest. This requires utmost care by an ATG member to avoid the possible creation of
such a superior lien.
The standard tool for monitoring information on the possible creation of mechanics liens is the
contractors sworn statement as provided for in 5 of c. 82. That section provides: It shall be the
duty of the contractor to give the owner, and the duty of the owner to require of the contractor
before the owner shall pay said contractor a statement in writing, under oath or verified
by affidavit, of the names and addresses of all parties furnishing materials and labor, and of the
amounts due or to become due each. Similarly, a sub-contractor hiring a sub-subcontractor or
buying materials from an outside source, must also supply a Section 5 affidavit.
Paragraph 7 of the Act provides that no contractor shall be allowed to enforce a mechanics lien
against any other creditor, encumbrancer or purchaser unless within four months after
completion of the work, the contractor shall either bring an action to enforce the lien or file in the
office of the recorder of the county in which the real estate is located a claim for lien, verified by
the affidavit of the contractor. The notice must contain a brief statement of the contract, the
balance due and an adequate description of the lot. Subcontractors must also send written notice
by certified or registered mail to the owner within ninety days of completing their work or
delivering materials in order to preserve their lien. Ill. Rev. Stat. c. 82, 24. Any suit to enforce a
mechanics lien must be filed within two years after the completion of the contract. Ill. Rev. Stat.,
c. 82, 9.
A special requirement is set forth in 5 which places a duty on subcontractors for an existing
owner-occupied, single-family residence to notify the occupant of their work either personally or
by certified mail, return receipt requested, within fourteen days from the first furnishing of
materials or labor. Any notice given after fourteen days by the subcontractor shall preserve the

Page 10D-2 ATG Basic Underwriting - Illinois
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lien, but only to the extent that the owner has not been prejudiced by payments made prior to
receipt of the notice. Ill. Rev. Stat., c. 82 5, and 21.
The Mechanics Lien Act also provides a degree of protection to the owner or other party
interested in the real estate to assist them in removing liens which may not be enforceable.
Paragraph 34 of the Act provides that upon written demand of the owner or other party interested
in the real estate served on the person claiming the lien requiring that suit be commenced to
enforce the lien, suit must be commenced within thirty days of the registered or certified mail
demand or the lien shall be forfeited. Paragraph 35 of the Act provides that whenever a lien is
paid, the person filing the lien must deliver a release of lien in writing to the owner within thirty
days after receipt of payment or shall be liable to the owner for the sum of $100.00.
Another priority problem arises from the operation of Illinois law with respect to mortgages. Ill.
Rev. Stat., c. 30, 37a, provides that, as to subsequent purchasers, a mortgage shall be a lien only
from the time money is advanced. While the statute gives priority to obligatory advances and
advances made within 18 months of recordation of the mortgage, liens arising during the period
before the mortgage is fully disbursed can cause priority problems for the mortgage.
Fund members are frequently requested to insure mortgages made during or after the erection of
new improvements, or the renovation of existing improvements, on the property to be insured.
Similarly, members are sometimes requested to give extended coverage (i.e., waiving Standard
Exception No. 4, among others) for owners policies when new construction is involved. In
either case, substantial risk is involved for An ATG because of the statutory priorities accorded
to mechanics lien claimants under Illinois law. In the case of a mortgage disbursed in stages
over a period of time (e.g., a construction loan), problems can arise because of liens which
attach prior to full disbursement of the loan. Coverage in either event can only be given in strict
compliance with this chapter. Any variation from these procedures requires the advance approval
of an ATG underwriter.
II. ATGS REQUIREMENTS
While the above rules sound straightforward, dealing in the area of mechanics lien is extremely
complex and difficult. For the sale of real estate with existing improvements, the members
obligations are fairly simple. First, Standard Exception 4 that appears in Schedule B of the
Owner Policy provides that there is no coverage under the policy for any lien, or right to a lien,
for services, labor, or material heretofore or hereafter furnished, imposed by law, and not shown
by the public records. Therefore, under the standard Owner Policy, no mechanics lien coverage
is provided. Naturally, if a mechanics lien is discovered, it must be raised as a Schedule B
exception. The following language should be used:
Mechanics lien filed by * against * on * as Document No. * (in Book *, Page *)
in the sum of *.
As noted above, suit must be filed within two years after completion of the work or the lien will
expire. Unfortunately, we cannot rely absolutely on the two-year statute of limitations since there
are matters that could toll the limitations period, thereby extending the lien beyond the two-year
period. The most striking example of the tolling of the limitations period is found in the case of
Garbe Iron Works, Inc. v. Priester, 99 Ill.2d 84, 75 Ill. Dec. 428, 457 N.E.2d 422 (1983). In that
case, the court held that the bankruptcy filed by the contractor, who was a necessary party in a
subcontractors action to enforce a subcontractors mechanics lien, extended the time the
subcontractor had to file suit. Therefore, the bankruptcy of the contractor or subcontractor who is
a necessary party in a mechanics lien foreclosure action tolls the limitation period. It is
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extremely unlikely that there would be any notice, actual or constructive, of such bankruptcy
filings. Therefore, there is a hidden danger that the right to enforce the mechanics lien exists
beyond the two-year statute of limitations.
ATG will not require the examination of bankruptcy filings in every case to determine whether
the contractor or any subcontractor has filed bankruptcy. Instead, we have established the
following guidelines that you can rely on in your examinations. First, we will not allow the
waiver of a mechanics lien discovered in a title search or listed on a prior policy until that
mechanics lien is at least two years and six months old. You need not raise as an exception
mechanics liens that are more than two years and six months old but less than five years old
where the amount of the lien is $3,500 or less. For liens more than $3,500 but less than $10,000,
the lien must be at least five years old before it can be waived as an exception. For all liens
above $10,000 or that do not otherwise fit within these guidelines, please contact the ATG
underwriting department for specific instructions.
If the standard Owner Policy is to be issued, no further action need be taken other than checking
the public records to make sure that there is no mechanics lien of record as of the effective date
of the policy. However, the Mortgagee Policy (MPA form) does provide mechanics lien
coverage to the lender since all five Standard Exceptions are deleted from Schedule B of the
MPA and insuring provision 7 affirmatively provides coverage for any loss arising by reason of
any statutory lien for labor or material which now has gained or hereafter may gain priority over
the lien of the insured mortgage, except any such lien arising from an improvement on the land
contracted for and commenced subsequent to the Effective Date of Policy. Furthermore, if a
standard waiver endorsement is issued for the Owner Policy, ATG would also be providing
coverage against loss by reason of mechanics liens.
In order to issue any MPA form or an extended coverage Owner Policy (waiver of the Standard
Exceptions), you must obtain, at a minimum, a composite mortgage statement (Funds equivalent
of an ALTA statement) signed by the buyer, the seller, and the lender. Paragraph 2 of the
composite mortgage statement provides:
That within the last four months, including the date hereof, no improvements or
repairs have been made on the land or upon any building on said land, nor any
work done thereon which have or has not been fully paid for, nor have any
materials which have not been fully paid for been furnished within said four
months for use upon said land or any building thereon, and that no contract of
any kind has been made, nor anything done, suffered or permitted, in relation to
said land or any building thereon or improvements thereof, in consequence of
which any lien or claim may be enforced against said land, building thereon or
presently contemplate use of part or all of the loan proceeds to pay for labor or
materials in making any improvements or repairs on the premises.
The composite mortgage statement can only be used in transfers of real property containing
existing structures. If the property ATG is asked to insure is new construction, including the
addition or improvement of existing structures, the following exception must be set forth on the
commitment:
New Construction
ATG must be provided with properly executed sworn contractors statements,
sub-contractors statements, and final lien waivers along with proof of proper

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disbursement of any loan funds used for improvement of the land or the policy
when issued will be subject to the following:
1. Any lien, or right to a lien, for services, labor, or material heretofore or
hereafter furnished imposed by law and not shown by the public records.
2. Consequences of the failure of the lender to pay out properly the whole or
any part of the loan secured by the mortgage described in Schedule A as
affecting: (i) the validity of the lien of said mortgage; and (ii) the priority
of the lien over any other right, claim, lien or encumbrance which has or
may become superior to the lien of the mortgage before the disbursement
of the entire proceeds of the loan.
This exception can be waived only upon examination of the general contractors and sub-
contractors sworn statements and final lien waivers from all subcontractors and suppliers
showing full payment of all amounts owing. An ATG member must also determine that the loan
proceeds have been fully and properly disbursed. In order to satisfy the above exception, an ATG
member must obtain and examine the following materials:
A. An Owners Statement, under oath, setting forth:
1. the names of all parties with whom the owner contracted for the furnishing of
labor and material in connection with the improvements, and;
2. the nature of each contract and the amount paid or to be paid thereunder.
B. A General Contractors Statement from each of the parties named in the Owners
Statement which should:
1. set forth the full name of the general contractor and the name of the party with
whom the contractor agreed to furnish labor and material in connection with the
improvement;
2. identify the land by its legal description or street address;
3. describe the improvements;
4. set forth the name of and the actual amount (not the estimated amount) due to
each subcontractor and materialmen, the total amount paid to each at the date of
the statement, and the balance due, if any;
5. bear a current date;
6. be properly signed by the general contractor, and;
7. be notarized.
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C. A Subcontractors Statement from each subcontractor named on the general
contractors statement which should:
1. set forth the full name of the subcontractor and the name of the party with whom
the subcontractor agreed to furnish labor and material in connection with the
improvements;
2. identify the land by its legal description or its street address;
3. describe the nature of the work or material to be furnished by the subcontractor;
4. set forth the names of their sub-subcontractors and materialmen, describe the type
and amount of work or material furnished or to be furnished by each, and set forth
the total amount paid to each at the date of the statement and the balance due
them, if any;
5. bear a current date or the date of completion of the subcontract;
6. be properly signed by the subcontractor making the statement, and;
7. be notarized.
NOTE: In the case of a single family-dwelling with a total value of less than
$150,000, subcontractors statements need be obtained from the following
trades only: (a) Concrete, (b) Masonry, (c) Carpentry, (d) Plastering or
Drywall, (e) Plumbing, (f) Septic and Well System, (g) Heating, (h) Air
Conditioning, and (i) Electrical.
NOTE: If all or part of the subcontractors material is from his stock, his
affidavit (not wavier) should recite: All (or all other) material was taken from
my open stock and delivered to the job site by my own truck, and the
following are the names of those parties who furnished said material:
Names Material furnished Amount Balance due, if any.
D. Final waivers from the general contractor and all the subcontractors, sub-
subcontractors and materialmen, which should:
1. identify the person with whom the contract was made to supply the work or
material furnished;
2. describe the work or material furnished;
3. identify the land for which the work or material was furnished by its legal
description or its address;
4. recite the full consideration for the waiver ($1.00 waivers not being acceptable);
and,
5. be properly executed by the person furnishing the waiver.
In addition to the above requirements, an ATG member must obtain a satisfactory
indemnity agreement from the seller and general contractor in any situation involving (1)

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commercial property or (2) single-family owner-occupied residential property with a
sales price greater than $150,000. For these purposes, commercial property is any
property other than single-family owner-occupied residential real estate. A form of this
special personal undertaking follows this chapter and is available upon request.
In order to rely on this indemnity, an ATG member must be satisfied that the indemnitors
have sufficient financial ability to hold ATG harmless should mechanics lien problems
arise. An ATG member, for example, may know the indemnitors financial status.
Alternatively, an ATG member may require audited financial statements showing the
indemnitors ability to pay. Finally, in the absence of the foregoing, the member may
require a surety bond, deposit of funds, pledge of assets, or other security for the
indemnity agreement.
Finally, please note that ATG will generally not insure the owner against mechanics
liens where the owner is the party who has contracted for the erection of improvements
on his own land. This policy is in effect since the owner has control over who he hires to
do the work and, therefore, would be responsible for his own loss. The owner can protect
himself through surety bonds, hiring an architect, etc. but not through title insurance.
III. MPC REQUIREMENTS
More and more, ATG members are being asked to insure construction loans. The following is an
all too brief explanation of ATGs requirements in issuing mortgage policies for construction
situations. ATG encourages only those members who have experience in construction matters to
undertake the issuance of construction policies. It is essential that the attorney and staff have
well-defined procedures for review of general contractors sworn statements, lien waivers, and
other documents involved as well as a working understanding of loan disbursement
requirements.
There are two methods by which an ATG member can issue a Mortgagee Policy for new
construction. The first and the simplest is for the member to issue a commitment containing the
new construction exception listed infra. At the time of the final disbursement, an ATG member
is required to review all general contractors and subcontractors sworn statements and final lien
waivers. The attorney must be assured that all of the sub and sub- subcontractors are listed on the
sworn statements, that payment has actually been received and that the lien waiver is a final lien
waiver, which has been signed by the appropriate person on behalf of the subcontractor. It is
highly recommended that an ATG member spot-check the accuracy of the lien waivers,
especially those for significant amounts, by contacting the signatory to confirm the execution of
the document and the receipt of payment. If all is in order, a final policy would be issued and
payment for the premium obtained at that time. An ATG member is, of course, free to charge an
additional fee for his work in reviewing the construction documents.
The second method of insuring construction loans and the one that is becoming required more
often, is for the member to issue a Mortgagee Policy and to amend that policy to increase the
amount of coverage with each draw. A special Mortgagee Policy form, the MPC, is used for
these construction loan situations. The following is an explanation of the procedure for the
issuance of an MPC.
At the commencement of the project it will be necessary for an ATG member to obtain a sworn
statement from the owner disclosing all persons with whom the owner has contracted for the
construction and, from those persons, contractors sworn statements listing all subcontractors and
materialmen and the amounts of their contracts for the project. Also, the member will need to
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have the contractor and owner execute satisfactory personal undertakings agreeing to indemnify
ATG for any loss due to non-payment of contractors, subcontractors, sub-subcontractors, and
materialmen. A copy of this special personal undertaking form is set forth at the end of this
chapter. Financial statements must be examined to ascertain the financial responsibility of the
owner and contractor before accepting the personal undertaking and issuing the MPC. Finally,
there must be proof of the issuance of the building permit by the local governing body.
An ATG commitment may be issued initially and an MPC issued at the time of the first draw.
The commitment and the MPC will be for the full amount of the construction loan. At the time of
the first draw and for subsequent draws, the policy will be amended by a disbursement
endorsement. The disbursement endorsement will show a current effective date, reflecting the
date through which a date down search has been conducted and a review of statements and lien
waivers has taken place. The endorsement will also show the total amount of disbursements
made through the effective date.
At the time that draws are requested, it is the responsibility of an ATG member to do the
following:
A. Conduct a date down title search to make sure that no mechanics lien or other liens have
been recorded.
B. If an architect or engineer is involved in the project, obtain a certificate from the architect
or engineer that the value of the work and material that is in place at the time of the draw
is equal to or greater than the amount of funds to be disbursed and that such work and
material are in compliance with the contract and applicable building codes.
C. Obtain a certificate from the architect, engineer, or surveyor that the building is within
the lot lines, set-back requirements and is not violating any easements.
D. Establish that the loan is in balance and there are sufficient funds to complete the project
and pay all related costs.
E. Obtain and review contractors and subcontractors sworn statements and obtain and
review lien waivers from all parties disclosed by those statements. Confirm that
subcontractors, sub- subcontractors, and materialmen seeking payment are those shown
on the contractors and subcontractors sworn statements and that the amounts paid are in
conformance with the sworn statements and:
1. Confirm that amounts released by contractors, subcontractors, and sub-
subcontractors lien waivers are equal to or greater than the amount of the draws to
date.
2. Make random checks of the validity of lien waivers by contacting the
subcontractors, sub-subcontractors, and materialmen to verify payment and
execution of the lien waivers.
Upon satisfaction of the above requirements, prepare and deliver the disbursement
endorsement to the lender.
The above procedures should be followed at each draw with the exception that an
additional surveyors certificate need only be obtained any time there is further
foundation work and prior to the final draw. At the time of the final draw, there should

Page 10D-8 ATG Basic Underwriting - Illinois
ATG
also be an architects final certificate that the building complies with the plans and
specifications, building codes, covenants, and restrictions and that all punch list items
have been completed. The certificate of occupancy should be obtained and reviewed. Of
course, all lien waivers must be reviewed to confirm that they are final lien waivers and
that all payments to contractors, subcontractors, sub-subcontractors, and materialmen
have been made. The final title search must indicate that no mechanics liens or other
encumbrances have been recorded.
Upon delivery of the final disbursement endorsement, the lender will have the option of
converting the MPC to an MPA if the same lender is providing the end loan. An MPA
replacement policy can be issued to the construction lender who is also the end lender for
an additional charge as long as the MPA is in an amount less than or equal to the MPC.
Payment in full for the MPC must be obtained at the time of the initial issuance of the
policy.
If you have any questions regarding these requirements, or problems arise during the
construction project, please do not hesitate to contact the ATG underwriting department.
ATG Basic Underwriting - Illinois Page 10D-9
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EXHIBIT 10D-1: ALTA STATEMENT















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ATG Basic Underwriting - Illinois Page 10E-1
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CHAPTER 10E LIENS:
MUNICIPAL AND OTHER LOCAL GOVERNMENT


I. MUNICIPALITIES
A. Water/Sewer
1. Creation
A municipality has a lien on the real estate for water and sewer charges assessed
against the real estate for which water and sewer services are supplied whenever
the charges become delinquent.
1

2. Recording Requirement and Priority
The municipality has no preference over the rights of any purchaser, mortgagee,
judgment creditor, or other lien holder arising prior to the filing of a notice of lien
with the recorder of the county in which the real estate is located. The notice of
lien must contain a sworn statement setting out the following: (a) a description of
the real estate; (b) the amount of money due for such service; and (c) the date on
which such amount became delinquent.
3. Duration of Lien
Because the statute provides that the lien may be foreclosed in the same manner
and with the same effect as the foreclosure of mortgages, the lien continues for a
period of ten (10) years (the statute of limitations for the enforcement of a
mortgage lien) from the time of filing.
However, if the municipality sues the occupant or user of the real estate in a civil
action to recover the delinquencies and a judgment in such action is entered in
favor of the municipality, then no lien shall exist thereafter against the real estate
for the delinquency. J udgment in the civil action operates as a release and waiver
of the lien for the amount of the judgment.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded
municipal water and sewer liens against the property during the period in which
the lien is valid. The format for the exception is as follows:
Notice of Lien claimed by the City of * under their provisions of
the Municipal Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).

Page 10E-2 ATG Basic Underwriting - Illinois
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B. Demolition, Repairs, and Board-Up
1. Creation
A municipality or a lienholder of record has a lien on the real estate for the cost of
demolition and repair of buildings or removal of debris therefrom.
2

2. Recording Requirement and Priority
The lien is superior to all PRIOR existing liens and encumbrances, except taxes, if
within 180 days after the repair, demolition, board up, or removal, the
municipality or other party who incurred the expense files a notice of lien for the
expenses incurred in the office of the recorder of the county in which the real
estate is located. The notice must consist of a sworn statement setting out the
following:
a. a description of the real estate;
b. the amount of the lien; and
c. the date on which the expenses were incurred by the municipality.
3. Duration of Lien
The lien continues for an indefinite period until paid.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded
demolition liens against the property during the period in which the lien is valid.
The format for the exception is as follows:
Notice of lien claimed by the City of * under the provisions of the
Municipal Code against * in the sum of $*, which a notice was,
recorded *, as Document No. * (in Book * at Page *).
C. Weed Cutting
1. Creation
A municipality has a lien for the reasonable costs of the cutting of weeds when
owners of real estate refuse or neglect to cut the weeds themselves.
3

2. Recording Requirement and Priority
The cost is a lien upon the real estate affected, superior to all other liens and
encumbrances, except tax liens, if within 60 days after such cost and expense is
incurred, a notice of lien is filed in the recorders office in the county where the
real estate is located. The notice must include a sworn statement setting out the
following:
a. a description of the real estate;
ATG Basic Underwriting - Illinois Page 10E-3
ATG
b. the amount of costs incurred; and
c. the date on which the costs were incurred.
The lien shall not be valid as to any purchaser whose rights in the real estate have
arisen subsequent to the weed cutting and prior to the filing of such notice, and
the lien shall not be valid as to any mortgagee, judgment creditor, or other lienor
whose rights in the real estate arose prior to the filing of the notice. A notice must
also be sent to the person on the last tax bill after the weeds are cut.
3. Duration of Lien
The lien continues indefinitely until paid.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded weed-
cutting liens against title to the property until the same are paid and released. The
format for the exception is as follows:
Notice of lien claimed by the City of * under the provisions of the
Municipal Code against * in the sum of $* which notice was
recorded *, as Document No. * (in Book * at Page *).
D. Rat Extermination
1. Creation
A municipality may charge owners of and persons interested in private property
the reasonable costs of preventing ingress of rats to their property and of rat
extermination therein, the cost of which is a lien upon the real estate affected.
4

2. Recording Requirement and Priority
The cost and expense is a lien upon the real estate affected, superior to all other
existing liens and encumbrances, except tax liens, if within 60 days after such cost
and expense is incurred, a notice of lien is filed in the recorders office in the
county where the real estate is located. The notice must consist of a sworn
statement setting out the following:
a. a description of the real estate;
b. the costs incurred for the service; and
c. the date on which the costs were incurred.
The lien shall not be valid as to any purchaser, mortgagee, judgment creditor, or
other lienor whose rights in the real estate arise subsequent to the rat
extermination and prior to the filing of the notice.

Page 10E-4 ATG Basic Underwriting - Illinois
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3. Duration of Lien
The lien continues for a period of one year after the date of filing the notice of
lien.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded rat
extermination liens against the property during the period in which the lien is
valid. The format for the exception is as follows:
Notice of Lien claimed by the City of * under the provisions of the
Municipal Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
E. Garbage and Debris Removal
1. Creation
A municipality has a lien for garbage and debris removal from private property
when the owner, after reasonable notice, refuses or neglects to do.
5

2. Recording Requirement and Priority
The lien attaches to the property only from the time of filing a notice of lien with
the recorder of the county in which the property is located. The notice of lien must
be filed by the municipality or the person performing the service within 60 days
after the costs are incurred. The notice must contain a sworn statement setting out
the following:
a. a description of the real estate;
b. the amount of costs incurred; and
c. the date on which the expense was incurred.
The lien shall not be valid as to any purchaser whose rights in and to such real
estate have arisen subsequent to removal of the garbage and debris and prior to
the filing of such notice, and the lien shall not be valid as to any mortgagee,
judgment creditor, or other lienor whose rights in and to such real estate arise
prior to the filing of such notice.
3. Duration of Lien
An action to foreclose a garbage and debris removal lien must be commenced
within two (2) years after the date of filing the notice of lien.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded
garbage and debris removal liens against the real estate during the period in which
the lien is valid. The format for the exception is as follows:
ATG Basic Underwriting - Illinois Page 10E-5
ATG
Notice of Lien claimed by the City of * under the provisions of the
Municipal Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
F. City of Chicago Transfer Tax
1. Creation
The City of Chicago has a lien upon the real estate when the transfer tax has not
been paid.
6

2. Recording Requirement
The lien does not take priority over the rights of any bona fide purchaser, holder
of a security interest, mechanics lienor, mortgagee, or judgment lien creditor
arising or existing prior to the recording of an instrument evidencing the citys
lien with the recorder of deeds of Cook County. However, the lien, whether or not
recorded, does have priority over any interest in the real property (including any
lien) acquired by a person in connection with the person providing financing to
the transferee taxpayer (or the taxpayers nominee or designee) for the acquisition
of the real property. The absence of tax stamps in the proper amount on the
document pursuant to which the transferee taxpayer acquired title to, or beneficial
interest in, the real property shall constitute constructive notice of the citys lien to
the person providing financing.
3. Duration of Lien
An action to foreclose a City of Chicago transfer tax lien must be commenced
within seven (7) years after the transfer giving rise to the tax liability. The seven-
(7-) year period may be tolled (a) for the duration of any judicial order enjoining
or restraining the city from instituting a foreclosure proceeding or (b) for the
period of time during which any related real property transfer tax assessment is
the subject of a Department of Revenue tax hearing.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded City of
Chicago transfer tax liens against title to the property during the period in which
the lien is valid, until the same are paid and released. The format for the exception
is as follows:
Notice of Lien claimed by the City of Chicago under the provisions
of the Sec. 3-33-120 of the Municipal Code against * in the sum of
$* which Notice was recorded *, as Document No. *.
Also, every document transferring property in the City of Chicago must include
the proper amount of transfer stamps or be marked exempt pursuant to one of
the City of Chicago transfer tax exemptions.

Page 10E-6 ATG Basic Underwriting - Illinois
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II. COUNTIES
A. Water/Sewer
1. Creation
A county has a lien for water and sewer charges upon the real estate to which
water or sewer service is supplied when the charges become delinquent.
7

2. Recording Requirement and Priority
The county shall have no preference in any such lien over the rights of any
purchaser, mortgagee, judgment creditor, or any lien holder arising prior to the
notice of filing of the lien with the recorder of the county in which the real estate
is located. The notice must contain a sworn statement setting out the following:
a. description of the real estate;
b. the amount of money due for such service; and
c. the date when such amount became delinquent.
3. Duration of Lien
Because the statute provides that the lien may be foreclosed in the same manner
and with the same affect as in the foreclosure of mortgages, the lien continues for
a period of ten (10) years (the statute of limitations for the enforcement of a
mortgage lien) from the time of filing.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded water
and sewer liens against the property during the period in which the lien is valid.
The format for the exception is as follows:
Notice of Lien claimed by the County of * under the provisions of
the Counties Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
B. Demolition and Repairs
1. Creation
A county or a lienholder of record can recover the costs of demolition or repair
incurred by them from the owner of the subject real estate, the cost of which shall
be a lien thereon.
8

2. Recording Requirement and Priority
The lien is superior to all prior existing liens and encumbrances except taxes if
within 180 days after such repair or demolition a notice of lien is filed with the
recorder of the county in which the real estate is located. The notice must contain
a sworn statement setting out the following:
ATG Basic Underwriting - Illinois Page 10E-7
ATG
a. a description of the real estate;
b. the amount of costs incurred; and
c. the date on which the cost was incurred.
3. Duration of Lien
An action to foreclose this lien may be commenced at any time after the date of
filing of the notice of lien. Therefore, the lien continues for an indefinite period
until paid. 4. Underwriting Requirements All ATG Commitments and Policies
must contain exceptions for recorded demolition liens against the real estate. The
format for the exception is as follows:
Notice of Lien claimed by the County of * under the provisions of
the Counties Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
C. Weed Cutting
1. Creation
In counties of less than three million inhabitants, a county has a lien for weed
cutting on lots in subdivisions in residential areas in the unincorporated area of a
county when owners of the lots refuse or neglect to cut them. Notice of intention
to cut weeds must be given to owners of subdivision lots at least 15 days before
such action is taken by mailing a copy of the notice to the last known address of
the owner.
9

2. Recording Requirement and Priority
The lien is superior to all other liens and encumbrances except tax liens, if, within
60 days after the cost and expense is incurred, a notice of lien is filed with the
recorder of the county in which the property is located. The notice of lien must
contain a sworn statement setting out the following:
a. a description of the real estate;
b. the amount of costs incurred; and
c. the date on which the expense was incurred.
The lien shall not be valid as to any purchaser whose rights in the lot have arisen
subsequent to the weed cutting and prior to the filing of the notice, and the lien
shall not be valid as to any mortgagee, judgment creditor, or other lienor, whose
rights in the lot arise prior to the filing of the notice.
3. Duration of Lien
The lien continues for an indefinite period until paid.
4. Underwriting Requirement

Page 10E-8 ATG Basic Underwriting - Illinois
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All ATG Commitments and Policies must contain exceptions for recorded weed-
cutting liens against the real estate. The format for the exception is as follows:
Notice of Lien claimed by the County of * under the provisions of
the Counties Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
D. Garbage and Debris Removal
1. Creation
A county has a lien for the cost of removing garbage and debris from
unincorporated areas of a county if the owner of the property refuses or neglects
to do so. Notice of the countys intention to remove garbage and debris must be
given to the owner of the property within 15 days before the action is taken by
mailing a written copy of the notice to the owners last known address.
10

2. Recording Requirement
The lien is superior to all other liens and encumbrances, except tax liens if, within
60 days after the costs are incurred, a notice of lien is filed with the recorder of
the county in which the property is located. The notice must contain a sworn
statement setting out the following:
a. a description of the real estate;
b. the amount of costs incurred; and
c. the date on which the expense was incurred.
The lien shall not be valid as to any purchaser whose rights in the real estate have
arisen after the removal of the garbage and before the filing of the notice. The lien
shall not be valid as to any mortgagee, judgment creditor, or other lienor whose
rights in the real estate arose before the filing of the notice.
3. Duration of Lien
An action to foreclose a garbage and debris removal lien must be commenced
within two (2) years after the date of filing the notice of lien.
4. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded
garbage and debris removal liens against the real estate during the period in which
the lien is valid. The format for the exception is as follows:
Notice of Lien claimed by the County of * under the provisions of
the Counties Code against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).

ATG Basic Underwriting - Illinois Page 10E-9
ATG

1
65 ILCS 5/11-139-8, 5/11-141-7, 5/11-141-16 (1992)
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65 ILCS 5/11-31-1
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65 ILCS 5/11-20-7
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65 ILCS 5/11-20-8
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65 ILCS 5/11-20-13
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Municipal Code of Chicago, Sec. 3-33-120
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55 ILCS 5/5-15021
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55 ILCS 5/5-1080
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55 ILCS 5/5-1099
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55 ILCS 5/5-1118






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ATG Basic Underwriting - Illinois Page 10F-1
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CHAPTER 10F LIENS:
SPECIAL DISTRICTS


I. DRAINAGE DISTRICTS
A. Creation
A drainage district has a lien for original and additional assessments, as well as annual
maintenance assessments, against property within the district benefited by the work of the
drainage district.
1

B. Recording Requirement
The assessment constitutes a lien, the same as general taxes from the date of the order of
the court approving the assessment roll until paid. With respect to each original or
additional assessment that is not paid by the date payment is due, the district treasurer
shall file a lien notice in the Office of the Recorder of the County in which the property is
located. The lien notice shall state the following:
1. The name of the district
2. Name of the person or persons to whom notice of the original or additional roll
was given
3. A description of the land being assessed
4. The date the original or additional assessment was due
5. The amount for which the lien is claimed
Annual maintenance assessments are due and payable and are a lien upon the land and
other property included in the annual maintenance assessment roll upon the first day of
J anuary next succeeding the confirmation of the levy. The lien shall continue until the
assessment is paid. One half of the annual maintenance assessment shall become
delinquent, if unpaid, on the first day of the following J une, and the remaining half shall
become delinquent, if unpaid, on the first day of the following September.
C. Underwriting Requirements
All ATG commitments and policies must contain exceptions for drainage districts that are
either on the search or known to the member. The format for this exception is as follows:
Drainage district of * under the provisions of the Illinois Drainage code.
We must be provided with proof that the assessments are paid in full to
date.

Page 10F-2 ATG Basic Underwriting - Illinois
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II. SANITARY DISTRICT
A. Creation
A sanitary district has a lien for the rates charged to each user of the sewerage system.
Such rates shall be liens upon the real estate for which the sewerage service is supplied.
However, the lien shall not attach to the real estate until the charges become delinquent.
2

B. Recording Requirement and Priority
The sanitary district does not have a preference over the rights of any purchaser,
mortgagee, judgment creditor, or other lienholder arising prior to the filing in the office
of the recorder in the county in which the real estate is located a notice of lien. The notice
of lien must contain a sworn statement setting out the following:
1. a description of the real estate;
2. the amount of charges for such sewerage service;
3. the date on which the amounts became delinquent; and
4. the owner of record.
C. Duration of Lien
The lien may be foreclosed in the same manner as the foreclosure of mortgages on real
estate and, as such, the lien continues for a period of ten (10) years.
However, when a judgment against the occupant or user of the real estate is obtained for
the sewerage service rendered, the lien against the real estate shall not be effective as to
the charges sued upon. Therefore, a judgment in such a suit operates as a release and
waiver of the lien upon the real estate for the amount of that judgment.
D. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded sanitary
district liens against the real estate during the period in which the lien is valid. The format
for the exception is as follows:
Notice of Lien claimed by the * under the provisions of the Sanitary
District Revenue Bond Act against * in the sum of $* which Notice was
recorded *, as Document No. * (in Book *, at Page *).
III. PUBLIC WATER DISTRICTS
A. Creation
A public water district has a lien for charges for the use and service of a water-
works/sewerage system upon the real estate for which service is supplied.
3

B. Recording Requirements and Priority
The lien has no preference over the rights of any purchaser, mortgagee, judgment
creditor, or lienholder arising prior to the filing of a notice of lien with the recorder of the
ATG Basic Underwriting - Illinois Page 10F-3
ATG
county in which the real estate is located. The notice must contain a sworn statement
setting out the following: (a) a description of the real estate; (b) the amount of money due
for such services; and (c) the date on which such amount became delinquent.
C. Duration of Lien
The lien may be foreclosed in the same manner as the foreclosure of mortgages on real
estate and, as such, the lien continues for a period of ten (10) years.
D. Underwriting Requirements
All ATG Commitments and Policies must contain exceptions for recorded sewer/water
liens against the real estate during the period in which the lien is valid. The format for the
exception is as follows:
Notice of Lien claimed by the * under the provisions of the Public Water
District Act in the sum of $* which Notice was recorded *, as Document
No. * (in Book *, at Page *).



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70 ILCS 605/5-17 to ILCS 605/5-21
2
70 ILCS 3010/17.
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70 ILCS 3705/23f.








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ATG Basic Underwriting - Illinois Page 11A-1
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CHAPTER 11A MISCELLANEOUS:
HOMESTEAD


I. IN ILLINOIS, HOMESTEAD IS, BY STATUTE, TWO DIFFERENT ENTITIES:
A. An estate: an interest in land; and
B. An exemption: exempt from the lien of creditors.
It is this dual nature of homestead that requires that it be analyzed and treated differently in a
transaction that contemplates a conveyance by deed of the fee simple (or a lesser estate or
interest) as compared to the mortgage (or other similar encumbrance) situation. It is also this dual
personality that spawns much of the misunderstanding, misinterpretation, and general confusion
that accompanies homestead law. What was designed as a very simple concept with good
intentions has become a two-headed mythological creature some 140 years after its creation.
II. WHY DOES IT EXIST?
Unlike dower and courtesy, homestead does not have its roots in the common law. It is a purely
statutory creation based on public policy considerations.
Historically, there are three principal reasons for the creation of homestead laws:
A. To protect the family unit from forced eviction from its home through the enforcement of
creditors claims;
B. To provide a certain amount of protection to the widow after the death of her husband;
and
C. To protect the wife from ill deeds of the husband. ).
1

III. CREATION OF A HOMESTEAD
735 ILCS 5/12-901 provides as follows:
Every individual is entitled to an estate of homestead to the extent in value of
$7,500 of his or her interest in a farm or lot of land and buildings thereon, a
condominium, or personal property, owned or rightly possessed by lease or
otherwise and occupied by him or her as a residence, or in a cooperative that
owns property that the individual uses as a residence. That homestead and all
right in and title to that homestead is exempt from attachment, judgment, levy, or
judgment sale for the payment of his or her debts or other purposes and from the
laws of conveyance, descent, and legacy, except as provided in this Code or in
Section 20-6 of the Probate Act of 1975. This Section is not applicable between
joint tenants or tenants in common but it is applicable as to any creditors of those
persons.

Page 11A-2 ATG Basic Underwriting - Illinois
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If 2 or more individuals own property that is exempt as a homestead, the value of
the exemption of each individual may not exceed his or her proportionate share of
$15,000 based upon percentage of ownership.
The following points should be noted:
A. Prior to 1982, what was then the Illinois Homestead Act, in order to be entitled to a
homestead estate, it was necessary the householder had a family. Public Act 82-685,
effective J anuary 1, 1982, amended the Act so that a family is not necessary. Now, any
individual is entitled to a homestead.
B. The legislative history behind Public Act 82-685, which made the change from
householder to individual, indicates that a married couple who together own the
residence in which they live are each entitled to claim a homestead exemption for a total
exemption of $15,000.00.
2
In an often repeated concurring opinion, J ustice Heiple stated
that the effect of the statute is to permit an unlimited number of homestead estates in a
single property and that a husband and wife with eight children could conceivably claim,
theoretically, a $75,000.00 homestead in the residence occupied by the family. (Note,
however, that there is a legislative cap of $15,000 as the maximum homestead
exemption, to be divided proportionately between the parties with the homestead
interest.)
C. No kinship appears to be required.
3
While it is true that kinship is not a prerequisite, the
learned justices fears have not come to fruition. The statute applies the exemption to the
farm or lot of land and buildings thereon, (or) a condominium rightly possessed by
lease or otherwise and occupied by him or her as a residence. Thus, it is apparent that
there must be a nexus beyond mere occupation between the property claimed as the
homestead and the party claiming the exemption. Indeed, subsequent case law has
followed this interpretation.
4

IV. OWNERSHIP AND POSSESSION
For a homestead to arise, there must be both ownership and possession.
5

One cannot have a homestead right in land to which he has no title or interest - possession
without a right of possession is not sufficient to support a claim of homestead. A right of present
possession is essential to a claim of homestead.
6
.
Ownership need not rise to the level of fee simple, but may be any of the lesser sticks in the
bundle.
7

For example, a life estate in present enjoyment is sufficient to support a claim of homestead
when coupled with possession.
8
Further, where a grantor deeds property to a third party retaining
a life estate, even though the deed specifically states that the grantor releases and waives all
rights under and by virtue of the homestead exemption laws, the release applies only to the
expectancy conveyed and the grantor retains his or her homestead in the life interest reserved.
9

Conversely, a homestead cannot attach to future estates or interests in land. The reasoning for
this is that one who possesses a mere future estate, vested or not, will come into actual
enjoyment only at a future time and therefore has no present right or claim to occupancy of the
premises.
10

ATG Basic Underwriting - Illinois Page 11A-3
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V. SUFFICIENT INTERESTS FOR HOMESTEAD CLAIM
A leasehold interest is sufficient to support a claim of homestead because the statute so
provides.
11
. Even an oil lease has been found to be an interest to which a homestead may attach
where the lessee received a freehold interest of unlimited duration and the property was occupied
as a homestead.
12

The beneficiaries of a land trust holding title to the residence in which the beneficiaries reside are
also entitled to the homestead claim
13
. Again, if the beneficiaries are married, each is entitled to
the $7,500.00 exemption
14
. However, it must be remembered that the land trust exemption
applies only to trusts created after J uly 1, 1982.
15

It has also been held by at least one Illinois Court that a tenancy at will is adequate to support a
homestead estate.
16
However, it is doubtful that tenancy at sufferance could be regarded as
rightful possession and therefore would not support a homestead estate because of the nexus
language of the Act.
Possession under a contract to purchase (installment contract or bond for deed, as it is sometimes
referred to) is sufficient to create a homestead estate when coupled with ownership.
17
The
homestead interest will also exist in an undivided interest when the tenant is in possession.
18

However, a co- tenant or joint tenant may not claim the exemption as against the other owners.
19

VI. POSSESSION - MARITAL CONCERNS
A spouse who occupies the marital residence with the titleholding spouse does not have a
homestead estate.
20

According to the language in the statute, the individual claiming the homestead must own or
rightly possess the residence by lease or otherwise. A non-titleholding spouse does not own nor
rightly possess the residence by lease or otherwise and therefore does not have a homestead
estate.
As pointed out, in order to possess the homestead estate, the claimant must both occupy the
residence and have a right to possess the property through ownership of an estate or interest in
the property.
The protection afforded by the homestead statute is based upon the homestead claimants rights
in the property and can have no separate existence independent of those rights
21
Thus, it can
never rise above the right, title, or interest that the claimant owns in the property. Stated
differently, when the estate or interest that the homestead is claimed through ceases to exist, so
does the homestead estate unless it is replaced with a new freehold estate or interest. For
example, a contract purchaser under an installment contract loses his or her homestead estate
when the contract is forfeited.
VII. EXAMPLES OF HOMESTEAD ESTATES
A. Husband and Wife both own the house in which they live. Since they both own the house
and both occupy it, both Husband and Wife have homestead estates.
B. Husband marries Wife but only Husband owns the house in which they both live. Only
Husband can claim the homestead estate.

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C. Before Husband met Wife, he lived alone in the house that he owned. Husband had a
homestead estate as an individual.
D. Before Husband married Wife, they lived together with Friend in the house Husband
owned. Only Husband was entitled to a homestead estate because Wife did not possess an
interest in the property.
E. Husband and Wife buy the house next door and open a business in it. They still live in the
first house and are married and both own the house. Both Husband and Wife have a
homestead estate in the first house but not in the house next door because they do not live
in (occupy) it. It is a commercial house.
F. Husband and Wife need a bigger house because they now have a son. They decide to rent
a house in a nicer neighborhood. On the day Husband signs the lease, Wife is out
shopping so only Husband signs the lease. Only Husband has a homestead estate because
he has both an interest in the house and occupies it.
VIII. STATUTORY CONSTRUCTION
As noted earlier, the concept of homestead is foreign to the common law. The homestead statutes
are remedial in nature, ensconced in social considerations, and designed for the benefit of
debtors. The statutes are to be construed liberally in order to give effect to their object and
purpose.
22

The Illinois Supreme Court stated in Scogin v. Scogin, 337 Ill. 427 (1929), that the law is to be
read so as to give the spouse the fullest measure of protection, without departing from the plain
and obvious meaning of the language used.
23
The various provisions of the Act, which will be
discussed later, must be read together to the extent that they relate to the same matter.
24

IX. HOW MANY HOMESTEAD ESTATES CAN AN INDIVIDUAL CLAIM?
An individual may not claim two separate homesteads.
25
However, two individuals who rightly
possess and occupy the property as their residence are each entitled to the homestead estate.
26

X. WHEN DOES THE HOMESTEAD ESTATE ATTACH?
In general, the right of homestead attaches at the moment the claimant receives his or her interest
in the property and begins occupancy of the residence.
However, there is also case law that holds that a right to possession with the intent to occupy the
premises, followed within a reasonable time by actual occupancy, may create the estate of
homestead even before the actual occupancy occurs.
27
This intent requires an outward showing
of physical acts of preparation or some equivalent showing.
28
As to what may be a reasonable
amount of time between right to possession and actual occupancy, see Crawford v. Richeson, 101
Ill. 351 (1882), and an unreasonable amount of time, see Rawlins v Launer, 369 Ill. 494 (1938).
XI. HOW DOES THE HOMESTEAD ESTATE ATTACH?
The right of the homestead attaches without the necessity of the claimant performing any act
such as filing or declaring that the premises is his or her homestead.
29
Therefore, a claimant does
not lose or waive his or her homestead right by failing to claim it before an execution sale. The
homestead estate may be waived or extinguished only through the means provided within the
statute.
30
The doctrines of estoppel and laches do not effect release of homestead.
31

ATG Basic Underwriting - Illinois Page 11A-5
ATG
XII. THE VALUE OF THE HOMESTEAD ESTATE
The value of the homestead is determined at the date of its allotment, and not at the date the
claimant obtains the right to possess and actually occupies the premises.
32
This rule is necessary
so the boundaries of the homestead may be ascertained with finality and fairness. Were the
homestead amount determined at the date of acquisition of the homestead, it would be possible
that a subsequent creditor would be unable to reach the debtors property at all.
Example: Suppose that on the day that the debtor purchases and moves into the residence, the
value of the homestead is $7,500.00. Debtor improves the residence, or because of inflation and
increase in the value of the property location, the property is valued at $15,000.00 at the date the
creditor obtains his or her judgment. If the value of the homestead were determined at the time
that the debtor claimed the homestead estate, the entire property would be exempt from the
creditors judgment. However, since the value of the homestead is determined at the date the
homestead estate is allotted, the debtor is entitled to the full $7,500.00 exemption and the
creditor is able to realize all or part of his or her judgment out of the remaining equity in the
property. Likewise, were the numbers reversed, the debtor would be deprived of any protection
under the Homestead Act.
33

In addition, where the value of the estate enhances or depreciates, it is necessary for purposes of
set-off of the homestead that the value of the allotment be determined at the time the allotment is
made against a creditor. The allotment at this time provides finality to the issue
34
. Otherwise, it
may become necessary to revisit the issue of the actual boundaries of the homestead estate from
time to time to determine if the premises have appreciated in value, thus entitling the creditor to
sell off more of the property.
XIII. HOMESTEAD AS AN ESTATE
735 ILCS 5/12-901 provides that homestead is an estate that is shielded from the laws of
conveyance, descent, and legacy In Illinois, homestead is a freehold estate to which a
judgment lien cannot attach, unlike other jurisdictions that hold that the lien of a judgment does
attach to the homestead interest but lies dormant or is held in abeyance so long as the land
continues to be occupied as a homestead.
35

Thus, where the total value of the debtors residence does not exceed $7,500.00 (or $15,000.00
in the case of husband and wife), any sale of the property to satisfy a judgment is null and void.
36

There cannot be a valid sale of said premises on execution or decree of court for the payment of
debts subject to the right of occupancy. The homestead estate is more than a personal right of
occupancy exempt from levy or sale for debts.
37
This also means that where the property does
not exceed the statutory allotment, the owner can convey or mortgage the property and the
grantee or mortgagee will take their interest free of any judgment against the grantor or
mortgagor.
XIV. HOMESTEAD AS AN EXEMPTION
735 ILCS 5/12-901 provides that homestead is an exemption that creditors cannot seize in order
to satisfy the debts of the party who possesses the homestead interest.
The homestead exemption may be thought of as the homestead right that arises when the
homestead property is valued at more than the statutory allotment and the creditor is entitled to
sell all or part of it. If the property is not subject to partition, then the creditor is entitled to have

Page 11A-6 ATG Basic Underwriting - Illinois
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the entire homestead sold and the homestead claimant receives the amount of the statutory
homestead exemption before the creditor is paid.
38

XV. HOW DOES ESTATE VS. EXEMPTION AFFECT THE TITLE COMPANY?
For title insurance purposes, an outstanding homestead right constitutes an encumbrance
preventing transfer or conveyance of marketable title.
39
A title may be encumbered by a
homestead right because at some point in the chain of title, the spouse of the owner did not
expressly waive the homestead right. It is important, then, to review every transaction for the
possible presence of a homestead interest not only in the present grantor or mortgagor, but also in
prior grantors or mortgagors.
Further, even though a non-titleholding spouse who lives on the homestead with his or her
spouse has no homestead estate because he or she has no interest in the property, that non-
titleholding spouse has an absolute right of possession. Unless the non- titleholding spouse
executes a waiver of homestead in compliance with the statute, that spouse can be deprived of
the right to occupancy only by his or her abandonment of the premises as his or her residence,
desertion of the family, or through a judgment of dissolution of marriage making disposition of
the homestead.
40
The right of occupancy is a present interest of value that the spouse holding
title cannot deprive him or her of without his or her consent.
41

To illustrate, the court in Willard v. Northwest National Bank of Chicago, held that a valid claim
of homestead is a complete defense against a forcible entry and detainer action that attempts to
evict tenants from their home after the sale of a collaterally assigned interest in a land trust
holding title to the residence, where both spouses did not sign the security agreement or some
other document waiving their right to homestead protection, even though only one spouse holds
title to the real property.
42

Where a conveyance is defective by virtue of an outstanding homestead interest, the remedy
depends upon the value of the property relative to the amount of the homestead exemption. If the
property is worth less than the amount of the exemption, a defective conveyance is wholly
ineffectual to convey any interest whatsoever in the premises.
43
If, on the other hand, the
property is worth more than the exemption, the purchaser receives equitable title to the excess in
value, which title may be enforced by payment or setting-off the amount of the homestead to the
debtor.
44
The purchaser acquires no right to possession of the premises until the homestead is set-
off.
45

XVI. RELEASE, WAIVER, OR CONVEYANCE
It is important for the title examiner to know how the homestead estate or homestead exemption,
is properly waived.
735 ILCS 5/12-904 provides the statutory means for release of homestead as follows:
No release, waiver or conveyance of the estate so exempted shall be valid, unless
the same is in writing, signed by the individual and his or her spouse, if he or she
have one, or possession is abandoned or given pursuant to the conveyance; or if
the exception is continued to a child or children without the order of a court
directing a release thereof; but if a conveyance is made by an individual as
grantor to his or her spouse, such conveyance shall be effectual to pass the title
expressed therein to be conveyed thereby, whether or not the grantor in such
conveyance is joined therein by his or her spouse
ATG Basic Underwriting - Illinois Page 11A-7
ATG
A release may be effected in five ways:
A. Release in writing;
B. Abandonment;
C. Pursuant to conveyance with possession;
D. Pursuant to dissolution of marriage; or,
E. Court order where minor children are in title.
XVII. RELEASE IN WRITING
Pursuant to 735 ILCS 5/12-904 of the Homestead Act, a release, waiver, or conveyance in
writing of the homestead estate must be:
A. signed by the individual;
B. signed by the spouse of the individual entitled to claim the homestead estate; and,
C. notarized.
Because the law disfavors forfeiture, the requirements are strictly enforced by the judicial
system. Even though the burden of proof is on the party claiming the homestead estate, the courts
tend to give the claimant wide latitude in consideration of the societal underpinnings of the
statute.
Note that the statute requires that the individual execute the release or waiver, not the
householder or head of the family. Because of the decision in Mohr, each titleholding spouse
is considered an individual for purposes of homestead and each is required to execute a waiver.
The most important aspect of the waiver in writing, and the requirement that is most frequently
overlooked, is the requirement of the additional signature of the spouse. The statute says that the
waiver must be signed by the individual and his or her spouse, if he or she has one The
statute does not say that the spouse must sign only if in title to the property.
The non-titleholding spouse must sign, in essence, to perfect the titleholding spouses waiver
of the homestead. Stated another way, the waiver by the titleholder is ineffective to pass title to
the homestead estate without the signature of the titleholders spouse. This means that if the sole
titleholding spouse conveys away the property or gives a mortgage on it without the non-
titleholding spouses consent in writing, he can only convey away or mortgage any value in the
property in excess of the statutory exemption. If the property is not worth $15,000.00, the
grantee or mortgagee takes nothing.
XVIII. REQUIREMENT OF WAIVER IN WRITING TITLE EXAMINER ISSUES
The title examiner faces several sub-issues in light of the requirement of waiver in writing. For
example:
A. What if the title fails to indicate marital status?
How can a title examiner determine if there are any outstanding homestead rights if
marital status is not shown in the chain of title? From an underwriting standpoint, time

Page 11A-8 ATG Basic Underwriting - Illinois
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may be the curative. If the conveyance occurred several years prior to the current
transaction or there have been several warranty deeds since the document in question, it
may be possible to waive the defect.
B. Can the non-titleholding spouse execute waiver of homestead in a writing separate from
that of the titleholding spouse?
There appears to be no Illinois case law directly on point concerning this issue. However,
other case law tends to indicate that any such separate execution must refer directly and
specifically to the fact that the spouse is signing for the purpose and intent of waiver of
any homestead rights in the property. For example, it would not be enough to give a
separate deed that does not specifically refer to release of homestead. The non-
titleholding spouse must recite that he or she is signing for the purpose of waiver of
homestead when executing a deed.
C. Is a recitation on a deed or mortgage that the property is not homestead property
sufficient to not require the signature of a spouse?
If it is possible to ascertain that the property being conveyed is, indeed, not the
homestead of the grantor or mortgagor, ATG usually accepts this averment. It may be
necessary in certain situations to require an affidavit from the parties because of the self-
serving nature of such a statement. This situation most frequently arises when dealing
with investment property or where additional guarantors are required on a mortgage.
D. What if the non-titleholding spouse is incompetent?
Unless there is a valid power of attorney, it is necessary to file a guardianship proceeding
and obtain a court order to sell or mortgage the property-waiving homestead. It may also
be possible to waive the co-signature of the spouse based on abandonment in limited
circumstances (see Abandonment section).
E. Can an agent under a power of attorney waive the homestead of the spouse?
If the power of attorney is the Illinois Statutory Short Form, yes. If the power is in any
other form, it must expressly grant the power to waive homestead to the agent.
XIX. ABANDONMENT AND RELEASE PURSUANT TO CONVEYANCE WITH POSSESSION
For the purpose of distinguishing between these two methods of release of homestead, it is
helpful to discuss them in conjunction with one another.
A. Surrender:
To make an effective conveyance of homestead pursuant to surrender of the property, the
surrender must be made pursuant to the instrument executed.
46
This conveyance requires
an affirmative, voluntary act by the grantor for the purpose of admitting the grantee to
possession of the premises and must be done by reason of, or on account of, the
conveyance that would not have been done except for the conveyance being made.
47

An abandonment not for the express purpose of giving effect to a deed of conveyance but
simply because the grantor has secured another homestead does not pass title of the
ATG Basic Underwriting - Illinois Page 11A-9
ATG
homestead to the grantee
48
. This abandonment does, however, extinguish the homestead
in the grantor.
49

B. Voluntary Abandonment:
The homestead right may be forfeited by voluntary abandonment of the premises without
any intention of returning.
50
This does not mean that constant occupancy is required to
maintain a homestead.
51
Abandonment is largely a matter of intent, as determined from
the facts in each case. It is apparent that the fact situations attending this statement are
without limitation.
The general rule is that a removal from the homestead premises is not deemed
abandonment where it clearly appears that the homestead claimant intends to return and
occupy the premises.
52
The statute states that waiver of homestead requires abandonment
of possession, not occupancy. It is not necessary to occupy the premises in order to
possess it.
53
The courts have long noted a distinction between the terms. While
occupation is always necessary to acquire homestead (except in those cases where intent
to occupy followed by actual occupation is sufficient), it is not necessary in order to
maintain it.
C. Intent to Abandon:
Unless there is an intent to abandon, the homestead claimant may lease the property and
still retain the homestead.
54
However, the intention to return may not be conditional or
equivocal.
55

Where a grantor relocates to other premises for health reasons, there is no abandonment,
even if the absence is for several years.
56
For example, it was held that a widow did not
abandon her homestead when she went to her daughters house to be cared for during her
illness and rented her premises to help pay for her medical expenses.
57

Similarly, one who is incompetent cannot form the requisite intent to abandon or to
return. It is not necessary that the homestead claimant be the person suffering from the
illness. The illness of another that causes the homestead claimant to leave the premises
does not constitute abandonment as long as the claimant intends to return to the premises.
Additionally, absence due to business does not create a presumption of abandonment. To
illustrate, a court found no abandonment even though one spouse leased and occupied an
apartment away from the family home in order to operate a business.
58
In another case,
the court rejected a presumption of abandonment where the head of the family went in
search of another home, but being disappointed in his search, returned home.
59

A separation by married parties wherein one spouse moves out does not necessarily
constitute an abandonment of homestead.
60
Unless there is a divorce allocating the
homestead or a different reason exists to justify the lack of spousal co-signature, the
homestead exception must be raised.
D. Physically Destroyed:
A homestead claimant whose homestead is physically destroyed does not lose the benefit
of the homestead, even if he or she leases the property to a third party, so long as he or
she maintains the intent to return.
61
. Clearly, any person who involuntarily ceases to

Page 11A-10 ATG Basic Underwriting - Illinois
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occupy a homestead is not deemed to have abandoned. In fact, the presumption of the law
is to the contrary.
62

XX. EFFECT OF ABANDONMENT
The effect of abandonment is it operates as a voluntary termination of the homestead right,
thereby rendering the property subject to any liens against the owner.
63
Resuming possession at a
later date does not cut off liens that have attached during the interim.
64

Note that the effect is entirely different where possession is given pursuant to conveyance. In that
situation, the homestead property passes to the grantee free of any liens against the grantor to the
extent of the homestead allotment.
65
However, any properly perfected lien against the grantor is a
lien against the property to the extent the property is worth more than the statutory amount of
homestead and such lien may be enforced against a subsequent grantee.
XXI. RELEASE EFFECTED PURSUANT TO DISSOLUTION OF MARRIAGE
Paragraph 12-905 of the Homestead Act states that the court granting a dissolution of marriage
may dispose of the homestead estate according to the equities of the case.
For underwriting purposes, where the grantor/mortgagor is shown as married in the chain of title
or has married since acquiring the property, and has since divorced, as long as title was never
conveyed to the spouse, and there is no recorded injunction prohibiting transfer of the property,
you are free to assume that the signature of the ex-spouse is unnecessary.
Alternatively, if the property was conveyed to the ex-spouse during the marriage, a quitclaim
deed from the ex-spouse is required unless the judgment of dissolution of marriage affirmatively
vests title in the grantor/grantee free of any and all right title, or interest of the ex-spouse,
including homestead. Remember, however, that mere separation of the parties does not abrogate
the necessity of both spouses signatures.
XXII. MINOR CHILDREN IN TITLE
Paragraph 12-905 of the Homestead Act states that where the homestead is continued in a minor
child or children, a court order is necessary to release the homestead.
For underwriting purposes, the mere execution of a release of homestead by the childs guardian
is not acceptable to insure over the homestead exception. A court order, transaction specific, must
be in the file.
XXIII. EXAMPLES OF RELEASE OF HOMESTEAD ESTATES
A. Husband marries Wife and moves into Wifes house. Record title is in Wifes name only.
Wife wants to sell the house to Friend and move into a houseboat. Both Wife and
Husband must execute the deed in order to waive homestead. (Husband signs to perfect
Wifes waiver - he has no interest in the property.)
B. Same facts, except this time, Husband and Wife have no ready buyer, so they move into
their new house on the shore without first selling the old house. When Friend moves into
town, they decide to deed the property to him. Their attorney neglects to insert a waiver
of homestead clause in the deed. Regardless, Wife and Husband both formed the requisite
intent to abandon the house as their homestead when they moved all their furnishings
from the house and put it up for sale. (Remember, however, abandonment is a question
that must be reviewed in light of the facts and circumstances.)
ATG Basic Underwriting - Illinois Page 11A-11
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C. Husband and Wife marry and buy a small cottage near a cove. After the birth of their
three sons, they sell the cottage to a vendor. There is not homestead waiver in the deed,
but, at closing, Husband and Wife turn over possession of the cottage. Homestead was
released because possession was given pursuant to the conveyance.
D. Husband and Friend buy a condo for investment purposes. The deed shows the grantees
as married men. Uncle agrees to buy the condo. Husbands and Friends Wives do not
have to sign the deed to Uncle because it is not homestead property.
E. Wife and Husband buy a two bedroom split-level. Record title is in Wifes name only.
Husband goes to sea for two years to keep his business going. In the meantime, Wife
decides to run away with Friend and sells the property to Uncle. Husband is entitled to
claim the homestead to the extent of the statutory exemption for both he and Wife
because Wifes homestead waiver was invalidly executed without his co-signature.
F. Wife divorces Husband and marries Friend. After six months, Friend moves out. He buys
a beach house and lives there alone for a year without getting a divorce. Friend then takes
a job in Tahiti and puts the beach house up for sale. Does Wife have to sign the deed at
closing to waive homestead even though she never lived there? Yes. There is no
requirement in the Homestead Act that the spouse live in the homestead. Again, Wife is
signing to perfect Husbands waiver of homestead.
XXIV. HOMESTEAD AND THE ILLINOIS LAND TRUST
Prior to 1982, there could not be homestead in residential property held in an Illinois land trust.
There are three reasons for this:
A. The trustee, not the trust beneficiary was (and still is) considered to be the owner of the
property, thus, failing to qualify for the homestead estate, as he would not be occupying
the property as his residence.
B. The beneficiary, who would most likely occupy the property, does not own the property;
he owns only the beneficial interest in the land trust. This interest was (and still is)
considered to be personal property, not real property
66

C. Prior to 1982, case law and statutory law clearly stated that the Homestead Act was not
applicable to personal property, thus, not applicable to this beneficial interest.
67

However, when the Illinois legislature amended the Homestead Act, they made it applicable to
personal property. 735 ILCS 5/12-901 provides:
Every individual is entitled to an estate of homestead to the extent in value of
$7,500.00, in the farm or lot of land and buildings thereon, a condominium or in
personal property
Again, the beneficial interest in a land trust is considered personal property, and any assignment
of said beneficial interest should contain, if applicable, a waiver of homestead rights.
68
However,
even after 1982, there is, generally, no homestead issue concerning any real estate conveyed by a
trustees deed. Therefore, the title examiner need not worry about a trustees deed containing a
waiver of the homestead. The reasons for this are listed as A. and B., above.

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Since neither the trustee nor the beneficiary can satisfy both requirements necessary in order to
possess a homestead estate, both own or rightly possess by lease or otherwise, and occupy the
property as his or her residence, generally, there can be no homestead issue relating to real estate
conveyed through a trustees deed.
However, any conveyance into either an Illinois land trust or a personal trust must waive or
convey any applicable homestead interest. If the trust does not waive the homestead interest,
there remains the problem of the outstanding homestead interest.
69

Note, though, that several lenders will not allow their mortgages to be executed by land trustees.
The rationale, however, does not relate to homestead. Rather, it appears to stem from the legal
characteristics of the Illinois land trust. Several lenders apparently are concerned with property
purchased and mortgaged through a land trust, and later, the beneficial interest assigned to a third
party with nothing ever subsequently placed of record, in the propertys chain of title, to alert the
mortgagee that the original owner/mortgagor no longer has an interest in the property.
XXV. HOMESTEAD LENDER CONCERNS
The problem in a mortgage situation usually concerns homestead the exemption and not
homestead the estate. The reason for this is because homestead becomes an issue when the
mortgagor breaches the mortgage and the lender wants to foreclose.
If the debtor and spouse failed to waive homestead in the mortgage, they are entitled to claim the
$15,000.00 homestead exemption ahead of the lender from the sale of the property (assuming, of
course, the property is worth more than $15,000.00 to begin with). This results in the lenders
title company paying the lender that $15,000.00. Consequently, title companies tend to be
extremely cautious when dealing with issues related to homestead.
Basically, the analysis of the homestead exemption is the same as for the homestead estate. The
facts may differ, but the two basic questions that the title examiner asks remain the same:
A. Who owns the property (or otherwise has a property interest sufficient to support a
homestead claim, i.e., a lease, life estate, installment contract, etc.)? and,
B. Does a non-titleholding spouse reside on the property?
When addressing the first question, it is important to remember that all owners must execute a
deed or mortgage so that the grantee or mortgagee receives an interest in all of the property. A
mortgage by only joint tenant conveys an interest that would result in the lender succeeding to
only a 50% interest in the property upon foreclosure.
However, where there is a non-titleholding spouse, that spouse need only execute the deed or
mortgage for the purpose of releasing homestead. The non-titleholding spouse will not want to
sign as warrantor under the deed or as guarantor under the mortgage.
As to the second question, the general requirement is that the non-titleholding spouse must
always execute the deed or mortgage for purposes of releasing homestead whether or not he or
she resides on the property. But, in certain circumstances, it may be possible to waive the
requirement with clearance from the ATG underwriting department.
ATG Basic Underwriting - Illinois Page 11A-13
ATG
C. Examples:
1. J ohn and Mary, husband and wife, and Tom and Sue, also husband and wife, buy
a nightclub in joint tenancy. Mary, in order to balance her household budget, talks
Sue into mortgaging the nightclub property without J ohn and Tom finding out.
Mary and Sue do not have to worry about getting J ohn and Toms waiver of
homestead because it is commercial property and not homestead property. (But
the lender may have a different problem.)
2. J ohn and Marys son, Rick, wants to move out and buy his own condo in
Hollywood. Because Ricks career is not exactly stellar, lender wants J ohn to
execute the note and mortgage along with him. There is no homestead problem
requiring that J ohn and Mary execute a waiver because it is not homestead
property to either of them. Neither of them owns the property.
3. Assume the same facts as the prior example except that this time J ohn makes the
down payment on the condo. To secure his investment, he wants to appear on the
title with Rick. There is no homestead problem as far as the title company is
concerned because the property is not J ohns homestead. Therefore, Mary does
not need to execute the homestead waiver in order to waive J ohns right. Even if
J ohn should later move in with Rick and take the condo as homestead, it is a post-
policy event, and outside the scope of coverage of the lenders title policy. But, if
you represent lender, it may be prudent to insist on a complete waiver by J ohn and
Mary to avoid the complication of that contingency.
4. J ohn leaves Mary but is not divorced. J ohn takes out a mortgage to purchase
Toms estate in Beverly Hills. J ohn swears that Mary will never live on the
property, so there is no homestead problem. Wrong. Remember that The
Homestead Act does not require that the non-titleholding spouse reside on the
property. It is only relevant that J ohn own the property and take occupancy to
secure a homestead estate. Mary must sign the waiver so that J ohn can release his
homestead interest. However, the following section addresses the homestead
exception.
XXVI. EXCEPTIONS TO HOMESTEAD INTEREST
735 ILCS 5/12-903 states that a purchase money mortgage or a home improvement mortgage
shall have priority over the homestead exemption. (Homestead is also inferior to tax or
assessment liens and condominium assessment liens.) This means that if all the proceeds of the
loan are either used to pay for the property in order to acquire it or all of the proceeds are used to
improve an existing home, the lien of homestead becomes inferior to that mortgage.
The most common justification for this statutory deviation from the social policy of protection of
the family home is found in the but for test. But for the purchase money mortgage, there
would be no home to protect.
The same analysis applies to the reason for affording home improvement loans priority over
homestead liens. But for the mortgage, there would be no enhancement in value of the
property. Thus, paragraph 12-903 of The Homestead Act makes it possible for title insurers to
insure a purchase money mortgage or home improvement loan without regard to the homestead
rights of the non-titleholding spouse.

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NOTE: This means it is unnecessary to even raise the homestead issue on the OPA or MPA.
The law statutorily affords priority to the mortgage. But there are some lenders who do not
feel fully protected unless they have a piece of paper in their file. To accommodate those
lenders, we do have a Homestead Subordination Endorsement available. Where the mortgage
being insured is a purchase money mortgage or a home improvement mortgage, the member
may issue the endorsement without charge. However, before issuing the Homestead
Subordination Endorsement under any other circumstances, it is necessary to first obtain
ATG underwriting approval. The Homestead Subordination Endorsement is for use with
mortgage policies (MPAs) only.
On the other hand, if the mortgage to be insured is not a purchase money mortgage or home
improvement loan (for example, a refinance or Revolving Credit or other type of equity loan
other than for improvement of the residence being mortgaged), the mortgage priority is not
protected by the statute and it will be necessary to raise the homestead rights as exceptions.
EXAMPLE: J ohn, separated from Mary, takes out a construction loan to build a house on
the beach in Malibu so that their son, Rick, will visit them. There is no homestead estate
problem involving Mary, the separated, non-titleholding spouse, because there is no
residence for J ohn, the owner, to occupy. But when J ohn executes and end loan, it will be
necessary for Mary to execute the homestead waiver in order for J ohn to waive his
homestead.
XXVII. HOMESTEAD MISCONCEPTIONS
Because of the split personality of the homestead interest, a proliferation of false assumptions,
misunderstandings, and just plain tall tales swirl around this area of real estate law. Some of the
more common misconceptions are as follows:
A. Unless the spouse is also in title, there is no need for spouse to waive homestead.
B. Spouse must waive homestead even though not in title and the property is commercial or
investment property.
C. If husband and wife are separated and one spouse moves out, that spouse has lost his or
her homestead rights. But to resurrect them, he or she need only spend the night in the
house with the other spouse.
D. An owner must have a family in order to qualify for homestead rights.
E. In order for a wife to qualify for homestead rights, she must be the sole support of the
family.
F. A married couple cannot claim homestead rights unless they have children.
G. Where one spouse is in title and wants to mortgage the property, if the other spouse signs
the mortgage to waive homestead, that spouse also becomes liable on the note and
mortgage.
H. If the wife is not in title, the husband can sign for her.
ATG Basic Underwriting - Illinois Page 11A-15
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1
Robert Kratovil and Raymond Werner, Real Estate Law (Prentice-Hall, Inc. 1983
2
First National Bank of Moline v. Mohr, 162 Ill. App. 3d 584, 114 Ill. Dec. 85 (1987)
3
Mohr, 114 Ill. Dec. 88 (1987)
4
In re Matter of Reuter, 56 B.R. 39 (Bkrtcy. N.D. Ill. 1985)
5
Rice v. United Mercantile Agencies, 395 Ill. 512. See also, Jones v. Kilfether, 12 Ill. App. 2d 390 (1956)
6
Brown v. Keller, 32 Ill. Dec. 151
7
Daughter v. Christie, 223 Ill. 612
8
Stombaugh v. Morey, 388 Ill. 392 (1944)
9
Rice, 515
10
Stombaugh.
11
735 ILCS 5/12-901
12
Chicago W. and F. Coal Company v. Herr, 127 F. 2d 1010 (1941)
13
Chicago
14
Mohr
15
Capitol Bank and Trust v. Fascetta, 771 F. 2d 1077 (1985)
16
Feldes v. Duncan, 30 Ill. App. 469
17
Stafford v. Woods, 144 Ill. 203 (1893) See also Watson v. Saxer, 102 Ill. 585 (1882)
18
Wilke v. Gainer, 179 Ill. 257 (1899)
19
Hertz v. Buchmann, 177 Ill. 553 (1899)
20
Jones v. Kilfether, 12 Ill. App. 2d 390 (1956)
21
Roberson v. Tippie, 209 Ill. 38 (1904)
22
Perkins v. Perkins, 122 Ill. App. 370 (1905). See also, Feides
23
Deere v. Chapman, 25 Ill. 610 (1861)
24
Kimble v. Epworthy, 6 Ill App. 517 (1880)
25
Rasmussen v. Rasmussen, 368 Ill. 137 (1938)
26
Mohr
27
Home Building and Loan Association v. McKay, 217 Ill. 551 (1905). See also, Boyd v. Fullerton, 125 Ill. 437 (1988)
28
Home
29
Rue
30
735 ILCS 5/12-904
31
Rice
32
Ketchan v. Ketcham, 269 Ill. 584 (1915)

Page 11A-16 ATG Basic Underwriting - Illinois
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33
Moher v. Goff, 316 Ill. 605 (1925); Denquil v. Dacco, 273 Ill. 117 (1916); Garwood v. Garwood, 244 Ill. 580 (1910)
34
Garwood
35
Dixon, 414
36
735 ILCS 5/12-909
37
Dixon, 414
38
735 ILCS 5/12-908
39
Rasmussen
40
Willard v. Northwest National Bank of Chicago, 92 Ill. Dec. 92 (1985)
41
Willard v. Northwest National Bank of Chicago, 92 Ill. Dec. 92 (1985)
42
Real Property Service, Illinois (The Lawyer's Co-Operative Publishing Company, 1987) S33.94
43
Bailey, 621
44
Diets v. Hagler, 309 Ill. 381 (1923)
45
Macaulay v. Jones, 295 Ill. 614 (1920)
46
Strayer v. Dickerson, 205 Ill. 257 (1903)
47
Venters v. Wickens, 224 Ill. 569 (1906)
48
Strayer
49
Gray v. Schofield, 175 Ill. 36 (1898)
50
Wiegard
51
Kanszewicz v. Kawszewicz, 385 Ill 461 (1944)
52
Rasmussen
53
Rice
54
Brokaw v. Ogle, 170 Ill. 115 (1897)
55
Kloss v. Wyiezalek, 207 Ill. 328 (1904)
56
Rice
57
Brokaw v. Ogle, 170 Ill. 115 (1897)
58
Dixon.
59
Ives v. Mills, 37 Ill. 73 (1865)
60
Henson v. Moore, 104 Ill 403 (1884)
61
Ketcham
62
Hastings' Heirs v. Dorrance, 2 Ill. C.C. 300 (1904).
63
Lehman v. Cottrell, <M%-2>298 Ill. App. 434 (1939)
64
Titman v. Moore, 43 Ill. 169 (1867)
65
Kilmer v. Garlick, 185 Ill. 406 (1900)
66
Chicago Federal Savings and Loan Association v. Cacciatore, 25 Ill. 2d 535 (1962).
67
Sterling Savings and Loan Association v. Schultz, 71 Ill. App. 2d 94 (1966).
ATG Basic Underwriting - Illinois Page 11A-17
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68
Kenoe on Land Trusts (Ill. Inst. for CLE, 1989) 6-100.
69
Willard.










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CHAPTER 11B MISCELLANEOUS:
FOREIGN PERSONS


I. TITLE EXCEPTION
Illinois statutes no longer provide for divestiture of title of non-citizens holding title to Illinois
property. The current statue, 765 ILCS 60/0.01, et seq., allows non-citizens to own and dispose
of property in the same manner as citizens.
For title purposes, it is not the obligation of the ATG member to inquire into the citizenship of
any party in title or the proposed Insured, even if the member knows that non-citizenship is a
possibility.
II. FIRPTA
The Foreign Investment in Real Property Transfer Act requires that all buyers be aware of their
potential liability for the payment of the sellers federal income tax by reason of the sale of real
property by a foreign person. While this does not create a title problem, information on FIRPTA
is provided to ATG members to avoid the potential for severe penalties that can be imposed
against ATG members and their clients. Therefore, for tax purposes, it may be necessary to
determine the citizenship of the seller of real property.
Under 26 U.S.C. 1445(a), any transferee (buyer) of a United States real property interest must
withhold an amount equal to ten percent (10%) of the amount realized in the transaction by the
transferor (seller). The requirement to withhold applies to every real estate transaction unless it
falls within one of the following exemptions:
A. Transactions wherein the transferor furnishes an affidavit to the transferee that states that
the transferor is not a foreign person and discloses the United States taxpayer
identification number of the transferor; or,
B. Transactions wherein the interest transferred is an interest in a domestic corporation (e.g.,
common stock) and the corporation furnishes an affidavit to the transferee that states that
the corporation is not and has not been a United States real property holding corporation
during the applicable period set forth in 26 U.S.C. 897(c)(1)(ii); or,
C. Transactions wherein the Treasury Department furnishes a qualifying statement
exempting the transferee from the obligation to withhold; or,
D. Transactions wherein the property is acquired by the transferee for use by him as a
personal residence and the amount realized by the transferor does not exceed $300,000;
or,
E. Transactions wherein the interest transferred is a share of a class of stock in a corporation
regularly traded in an established securities market.
The exemptions A and B above do not apply: (1) where the transferee has actual knowledge that
the affidavit is false, or (2) where an agent of the transferor or transferee discloses to the
transferee that the affidavit is false, or (3) where the Secretary of the Treasury provides

Page 11B-2 ATG Basic Underwriting - Illinois
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regulations requiring the transferee to furnish a copy of the affidavit to the IRS and the transferee
fails to do so.
The Act also imposes liability to withhold upon agents of the transferor and transferee. An
agent is defined as any person who represents either party to a transaction in negotiations with
the other party or his agent, or who represents either party in settling the transaction. Be aware
that, under the Act, you may be personally liable for the failure to withhold where a false
affidavit is supplied to the transferee and, as the agent of either party, you are aware of that fact.
In addition, the attorney for the transferor will be liable if the transferor is a foreign corporation.
However, you can avoid liability by disclosure to the transferee that the affidavit is false, or that
the transferor is a foreign corporation. The liability of an agent for failure to withhold, if any, is
limited to the amount of compensation received by the agent with respect to the transaction.
In practice, most real estate transactions will not require the actual withholding of proceeds.
Most transactions will qualify under exemption 4 above, since they involve the purchase of a
home for the buyer with a sale price of $300,000 or less. In other situations, a simple affidavit of
the transferor qualifying under exemption 1 will obviate the need to withhold. However, keep in
mind that, theoretically, any transaction might be subject to withholding. For example, you
cannot assume that the buyer is acquiring the property for use as his residence simply because it
is residential property. He may be acquiring it as an investment, or for a family members use, or
to convert it to commercial use. It is incumbent to advise your client of the provisions of the new
Act and to determine the applicability of appropriate exemptions.
ATG Basic Underwriting - Illinois Page 11B-3
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EXHIBIT 11B-1: FOREIGN TRANSFEROR AFFIDAVIT - INDIVIDUAL


Page 11B-4 ATG Basic Underwriting - Illinois
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EXHIBIT 11B-2: FOREIGN TRANSFEROR AFFIDAVIT - ENTITY













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CHAPTER 12 MORTGAGE FORECLOSURE


I. A PENDING FORECLOSURE PROCEEDING IN THE CHAIN OF TITLE PRIOR TO A
JUDICIAL SALE
If the title search or other evidence discloses a pending mortgage foreclosure proceeding, you
must raise the following pending proceeding exception on Schedule B:
Proceeding pending in the Circuit Court of * County, Illinois, Case No. *,
Complaint filed as disclosed by Notice of Foreclosure (Lis Pendens) recorded as
Document No. *. We have not made a complete examination of this proceeding
and if title is to be insured through these pending proceedings, this commitment
and policy are subject to such other and further exceptions as may be deemed
necessary upon a complete examination thereof.
In order to determine the status of the proceeding, the court file must be obtained and examined.
The examination is solely for the purpose of determining the current status of the case, and does
not require determination of proper jurisdiction, timeliness of actions taken, and so on. If,
however, the case has been dismissed without any judgment order, the exception need not be
raised.
However, if the complaint was dismissed without the agreement or consent of the plaintiff, the
following right of appeal exception must be raised on Schedule B:
Right of any party interested by motion, appeal, petition or other direct
proceeding to have set aside, modified or reversed any judgments and orders
entered into in Case No. * filed in the Circuit Court of *, Illinois, within the time
allowed by law.
This exception may only be waived if no such action is taken before the expiration of thirty (30)
days from the entry of the order of dismissal, and the property is transferred for value to any
person not a party to the proceeding. If the property is sold to a third party and the mortgage that
was the subject of the foreclosure is satisfied and released, the exception may be waived prior to
the expiration of the thirty (30) day period.
If a judgment of foreclosure has been entered, the pending proceeding exception may not be
waived unless the judgment is vacated and the complaint is dismissed. A dismissal alone is
insufficient without a vacation of the judgment. Of course, if the vacation and dismissal are done
without the consent of the plaintiff, the right of appeal exception must be raised.
II. A FORECLOSURE PROCEEDING IN THE CHAIN OF TITLE AFTER JUDGMENT BUT BEFORE A
JUDICIAL (SHERIFFS) DEED
If the title search or other evidence discloses a mortgage foreclosure proceeding that has resulted
in a sale and the recording of a certificate of sale, but no deed has yet been delivered and
recorded, raise the following exception on Schedule B:

Page 12-2 ATG Basic Underwriting - Illinois
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Right, title and interest of * under a certificate of sale dated * and recorded * and
Document No. * and issued pursuant to judgment of foreclosure entered * and
Case No. * and all persons claiming thereunder.
If a sheriffs judge or judges deed has been recorded, the following exception must be raised in
lieu of the preceding one:
Right, title and interest of * under a sheriffs (judges) deed dated * and recorded
as Document No. * and all persons claiming thereunder.
In either situation set forth in this subsection, the pending proceeding exception need not be
raised. Remember, also, that ATG is not be requested to insure title passing through the
foreclosure in these situations, but rather is being requested to show the state of title in the hands
of the person against whom the foreclosure was commenced. Even though there may be serious
defects in the foreclosure that would cause us to decline to insure title through foreclosure, the
exceptions in this subsection may not be waived unless:
A. a court order is entered in the proceedings setting aside the sale or deed; or
B. the mortgagor redeems after sale under the circumstances set forth in 15-1604 of the
Code of Civil Procedure; or the waiver is approved by an ATG underwriter.
MINUTES OF FORECLOSURE
In order that we may insure title after completion of any proceeding
brought to foreclose the lien of the mortgage/trust deed noted at Schedule
B No. * and recorded as Document No. *, we note the following and this
commitment is subject to:
a. Our policy when issued will be subject to direct attack upon the
judgments and orders entered in the proceeding.
b. Our policy when issued will be subject to any right or asserted
right of a creditor, trustee, or debtor in possession in bankruptcy
to avoid a transfer of title by sheriffs deed or otherwise pursuant
to Title 11 U.S.C. (Bankruptcy) or any creditors rights law or
state insolvency law.
c. Upon the filing of the complaint, a proper Notice of Foreclosure
(Lis Pendens) under Section 15-1503 of the Code of Civil
Procedure must be recorded in the Recorders Office of * County,
Illinois.
d. The following persons are necessary parties to any such
proceeding:
(1) (Mortgagor or successor in interest), the record
owner, as a party defendant.
(2) (Mortgagee or successor in interest), as party
plaintiff.
ATG Basic Underwriting - Illinois Page 12-3
ATG
e. The following persons must be made parties defendant to the
foreclosure if it is desired that their interests be barred by the
proceeding:
(1) All parties acquiring rights in the premises
subsequent to the date of this commitment and prior
to a complete Notice of Foreclosure (Lis Pendens).
(2) Any person other than those herein named known to
the Plaintiff or the Plaintiffs attorney to have or
claim an interest in the premises.
(3) All persons in possession of any part of the
premises in question and all persons whose rights
would be disclosed by an inspection of the premises.
(4) United States of America by reason of Exception
No. *.
NOTE: Compliance should be had with the provisions of
Section 2410 of the Federal Judicial Code 28 U.S.C.A., *
and in connection therewith the following information is
furnished:
The Notice of tax lien noted at Exception No. * was filed by
the District Director of Internal Revenue, at *, Illinois
against * in the office of the Recorder of Deeds of *
County, Illinois on * as Document No. *.
[Waive where no junior federal lien appears as an exception. Delete to * where U.
S. Lien is one arising other than under the Internal Revenue Laws.]
NOTE: Attention is directed to the provisions in Section
2410 of the Federal Judicial Code requiring that any
action to foreclose a mortgage naming the United States as
a party under the Section must seek a judicial sale. In
the event a sale is not sought in the contemplated
proceeding, * such proceeding will not affect the rights of
the United States noted at Exception No. * and the United
States should not be made party thereto. In addition * we
note the consequences of liens, if any, in favor of the United
States that appear of record after the date of this
Commitment.
(Applies to common law strict foreclosure or Consent Foreclosure under Section
15-1402 of the Code of Civil Procedure. Delete * to * where no federal lien
appears as an exception.]
(5) (Second mortgagees, judgment lienors, etc.), by
reason of Exception No. *.

Page 12-4 ATG Basic Underwriting - Illinois
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NOTE: If it is known that any of the parties listed herein
are deceased, their heirs or devisees should be made
parties by name if known; and if unknown, by the name and
description of UNKNOWN HEIRS OR DEVISEES OF
such deceased person or persons. If it is not known or
cannot be ascertained whether any of said necessary
parties be living or dead, then such parties should be made
parties by name, and such persons as would be their heirs
or devisees should also be made parties to the proceeding
as UNKNOWN OWNERS. In this connection, we direct
your attention to Section 2-413 of the Code of Civil
Procedure.
NOTE: In the event that there are any persons who are
necessary parties to the contemplated proceeding, but the
names of such persons are unknown and unascertainable,
then, and in that event only, such persons should be made
parties under the description of UNKNOWN OWNERS,
unless the contrary is herein indicated.
NOTE: The proceeding will not affect the Standard
Exceptions nor the exceptions noted in Schedule B at Nos.
*; and our policy when issued will be subject to such
exceptions unless satisfactory disposition thereof is
otherwise made.
III. UNDERWRITING CONSIDERATIONS
A. A Title Company Reporting a Foreclosure
1. A foreclosure in process, before judgment.
a. Title company raises an exception for pending proceedings:
Proceeding pending in the Circuit Court of * County,
Illinois, Case No. *, Complaint filed by * v. * as disclosed
by Notice of Foreclosure (Lis Pendens) recorded * as
Document No. *.
b. Title company caveat:
We have NOT made a complete examination of this
proceeding and if title is to be insured through these
pending proceedings, this commitment and policy are
subject to such other and further exceptions as may be
deemed necessary upon a complete examination thereof.
ATG Basic Underwriting - Illinois Page 12-5
ATG
i. Title company only reports the status of court file (i.e., Complaint
filed, etc.).
ii. If more is required, ALERT title company that title is to be insured
through foreclosure.
(a) i. Title company will review jurisdiction, timeliness
of actions, propriety of parties, etc. (see ahead).
(b) ii. Only then will title company be bound to insure title
derived through foreclosure.
c. If complaint was dismissed without the consent or agreement of the
plaintiff, a right to appeal exception is shown on Schedule B.
Right of any party interested by motion, appeal, petition or
other direct proceeding to have set aside, modified or
reversed any judgments and orders in Case No. * filed in
the Circuit Court of *, Illinois, within the time allowed by
law.
i. The title company will waive the pending proceeding exception
upon:
(1) Voluntary dismissal, or
(2) Involuntary dismissal where the appeal period has passed
with no appeal (and, sometimes only then upon a sale to an
independent third party), or
(3) The mortgage is satisfied or released.
ii. The title company will not waive the pending proceeding
exception after judgment unless the judgment is vacated and the
complaint is dismissed.
(1) Dismissal alone is NOT sufficient.
(2) Also, if the vacation and dismissal are without consent of
plaintiff, the right of appeal exception shown.
2. A foreclosure procedure in process, after judgment.
a. The title company discovers a certificate of sale (see IMFL 15-1507(e)),
but no deed; the company reports that interest as follows:
Right, title, and interest of * under a certificate of sale
dated * and recorded * as Document No. * and issued
pursuant to a judgment of foreclosure entered * in Case
No. * and all persons claiming thereunder.

Page 12-6 ATG Basic Underwriting - Illinois
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b. The title company discovers a recorded sheriffs deed or judicial deed, it
raises the following exception:
Right, title, and interest of * under a sheriffs (judges)
deed dated * and recorded * as Document No. * and all
persons claiming thereunder.
c. In 1. and 2. above, the title company is only reporting the status of the
proceedings against the mortgagor. Insuring title derived through
foreclosure must be requested of the title company.
d. The exceptions in 1. and 2. above will be waived only when:
i. A court order is entered in the proceedings setting aside the sale or
deed, or
ii. The mortgagor redeems after the sale under the circumstances set
forth in 15-1604 of IMFL.
B. The Mortgage Title Insurance Policy The Coverages Given the Lender by the Title
Company Before Foreclosure
1. Full ALTA Mortgagee Policy (1970 & 1987) insures:
a. Title in mortgagor.
b. No defects or other liens affect title.
c. Title is marketable.
d. There is legal access to the real estate.
e. The mortgage is valid and enforceable.
f. The lien of the mortgage is a first lien.
g. Against loss from most mechanics liens.
h. Assignee is also insured.
i. No Standard Exceptions as in ALTA Owner Policy.
2. Mortgagee policies exclude from coverage, losses due to:
a. Truth in lending, consumer credit law, or usury law violations.
b. Laws, ordinance, or government regulations relating to zoning and
environmental protection.
c. Takings in eminent domain or policy power exercise.
ATG Basic Underwriting - Illinois Page 12-7
ATG
d. Defects, liens, encumbrances, or adverse claims, created, suffered,
assumed, or agreed to by insured, or not known by the title company, but
known to the Insured.
e. Failure to qualify as doing business in Illinois.
3. The Mortgagee Policy given in conjunction with the original loan provides
coverage to the Insured, before, during, and after foreclosure.
a. ALTA mortgage policies provide continuous coverage to Insured
Mortgagee who acquires title to the insured property after a foreclosure,
trustees sale, deed in lieu of foreclosure, or other legal matter which
discharges the lien of the insured mortgage. (See paragraph 2 of form
policy.)
b. This continued coverage is afforded to the mortgagee, or its transferee
(provided that the transferee is related to the mortgagee) and to any
governmental agency which acquires the real estate as such.
c. The amount of coverage is limited to the lesser of:
i. The face amount of the insurance,
ii. The amount of unpaid principal indebtedness, plus interest, plus
the expenses of foreclosure and amounts advanced to protect the
lien of the mortgage; or
iii. The amount actually paid by the governmental agency to acquire
the property.
d. The coverage is for title matters that later prove to be defective as of the
effective date of the policy. A new commitment and policy will be needed
to insure title derived through a foreclosure of the mortgage; the old
policy should be kept because there is still coverage available under its
terms.
e. The coverage continues to the insured mortgagee for so long as the
mortgagee:
i. Continues to retain an interest in the property; or
ii. Continues to hold the insured secured indebtedness; or
iii. Continues to have liability for any warranties made in a
conveyance of such interest.
f. Advancements during foreclosure.
i. With some limitations, this continued coverage will include
amounts advanced after the initial disbursement by the mortgage.

Page 12-8 ATG Basic Underwriting - Illinois
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ii. If these advancements are made to protect the lien of the insured
mortgage and these additional charges in addition to the remaining
liability do NOT exceed the original amount of the Mortgagee
Policy, then the coverage may likely be included for these
additional items. (See paragraphs 8(b) and 6 of the policy.)
iii. Practice point. Prudent lenders counsel may suggest to their
mortgagee clients to ask for extra title insurance up to the amount
of the Owner Policy. (Some title companies limit the extra amount
of mortgage title insurance to 10% over the face amount of the
mortgage. Other title companies have no objections to insuring the
Mortgagee Policy up to the full amount of the Owner Policy issued
with the Mortgagee Policy.
C. A Title Policy Nonrecord a Mortgage Foreclosure Action; Insuring Title Acquired in
Foreclosure
1. Title company begins with minutes of foreclosure; before foreclosure, title
companys opinion of title and its requirements to successfully foreclose the
mortgage to vest unencumbered title to the purchaser at foreclosure sale.
2. Title examinations.
a. Prior to filing (for initial determination of Necessary Parties).
b. Through the filing of Lis Pendens (Additional Necessary Parties).
c. Before or at the Recording of Deed (discover late interests and federal
taxes).
NOTE: Title search at or before the recording of the deed is necessary
to (1) confirm title in the grantee, (2) discover if anyone else may be
claiming an interest (valid or not), or (3) to discover if the U.S. has
redemption rights acquired by lien, which may go beyond the deed
recording.
1

3. Our policy when issued will be subject to direct attack upon the judgments and
orders entered in the proceeding (Minutes, (a)).
a. Personal jurisdiction begins with proper service of process by the sheriff
(coroner) or person, over 18, not a party (with court order), or by licensed
private detective.
2

b. Service on individuals.3
i. Personal service: by leaving a copy of summons personally with
defendant.
ii. Abode service or in lieu of personal service: by leaving a copy at
the defendants usual place of abode, with some person of the
family, 13 years of age or older, and informing that person of the
ATG Basic Underwriting - Illinois Page 12-9
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contents, and, sending a copy in a sealed envelope postage prepaid,
addressed to the defendant at his/her usual place of abode.
c. Service on private corporation.
4

i. By leaving a copy with registered agent or any officer or agent of
the corporation found anywhere within the state, or
ii. In any manner now or hereafter permitted by law.
d. Service on partnerships.
5

i. Partnership sued in its firm name:
(1) By leaving a copy of the process with any partner
personally, or
(2) By leaving a copy of the process with any agent of the
partnership found anywhere in the state.
ii. Partner is sued individually for partnership obligation:
(3) By rules governing personal service on individuals supra.,
or
(4) By leaving a copy of the Summons with any partner and
mailing a copy to the partner in question as in abode
service on individuals.
e. Service on unincorporated associations.
6

i. By leaving a copy of the process with any officer of the association
personally, or
ii. By leaving a copy of the process at the office of the association
with an agent of the association.
(See also Service on Government Corporations
7
, and Personal Services
outside of State
8
, and the Illinois Long Arm Statute
9
.)
A private corporation, partnership sued in its own name, or a voluntary
unincorporated association may also be notified by publication and mail in
like manner and effect as individuals.
10

f. Service on State of Illinois in Mortgage Foreclosure action (15-1501(g)
IMFL).
i. Send a copy of the Summons and Complaint to the Attorney
General by registered or certified mail.
ii. The Complaint must set forth the nature of the states interest or
lien.

Page 12-10 ATG Basic Underwriting - Illinois
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iii. If the states interest is a record interest:
(1) The Complaint must state Document Number of the
Recorded instrument, and
(2) The Complaint must state the Recorders office where it is
recorded.
iv. This is new in IMFL. The previous practice of endorsing
certificates of sale of recording them is replaced. In IMFL, the
state relaxes its exercise of sovereign immunity in foreclosure
actions.
g. Service on United States
11
.
i. Serve a copy of process with copy of Complaint upon the U.S.
Attorney for the district in which the action is brought or upon an
Assistant U.S. Attorney or clerical employee designated by the
U.S. Attorney, and
ii. Send copies of the process and Complaint to the U.S. Attorney
General at Washington, D.C. by certified or registered mail.
iii. The Complaint must set forth the nature of the interest in the U.S.
(1) In actions involving IRS Liens, the Complaint must include
name and address of the taxpayer, and
(2) If notice of the Tax Lien was filed, the Complaint must
show the identity of the IRS office that filed the notice, and
the date and place such notice of Lien was filed.
iv. The U.S. has 60 days to answer.
v. Effect of judgment (infra.)
h. Service of process upon individual defendants by publication on
defendants in an action affecting property (e.g., foreclosure)
12

i. The subject real estate must be within the jurisdiction of the court.
ii. An affidavit must be filed with clerk:
(1) Showing:
(a) That the defendant resides within the state, or
(b) That the defendant has gone out of this state, or
(c) On due inquiry, the defendant cannot be found, or
(d) The defendant is concealed within this state so that
process cannot be served upon him/her, and
ATG Basic Underwriting - Illinois Page 12-11
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(2) Stating:
(a) The place of residence of the defendant, if known,
or,
(b) That upon diligent inquiry, the defend ants place of
residence cannot be ascertained, and
(c) Notice is published in a county newspaper.
(d) A copy of the Notice is mailed to the defendant at
his last known address as determined from the
affidavit.
(3) See defective service of process (infra.) for rules regarding
breach of 2-206.
i. Summons/Service must be served within 30 days from the date the Clerk
signs it and be under seal of the Circuit Court 13
j. Defective Service of Process.
i. GENERAL RULE
14
Unless lack of jurisdiction affirmatively
appears from the record proper, any vacation or modification of an
order or judgment pursuant to a post judgment petition for relief,
shall NOT affect the right, title or interest in or to any real estate
acquired by deed or certificate of sale pursuant to the original order
or J udgment so long as:
(1) Such interest was acquired for value.
(2) The party acquiring the interest was NOT a party to the
action from which title was derived.
(3) The interest was acquired after the original order was
entered, but before the post judgment relief petition was
filed.
This preserves the sanctity of a judicial deed to a bona fide
purchaser without notice who paid value. It does not
protect the foreclosing mortgagee who purchased at sale
from post-judgment relief, and it protects no one if lack of
jurisdiction is apparent from the record.
ii. Recent cases where lack of jurisdiction affirmatively appears from
the record.
(1) Where Service of Process is by publication (see Service by
Publication supra. II, F(l) and (2)). The Affidavit must
state the place of residence of the defendant, if known; if
not known, the Affidavit must state further that upon

Page 12-12 ATG Basic Underwriting - Illinois
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diligent inquiry that the defendants place of residence
cannot be ascertained.
15

(a) Facts:

City sued to enforce statutory lien against
defendant. The city served defendant LeMar by
publication. The affidavit filed with the court
indicated that the defendants residence was
unknown, but no mention was made as to whether
or not the city diligently inquired as to the
defendants residence.
(a) Result:

The judicial sale to a third party who paid value and
who did not know of the defect (but should have
known from the record) was set aside. The
technicalities of the statute must be followed
scrupulously.
(b) Note:

The case further explains that diligent inquiry
means something more than reading the telephone
directory. The court suggested a title search or a
search of the treasurers records was appropriate.
Beware: These affidavits should not be treated
perfunctorily.
(c) Note Further:
Chapter 110, 202-6 does not require a recital of the
facts, but only the conclusion.
iii. Purchasers at judicial sale may not rely on jurisdictional recitals in
foreclosure judgment where lack of jurisdiction is apparent from
record.
16

(1) Facts:
Bank sought to foreclose mortgage. Service of Process on
defendant by substitute/abode service. The return failed to
show that a copy of the process and Complaint had been
mailed to the defendant. (Indeed, a copy may have been
sent, the return simply failed to report that it was.)
(2) Result:
Despite the courts findings of jurisdiction in the judgment
of foreclosure, it was apparent from the record that the
ATG Basic Underwriting - Illinois Page 12-13
ATG
court lacked jurisdiction, and the judicial sale and
subsequent sale were set aside.
iv. Effect of the delivery of judicial deed at close of foreclosure -
(15-1509(b) IMFL and c. 110,2-130(q)).
(1) Generally, where jurisdiction over the person of a
defendant was obtained by Service of Process by
publication, such defendant has a right to post-judgment
from the final judgment relief in that action for up to one
year after the judgment was entered. (This includes all
known or unknown, owners and nonrecord claimants.) The
post-judgment relief includes the right to set aside the sale
for reasons other than jurisdiction. (Lack of jurisdiction is
always an issue without time restraints.)
(2) IMFL abrogates general rule of 2-1301(g) in 15-1509(b)
IMFL:
Notwithstanding 1301(a) CCP, delivery of the deed after
foreclosure sale, to the purchaser or holder of the certificate
of sale is:
(a) Sufficient to pass title to such person.
(b) Bars all claims of parties to foreclosure.
(c) Bars all claims of nonrecord claimants given notice
pursuant to 15-1502.
(Again, 15-1509 is no help where lack of jurisdiction is
apparent from the record.)
(3) Any appropriate person seeking relief by 2-1301(g) in a
foreclosure action may only claim an interest in the
proceeds of sale.
(4) Section 15-1509(b) offers this protection to purchasers
regardless of whether the purchaser or holder of the
certificate is a party to the foreclosure or not.
(5) Finality of judgment was the goal, until the bankruptcy
court went beyond the judgment of foreclosure. (See infra.)
k. Direct attacks come as follows:
i. During the appeal period (waived after 30 days if no appeal).
ii. 2-1401 post-judgment petitions:
(1) Cannot waive if the insured is a party to foreclosure

Page 12-14 ATG Basic Underwriting - Illinois
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(2) May waive if Insured is a third party transferee for value
(unless lack of jurisdiction is apparent from the record).
iii. 2-1301(g) post-judgment relief for defendants served by
publication.
(1) May waive if judgment of foreclosure and deed are
executed and delivered
(2) The sale proceeds may be attachable.
iv. 2-1301(e) post-judgment relief for defendants who were defaulted
for 30 days may be waived after 30 days.
4. Our policy when issued will be subject to any right or asserted right of a creditor,
trustee or debtor in possession in bankruptcy to avoid a transfer of title by
sheriffs (judicial) deed or otherwise pursuant to Title 11 U.S.C. (Bankruptcy) or
any creditors rights law or state insolvency law.
a. Typical foreclosure sale is forced sale.
i. If lender is purchaser, the price paid at sale is usually the amount
of debt, plus amounts spent for taxes, insurance, and attorneys
fees.
ii. If third party purchases, usually a bargain hunter.
iii. Its a rare case where the price paid at sale reflects the actual fair
market value of the real estate.
b. The trustee in bankruptcy may avoid any transfer that was incurred on
or within one year before the date of the filing of the petition, if the debtor
voluntarily or involuntarily received less than a reasonably equivalent
value in exchange for such transfer or obligation, and was insolvent at that
time.
17

c. Whats reasonably equivalent value?
i. Durrett v. Washington National Insurance Co., 621 F.2d 201 (5th
Cir 1980) -- reasonably equivalent value is approximately 70% of a
fairly appraised market value.
ii. In re Madrid, 725 F.2d 1197 (9th Cir 1984) -- reasonably
equivalent value is what you get at a regularly conducted, non-
collusive foreclosure sale, where the state law procedures are
followed scrupulously.
iii. In re Bundles, 856 F.2d 815 (7th cir. 1988).
(1) Reasonably equivalent value cannot be presumed from a
regularly conducted, non-collusive foreclosure sale, nor
ATG Basic Underwriting - Illinois Page 12-15
ATG
determined by merely referring to a comparison of the sale
price and the fair market value as appraised.
(2) Reasonable equivalence should depend on all of the facts
of each case.
(3) Court balanced the policy questions of general creditors v.
certainty of deeds in foreclosures, and found that
preserving the assets of the estate was a more important
consideration.
(4) Factors to help determine reasonably equivalent value
according to 7th Cir:
(a) Fair market value of the property, which takes into
consideration the fact that the real estate is in
foreclosure (presumably, the court admitted, this
would be the amount received at a regularly
conducted, non-collusive foreclosure sale) and
(b) Tempered by every other factor involved in the
foreclosure and sale to insure that the price received
at the sale not only covered the mortgagees value
in the security, but also adequately represented the
mortgagor/debtors interest in it.
Was the sale advertised widely?
Whether competitive bidding was encouraged
(not that it actually occurred - only that it was
encouraged).
(c) Reasonably equivalent value is a federal question
and a state determination or finding of reasonably
equivalent value is not sufficient.
(d) This affects titles derived through foreclosure sales,
as well as deeds in lieu of foreclosure.
(5) 1984 bankruptcy amendments describe a fore closure sale
as a transfer; therefore, it is no defense that the transfer
occurred over one year previous - (i.e., at the time the
mortgage was executed).
(6) Consequences of avoidance (Section 550, 11 U.S.C. 550).
(a) Trustee may recover the real estate from the
purchaser at sale; or
(b) If the buyer at sale subsequently conveys the
property to a third party, the trustee may void that

Page 12-16 ATG Basic Underwriting - Illinois
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transfer or attach the proceeds of that sale. - Trustee
may not avoid a sale where:
The transfer to the third party was in good faith;
Fair value; and
Without knowledge of its void ability.
(7) Title companies response to Bundles:
NOTE: ATG will follow the Madrid ruling in that a
regularly conducted sale is presumed to be reasonably
equivalent value.
(a) Insuring non-party transfer for buyer at seller; will
waive exception unless evidence of bad faith or
insufficient value paid.
(b) Insuring the buyer at sale; this exception will be
waived only after one year has passed.
5. Upon the filing of the Complaint, a proper Notice of Foreclosure (Lis Pendens)
under Section 15-1503 of the Code of Civil Procedure must be recorded in the
Recorders Office of *, County, Illinois.
a. Notice of Foreclosure is executed by party or attorney and shall include:
i. The names of all plaintiffs.
ii. The case number.
iii. The name of court.
iv. The names of title holders of record.
v. The legal description.
vi. A common address.
vii. The identification of the mortgage being foreclosed.
b. This Notice of Foreclosure provides constructive notice of the action to
the world and,
i. Interests acquired subsequent to its filing (recording):
(1) Take subject to all prior recorded interest and to the
foreclosure proceedings itself, but
(2) Those parties may have the right to intervene.
ATG Basic Underwriting - Illinois Page 12-17
ATG
ii. Interest acquired and recorded prior to the recording of the Notice
are superior to the mortgage foreclosure action, but may or may
not be subject to the mortgage itself, then:
(1) Interests acquired prior to the mortgage itself are superior
to the mortgage if the recording was timely.
(2) Interests acquired after the mortgage itself, before the
mortgage foreclosure action was started and the mortgage
was timely recorded:
(a) If the plaintiff fails to join, then the title will be
subject to this interest.
(b) Under old law, such missed interests only had a
right to redeem
18

(c) Does IMFL change this?
(d) The court may proceed to adjudicate their
respective interest, but any disposition of the
mortgaged real estate shall be subject to (i) the
interests of all other persons not made a party or (ii)
interests in the mortgaged real estate now otherwise
barred or terminated in the foreclosure.
(e) Is Baldi still good law?
(f) IMFL purportedly was not designed to change
existing equitable principles in foreclosure.
(g) Does a missed second mortgage gain first position
after the first fore closure; if so, can second then
fore close its mortgage - SURELY NOT!
6. The following persons are necessary parties to any such proceeding:
(Mortgagor or successor in interest), the record owner as party defendant.
(Mortgagee or successor in interest), as party plaintiff. ((d) Minutes).
a. Necessary Parties (IMFL 15-1502(a)).
i. Plaintiffs:
(1) If the security instrument is a mortgage, then the mortgagee
or its assignee is the proper plaintiff, or
(2) If the security instrument is a Trust Deed, then the Holder
of the Note and Trustee are the proper J oint Plaintiffs.

Page 12-18 ATG Basic Underwriting - Illinois
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Some title companies may suggest that the holder of the Note be
named as Plaintiff with the Trustee as Defendant; it is clear that
both are Necessary Parties, check with your title company.
ii. Defendants:
(1) The Mortgagor
19

(a) The person whose interest in the real estate is the
subject of the mortgage, and
(b) Any person claiming through the mortgagor as
successor.
(c) Where the mortgage is executed by the trustee of a
land trust, the mortgagor is the trustee, not the
beneficiary or beneficiaries, and
(2) Other persons.
(a) Who owe payment on the indebtedness, or
(b) Who owe performance of other obligations which
are properly secured, and
(c) Against whom personal liability is asserted, except
(d) NOT Guarantors.
(3) Other persons who have an interest.
Any other interests need not be joined and are not
considered jurisdictional. The court may proceed to
adjudicate the various interests properly before it, and the
real estate and the judgment of foreclosure will be subject
to (a) the interests of all other persons or interests not made
a party, and (b) prior interests in the real estate and other
interests not otherwise barred or terminated in the
foreclosure or otherwise. The status of a missed interest is
unclear. Recall previous discussion (E. 2(b)(2)) and Baldi.
(4) Necessary Parties - Special Problems - Land Trusts.
(a) Nature of Land Trust.
Created by Land Trust Agreement and Deed in
Trust.
Both the legal and equitable title are vested in
the Land Trustee (the beneficiary has neither).
ATG Basic Underwriting - Illinois Page 12-19
ATG
Land Trustees Powers and duties to convey,
mortgage, or otherwise deal with the property
are only as described in the Deed and
Agreement, with most of the control (if not all)
in the beneficiary:
Possession, management, control and operation
of the property; the right to rents, issues profits
and proceeds of sale or mortgage financing,
remain with the beneficiary.
The interests of the beneficiary are considered
personal property.
(b) Marshall v. Solomon (335 Ill. 302, 1948). Leading
case; states that based upon the relationship
expressed in the deed in trust (no beneficiary title or
interest) beneficiaries are not necessary parties.
(c) But see: Spachman v. Oventor (16 Ill. App. 3d 385,
1974). Beneficiary of Land Trust has the right to
redeem.
The beneficiaries clear right to redeem at
foreclosure, and to intervene as a party and so
on, seems to create something of exception to
the general rule of Solomon.
IMFL is of no real help. (See 15-1501(a)(ii),
which mandates other persons who owe
payment of indebtedness be considered
necessary parties. This will more likely be the
beneficiary and not the Land Trustee.)
(d) Prudent J oinder of Beneficiaries:
Where receipt of rents is issue, join beneficiaries
for control over rents.
Where the mortgage is actually an assignment
of beneficial interests required to be foreclosed,
join the beneficiaries.
Where plaintiff has both a mortgage note and an
assignment of beneficial interest, join the
beneficiaries.
To impact or bar possessory interests.
7. The following persons must be made parties defendant to the foreclosure if it is
desired that their interests be barred by the proceeding:

Page 12-20 ATG Basic Underwriting - Illinois
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a. All parties acquiring rights in the premises sub sequent to the date of this
commitment and prior to a complete Notice of Foreclosure.
The gap between the commitment date and the date it is filed is NOT
covered by the minutes; a subsequent search (after recording the
Notice of Lis Pendens - Notice of Foreclosure) will discover these
interests in the gap.
See previous discussion of Lis Pendens.
b. Any person other than those herein named known to the plaintiff or the
plaintiffs attorney to have or claims an interest in the premises.
The title commitment and policy do NOT cover nonrecord items
which are known by the Insured. This is fair warning that the title
will NOT guarantee those items known by the Insured or the Insureds
attorney. In order to overcome this exception, the Insured or proposed
Insured should notify the title company, in writing, of any such
interest. If the title company makes no further requirement of the
proposed Insured as to that newly discovered interest, then, unless
there are other defenses available, the title company CANNOT
exercise this exception to its benefit.
c. All persons in possession of any part of the premises in question and all
persons whose rights would be disclosed by an inspection of the
premises.
The title company generally looks only at the public records.
Unrecorded rights in property are obviously NOT disclosed there. In
order to overcome this exception, the proposed Insured should provide
the title company with adequate assurances as to the rights of parties in
possession, if any.
d. United States of America by reason of Exception No.*
NOTE: Compliance should be had with the provisions of Section 2410
of the Federal J udicial Code, 28 U.S.C 2410* and in connection
therewith, the following information is furnished.
The Notice of Tax Lien noted at Exception No. * was filed
by the District Director of Internal Revenue, at *, Illinois
against *, in the office of the Recorder of Deeds of *
County, Illinois on * as Document No. *.*
i. Where a junior federal lien appears, this exception will appear.
Note: Attention is directed to the provisions in Section
2410 of the Federal Judicial Code requiring that any
action to foreclose a mortgage naming the United States as
a party under the section must seek a judicial sale. In the
event a sale is not sought in the contemplated proceeding,
ATG Basic Underwriting - Illinois Page 12-21
ATG
such proceeding will not affect the rights of the United
States noted at Exception No.*, and the United States
should not be made party thereto. In addition * we note the
consequences of liens, if any, in favor of the United States
which appear of record after the date of this Commitment.
ii. This note applied to common law strict foreclosures (which most
title companies will NOT insure) and IMFL consent foreclosures.
iii. In order to foreclose a junior federal lien:
(1) Serve a copy of process with copy of complaint upon the U.
S. Attorney for the district in which the action is brought or
upon an Assistant U. S. Attorney or clerical employee
designated by the U. S. Attorney, and
(2) Send copies of the process and complaint to the U. S.
Attorney General at Washington, D.C by certified or
registered mail.
(3) The complaint must set forth the nature of the interest of
the U. S.
(a) In actions involving IRS Liens, the complaint must
include name and address of the taxpayer, and
(b) If notice of the Tax Lien was filed, the complaint
must show the identity of the IRS office which filed
the notice, and the date and place such notice of
Lien was filed.
(4) The U. S. has 60 days to answer.
(5) Effect of judgment.
(a) With proper jurisdiction, a judgment or decree has
the same effect respecting the discharge of the
property from the Lien held by the U. S. as provided
in state law.
(b) In mortgage foreclosure cases, where the U. S. has
such an interest, the plaintiff must proceed to
judicial sale in order to discharge Lien of U.S. The
Deed in Lieu of Foreclosure and Consent
Foreclosure procedures will not bar the U.S. Only a
judicial foreclosure which proceeds through sale
and redemption will bar the U.S. The U.S. partially
relaxed is sovereign immunity and allowed it to be
bound by a states law (despite the supremacy
clause) but only if there is a sale.

Page 12-22 ATG Basic Underwriting - Illinois
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(c) If mortgage is inferior to U.S. Lien, the real estate
continues to be burdened by U.S. Lien (i.e., no
discharge of U.S. Lien).
(6) Redemption rights of U.S. (Not bound by state law of
redemption.)
(a) If Mortgage Lien being foreclosed is prior to U. S.
Lien, U. S. has one year from the date of sale to
redeem.
(b) Except if IRS Liens, the redemption period is 120
days from the date of sale, or the state period,
whichever is longer.
(7) Also, U. S. has the right to bid at the sale or to seek to
foreclose its own lien.
(8) In cases where the U. S. has a lien, the same may be
released by the U. S. without the necessity of payment or
foreclosure where:
(a) A written request is made of the administrator of the
lienors department, and
(b) The facts indicate that no sale proceeds will be
available to pay the lien,
(c) Except IRS Liens.
A senior Lien (IRS or otherwise) CANNOT be
foreclosed by a junior mortgage.
e. (Second mortgagees, judgment liens, etc.), by reason or exception *.
i. Permissible Parties (15-1501(b)). The joinder of other person is not
required to effectuate a mortgage foreclosure. The following
interests may be foreclosed if they are subsequent to the mortgage,
and so long as the mortgagee chooses to terminate that interest.
Otherwise, the title will remain benefited or burdened by these
interests in the absence of a judgment of foreclosure terminating
these rights. Examples are:
(1) Persons with possessory interest(s).
(2) Mortgagors spouse who waived homestead or whose
homestead arose after mortgage (Note: if spouses did not
waive homestead, that persons interest is likely superior to
mortgage as a prior interest).
(3) Trustee holding interest in the real estate, or a beneficiary
(see supra.).
ATG Basic Underwriting - Illinois Page 12-23
ATG
(4) Holder of Note secured by Trust Deed.
(5) Grantors.
(6) State or local governments (by voluntary or involuntary
lien).
(7) U.S.A. (by voluntary or involuntary lien).
(8) Any Assignee of leases or rents.
(9) Mechanics Lien claimant.
(10) Any other mortgagee claimant.
(a) Plaintiff may or may not choose to foreclose these
interests or any of them.
(b) An interest may attach to real estate subsequent to
the mortgage and actually benefit the land (e.g.,
favorable lease or easement) as well as burden it
(judgment lien, second mortgage, real estate taxes,
tax liens).
(c) Prior interests cannot be foreclosed. Prior interest
cannot be foreclosed, and title as well as the
interests acquired prior to the mortgage in question
which is being foreclosed are superior to that
mortgage (unless subordinated), so long as it is
recorded prior to the mortgage and cannot be
foreclosed unless that lien had been subordinated.
The J udgment of Foreclosure, Certificate of Sale
and the J udicial Deed (hence the title) are each
subject to these interests, and until these superior
interests are released, satisfied, merged or otherwise
terminated, title will be subject to them.
(d) Permissible interests not foreclosed remain on title.
J ust as interests acquired prior to the mortgage must
be released, satisfied, merged or otherwise
terminated, any interests acquired after the
mortgage in question (i.e., inferior to the mortgage)
must be joined in the proceedings and foreclosed or
the title to the real estate remains subject to each
whether beneficial or burdensome.
NOTE: if it is known that any of the parties
listed herein are deceased, their heirs or devisees
should be made parties by name if known; and
if unknown, by the name and description of
UNKNOWN HEIRS OR DEVISEES OF

Page 12-24 ATG Basic Underwriting - Illinois
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such deceased person or persons. If it is not
known or cannot be ascertained whether any of
said necessary parties be living or dead, then
such parties should be made parties by name,
and such persons as would be their heirs or
devisees should also be made parties to the
proceeding as UNKNOWN OWNERS. In this
connection, we direct your attention to Section
2-413 of the Code of Civil Procedure.
NOTE: In the event that there are any persons
who are necessary parties to the contemplated
proceeding, but the names of such persons are
unknown and unascertainable, then, and in that
event only, such persons should be made parties
under the description of UNKNOWN
OWNERS, unless the contrary is herein
indicated.
ii. Unknown owners as parties to foreclosure.
20

(1) Requires actual parties who do or may have an actual
interest in real estate, and
(a) only their names are unknown, or
(b) It cannot be determined whether such persons are
alive or dead; if dead, where some doubt exists as to
their successor in interest (i.e., heirs, legatees,
assigns).
(2) With proper Affidavit(s), the judgments entered shall be as
if the actual proper names of these persons had been used.
(a) This section does not claim jurisdiction; that comes
from service of process. (2-413 Process may
then issue and publication may be had against these
persons by name to description so given ).
(b) Publication required for jurisdiction to determine
these unknown owners rights. (See infra.)
(3) Great debateTo name unknown owners or not.
(a) Some suggest only when necessary.
(b) Others say always necessary.
(c) Unknown owners may disqualify diversity
jurisdiction in Federal Court.
ATG Basic Underwriting - Illinois Page 12-25
ATG
iii. Nonrecord claimants in foreclosure (IMFL 15-1210, 15-1502). (A
subclass of unknown owners) specifically treated in IMFL.
(1) A nonrecord claimant is:
(a) Persons with rights to homestead, or
(b) J udgment creditors, or
(c) Beneficial interest holders of trust in actual
possession, or
(d) Mechanics lien claimants who have or claim to
have an interest when Notice is filed, and whose
nonrecord claim is not disclosed by:
A recorded Notice, nor
A legal proceeding which would give
constructive Notice of the existence of that
interest by existence of that interest (by Lis
Pendens, with an accurate legal description).
(2) A nonrecord claimant has a right to become a record
claimant:
(a) By recording a Notice.
(b) Any time before Notice of Foreclosure (i.e., Lis
Pendens) is filed.
(3) The substantive rights of nonrecord claimants - after
foreclosure are barred to the same extent as if such claimant
were a party.
(4) Terminating rights of nonrecord claimants in foreclosure:
(a) Requisite affidavit filed with court stating:
Names and present address or last known
address of such claimants, or
That the existence, names or the present or last
known residences, or both, are unknown to the
party or his attorney.
(b) Affidavit may be on information and belief.
(c) Affidavit has no requirement of diligent inquiry,
and specifically excuses such an inquiry.

Page 12-26 ATG Basic Underwriting - Illinois
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(d) Notice to any person identified in the affidavit of
the action:
At least 30 days prior to entry of judgment, and
Publication pursuant to CCP 2-206, 2-207.
(5) Notice to nonrecord claimants shall have the same effect
with respect to all nonrecord claimants designated in the
Notice as though their proper names had been published in
accordance with 2-206 and 2-207, the Notice of 15-1502
and 2-206 and 2-207 may be combined.
(6) Any inaccuracies with technical requirements of this
affidavit do not affect the sale, but may give rise to a cause
of action on behalf of the aggrieved party (i.e., the barred
nonrecord claimant) against the party in whose behalf the
affidavit was prepared (IMFL 15-1502(4)).
CAUTION: Unknown owners and nonrecord claimants
should be joined when all the risks are examined.
Again, some suggest the risks of non-joinder are slight
and the added expenses are worth it; others note the
expenses, and the fact that unknown others may
actually gain some relief due to plaintiffs gratuitous
use of the procedure. Careless use of such joinder could
create post-judgment relief to assist unknown claimants
to overturn judgments and sales (possibly) and create
liability for clients in the post judgment relief Sections
of 2-1301, 2-1401 of CCP notwithstanding Section 15-
1509 (see e.g., Defective service of process infra.).
NOTE: The proceeding will not affect the Standard
Exceptions nor the exceptions noted in Schedule B at
Nos. *; and our policy when issued will be subject to
such exceptions unless satisfactory disposition thereof
is otherwise made.
An Owner Policy is forthcoming pursuant to this
commitment, and, therefore, the five Standard
Exceptions will appear on the policy unless satisfactory
evidence is provided to the title company to waive
them.
Also, these minutes of foreclosure are part of a
commitment. Some interests (taxes, first mortgages,
etc.) Will NOT be foreclosed, and the policy will reflect
exceptions for them. Those exceptions are shown here.
The title company hereby commits to insure through
foreclosure upon a complete and proper resolution of a
ATG Basic Underwriting - Illinois Page 12-27
ATG
mortgage foreclosure proceeding pursuant to the
mortgage and these requirements, and the terms and
conditions of the mortgage and policy.
The title company must be made aware that a
foreclosure proceeding is contemplated, and that
Minutes of Foreclosure or Necessary Party Letters
are prepared. Otherwise, the title company will only
report the status of title and NOT bear any
responsibility for the proceedings.
A commitment that does not commit to insure a
foreclosure proceeding (when such is requested) is of
little value to anyone. If the title company is NOT
asked to insure title derived through foreclosure, it is
likely that the proceeding as post-coverage events. And,
perhaps, deny liability.
D. Consent Foreclosures
1. A judicial proceeding that satisfies mortgage indebtedness:
a. By vesting title in mortgagee.
b. Free and clear of all liens (except the U.S., which cannot be foreclosed
without a sale).
c. Without a judicial sale.
2. Neither mortgagor nor any party has any rights to reinstate or redeem.
3. If a party objects, the court may:
a. Not approve the procedure.
b. Deny the objection and approve the procedure.
c. Allow party who objects an opportunity to redeem.
4. Title company requirements for a proper resolution of a consent foreclosure
proceeding:
a. Minutes of foreclosure analysis is appropriate (see supra).
b. Motion or complaint where mortgagee offered and mortgagor accepted
consent procedure.
c. Court order finding proper Notice.
d. J udgment with a recitation of mortgagees waiver of personal judgment
for deficiency against mortgagee or any other person liable on the debt.

Page 12-28 ATG Basic Underwriting - Illinois
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e. The lien of the U. S., if any, will remain absent a judicial foreclosure and
sale.
E. Strict Foreclosure
1. A common law action by the mortgagee requesting the court to fix a date, often in
as little as 30 days, before which a mortgagor must redeem the arrearages of the
default. If the mortgagor fails to pay, his equitable rights of redemption are barred
and foreclosed and the court confirms title in the mortgagee.
2. This procedure is still recognized in Illinois (IMFL 15-1403) so long as:
a. The mortgagor is insolvent.
b. The amount due exceeds the value of the property.
c. The property will be taken in full satisfaction of the debt.
d. No other encumbrances affect title to the land.
3. Very limited usefulness.
4. Check with the title company for requirements, if any. ATG will require that the
Statutory J udicial procedures be followed.
F. Deeds in Lieu of Foreclosure.
1. An agreement between mortgagor and mortgagee.
a. After default.
b. Terminating mortgagors interest in the real estate by:
i. Conveyance of mortgagors complete interest in the real estate to
mortgagee.
ii. In full and final satisfaction of mortgage indebtedness:
(1) Mortgagee releasing all who owe an indebtedness secured
by the mortgage in question, unless
(2) Those who owe on such obligation agree, in writing, to be
bound by the obligation.
2. A deed in lieu does not affect a merger of title.
a. Mortgagee is in title.
b. Mortgagee retains his secured priority status.
3. Title Insurance Concerns.
a. Similar transactions where:
ATG Basic Underwriting - Illinois Page 12-29
ATG
b. A deed is given as additional security, or
c. Deed is given under duress or fraud or undue influence is subject to such
equitable defenses of rescission or revocation, or
d. Preferences or fraudulent conveyances under Bankruptcy Law, creditors
rights or State Insolvency Law.
f. Possible underwriting responses by the Company.
i. Contract for deed in lieu of foreclosure.
(1) Written agreement.
(2) Parties complete understanding.
(a) Recitals of parties interest.
(b) Statement of defaults.
(3) Statement of mortgages intention to foreclose.
(4) Statement of property value.
(5) Statement of Agreement for exchange, to wit:
(a) Mortgagor releases equity of redemption.
(b) Mortgagee releases rights to deficiency judgment.
ii. Cancellation of indebtedness.
iii. Dismissal of foreclosure.
g. Bankruptcy questions. (See discussion on creditors rights supra.)
h. Intervening creditors remain after a deed in lieu of foreclosure despite the
superior nature of the mortgage in question. If mortgagee wants them
removed, judicial foreclosure or release are only remedies.
i. Corporate mortgagors will be asked to provide proper corporate
resolutions.
j. Upon sale by mortgagee/owner, a release of the mortgage must be
recorded (since there is no merger).


Page 12-30 ATG Basic Underwriting - Illinois
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[NOTES]
ATG Basic Underwriting - Illinois Page 12-31
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1
28 U.S.C. 2410
2
735 ILCS 5/2-202
3
735 ILCS 5/2-203
4
735 ILCS 5/2-204
5
735 ILCS 5/2-205
6
735 ILCS 5/2-205.1
7
735 ILCS 5/2-211
8
735 ILCS 5/2-208
9
735 ILCS 5/2-209
10
735 ILCS 5/2-205.5, 2-205, 2-204
11
28 U.S.C. 2410
12
735 ILCS 5/2-206
13
See Sup. Ct. Rules 102(b) and 101(a), by the sheriff (coroner), or person over 18, not a party to the action with court order,
or by licensed private detective. 735 ILCS 5/2-202
14
735 ILCS 5/2-1401(e)
15
See City of Rockford v. LeMar, 109 Ill. Dec. 507 (1987)
16
State Bank of Zurich v. Thill, 113 Ill. 2d 294, 497 N.E.2d 1156 (1986)
17
(Section 548, Bankruptcy Code, 11 U.S.C. 548.)
18
(see Baldi v. Chicago Title & Trust Co., 113 Ill. App. 3d 29, 68 Ill. Dec. 808, 446 N.E.2d 1205 (1983); see also Illinois
Fund Concept, Vol. 7, p. 17, May-J une 1983
19
735 ILCS 5/15-1209
20
735 ILCS 5/2-413













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ATG Basic Underwriting - Illinois Page 13-1
ATG
CHAPTER 13 POWERS OF ATTORNEY


An individual (the principal) may, by execution of a proper instrument, confer authority upon another
person (the agent) to deal with property or make personal and health care decisions for the principal. The
authority so conferred is known as a power of attorney. In order to codify the law of powers of
attorney in Illinois, to expand and clarify the permissible scope of the authority of the agent, and to be
sure that third parties will honor the agents authority at all times, the state of Illinois has enacted the
Illinois Power of Attorney Act
The Act is divided into three substantive sections: The Durable Power of Attorney Law, the Statutory
Short Form Power of Attorney for Property Law and the Powers of Attorney for Health Care Law.
While the last section will have important implications for the health care field, this chapter will deal
only with the first two sections and will set forth ATGs requirements to insure title based upon
conveyances, mortgages and other instruments affecting title to real estate executed pursuant to powers
of attorney.
I. DURABLE POWER OF ATTORNEY
The Durable Power of Attorney Law allows the principal to specify the event or time that the
power of attorney will begin and terminate, the mode of revocation or amendment and all other
terms applicable to the agent and persons dealing with the agent. The power will control even if
it is inconsistent with the Act. The Act applies to all powers exercised in Illinois and to all other
powers if the principal is a resident of Illinois at the time the power is signed or exercised or if
the power indicates that Illinois law is to apply.
The power may be revoked or amended by the principal at any time. If not revoked or amended,
it will continue until the death of the principal, notwithstanding an earlier disability, incapacity or
guardianship of the principal after the power is signed.
Third parties who act in good faith reliance on a copy of the power will be fully protected and
released to the same extent as though they had dealt directly with the principal as a fully
competent person. The third party may request from the agent an affidavit establishing the
continuing validity of the power, but good faith reliance on the power will protect the third party
without the affidavit.
II. POWER OF ATTORNEY FOR PROPERTY LAW
The Statutory Short Form Power of Attorney for Property Law sets forth a form that a principal
may use to give an agent powers with respect to property and financial matters. When the
statutory form is used, the power of attorney has the meaning and effect prescribed in the Act.
The form may be modified by striking out one or more of the categories of optional powers listed
in the form or by specific limitations on or additions to the agents power.
The form begins with a notice to the principal about the effect of the form and the rights of the
principal and agent. Paragraph 1 appoints the agent and lists the categories of powers granted.
The principal may strike one or more of the categories of powers. Paragraph 2 allows the
principal to modify or limit a particular power or powers. For example, the principal may
prohibit the sale of a particular piece of real estate without limiting the agents authority to sell
other real estate.

Page 13-2 ATG Basic Underwriting - Illinois
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Paragraph 3 allows the principal to list additional powers not covered by Paragraph 1. For
example, the principal may grant authority to make gifts, change beneficiaries on insurance
policies, or revoke or amend trusts. Paragraph 4 allows the agent to delegate discretionary
decision-making. This paragraph may be struck out by the principal. Paragraph 5 allows the
agent to be compensated for services rendered but this paragraph may be struck out by the
principal.
Paragraph 6 allows the principal to specify a future date or event upon which the power will
become effective. In the absence of such a specification, the power of attorney becomes effective
when signed. Paragraph 7 allows the principal to specify a future date or event upon which the
power will terminate. In the absence of such a specification, the power will terminate upon the
death of the principal.
Paragraph 8 allows the principal to designate successor agents. Paragraphs 9 and 10 allow the
principal to designate a guardian of the estate or person, or both, of the principal.
The instrument must be signed by the principal and notarized to be effective. The principal may,
but is not required to have, the agent and successor agents provide specimen signatures. If
specimen signatures are provided, the principal must certify that they are correct. If the agent has
authority to convey any interest in real estate, the name of the preparer of the power of attorney
must be inserted. This is necessary since the power must be recorded at the time of or before the
recording of the instrument of conveyance executed pursuant to the power. ATG requires all
powers of attorney used in the connection with the execution of a deed, mortgage, or other
instrument dealing with real property to be recorded.
The reverse side of the form consists of reproductions of Sections 3-4 of the Act, which is
delineation, and explanation of the powers granted under the Statutory Short Form Power of
Attorney for Property. The agent is authorized to exercise the same powers with respect to real
estate that the principal could if present and under no disability. The authority includes real estate
in a land trust and all beneficial interest in and powers of direction under a land trust.
III. ATG REQUIREMENTS
In order to insure title to real estate derived through conveyances executed under a power of
attorney, you can rely on the provisions of the Act, especially when the statutory form is used.
The document must be examined to make sure that it has been signed by the principal and
properly notarized with the statutory acknowledgement. The power must be closely scrutinized
to determine that the power to deal with real estate is granted and that no limitation is imposed
with respect to the particular action to be taken or the particular real estate in question.
If the statutory form is not used, the authority to deal with the real estate must be specifically set
forth in the power, and a legal description must be included. In addition, the authority to waive
homestead must be specifically granted if the real estate is the homestead of the principal. It must
also be acknowledged. Neither a legal description nor a specific grant of authority to waive
homestead need be included when the statutory form is used.
Please note that the United States Department of Housing and Urban Development (HUD) has
indicated that every power of attorney used in FHA transactions must be transaction-specific (see
HUD circular letter 87-2). The Illinois statutory form will generally not be transaction-specific
and you should be aware of the requirements of HUD when the sellers or buyers will not attend
the closing. The power of attorney in those circumstances must give a specific direction for the
ATG Basic Underwriting - Illinois Page 13-3
ATG
particular transaction, which includes date, time, dollar amounts, type of transaction, and
anything else germane to the transaction.
You do not need to obtain proof that the principal is alive or that the power has not been
terminated or amended unless evidence to the contrary is brought to his or her attention.
However, the bankruptcy of the principal will terminate the authority of the agent. If there is an
indication that the principal is dead, has filed bankruptcy, or that the power has otherwise been
terminated or amended, request additional information and proof to establish the continuing
validity of the power. If the power specifies either a beginning or ending time or an event for its
effectiveness, ascertain whether or not the time is passed or the event has occurred.
The Illinois Power of Attorney Act is a valuable and powerful tool designed to make powers of
attorney work in this state. It answers many questions about the scope and durability of powers
and will allow ATG members to insure title with confidence in the validity of actions taken
pursuant to the power. The use of the statutory form and reliance upon it in good faith will
protect ATGs Insureds to an extent not previously possible.






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ATG Basic Underwriting - Illinois Page 14-1
ATG
CHAPTER 14 RAILROADS


Railroads may hold property in one of two ways: (1) as an easement of right-of-way for railroad use
with a right of reverter, or (2) in fee simple. If the railroad has a right-of-way then the abandonment of
rail service automatically ends the interest so that the railroads interest reverts to the owner of the fee
simple. If a railroad holds land in fee simple then abandonment of rail service does not affect its
property right at all. To determine whether a railroad has a right-of-way or a fee simple, courts examine
the granting instrument, be it a deed or a statute. Illinois courts presume that a deed to a railroad conveys
a right-of-way rather than a fee simple, but a clear intent to convey a fee simple will overcome that
presumption.
If a search discloses a railroad currently or formerly in the chain of title, examine the extent of the
railroads interest in the property. Railroads often do not know they have less than fee simple title and
attempt to convey fee simple title. While this area of the law is confusing and fact-specific, this chapter
offers some guidance to the issues involved in railroad interests in real property.
I. FEE SIMPLE V. RIGHT-OF-WAY
A. Illinois Central Railroad Property (Land Grant Property)
First, determine what type of ownership interest the railroad holds in the property. In
Illinois, the Illinois Central Railroad (ICRR) presents a unique situation and you should
pay particular attention should this entity appear in the chain of title. In 1850, the U.S.
government decided to grant land to railroads in order to accelerate economic growth
across the nation. In accomplishing this, the federal government conveyed land to the
State of Illinois for railroads by the Act of 1850. This act conveyed to Illinois only an
easement for a railroad right-of-way with a right of reverter back to the U.S. government
upon abandonment.
1
Thus, the federal government still holds the fee simple interest in
these right-of-ways and could convey that interest independently of the right-of-way. In
1851, the State of Illinois chartered the ICRR and conveyed to it all the lands granted to
the State of Illinois by the United States in fee simple. When Illinois granted this land,
however, the State of Illinois only had a right-of-way and could not grant more than it
actually possessed. Thus, the state granted only a right-of-way with a reverter.
2
Upon
abandoning railroad use, the land reverts back to the U.S. government if the government
has not otherwise disposed of the underlying property.
For any property in which the ICRR appears in the chain of title as grantor the following
exception must be raised on the commitment:
Right, title, and interest of the United States of America, or any person
claiming by, through, or under the United States.
B. Non-Illinois Central Railroad Property
Railroads other than the ICRR acquire property through deeds. If any non-ICRR railroad
should appear in the chain of title, inspect the conveying deed to discover what type of
ownership interest the railroad received. Illinois courts adhere to the principle that the
cardinal and all important rule in construing such deeds is to ascertain the intention of the

Page 14-2 ATG Basic Underwriting - Illinois
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parties.
3
Thus, the court will find either a fee simple or a right-of-way easement interest
depending upon how the court interprets the evidence of intent in the deed of the
conveying parties. However, Illinois courts have generally held to a more definite rule.
Where the granting clause of a deed contains language limiting the interest conveyed or
describing the use or purpose for the conveyance, then the court will find only an
easement interest in a right-of-way with a reverter.
4
Furthermore, if the deed anywhere
uses the term right-of-way, then the court will find only an easement of right-of-way in
the railroad, because the term right-of-way has come to have a definite legal meaning.
5

If the deed conveys a definite parcel of land without language relating to the purpose of
the conveyance or limiting the interest in the granting clause, then the court will find a
fee simple interest in the railroad.
6
Be aware that this rule is a summary of holdings and
that Illinois courts decide each case individually, reading the relevant deed on its own.
If the examination reveals that the deed conveying property to the railroad has any
limiting language as to the use or purpose of the land, then the following exception
should be raised on the commitment:
Right, title, and interest of *, and any person claiming by, through, or
under * as evidenced by deed dated * and recorded as document no. *,
[Book *, Page *].
II. ABANDONMENT
A. Illinois Central Railroad Property
Since the ICRR received land indirectly from the federal government, the federal statute
on abandonment governs disposition of its right-of-ways. 43 U.S.C. 912 states that
where the railroad holds title to property outside of municipalities, the right-of-way will
revert back to the original grantor (the U.S. government) and through the original grantor
to the current owner of the fee simple. In a municipality, however, the right-of-way vests
in the municipality automatically. Thus, a title search requires the member to investigate
who holds the right to the reversionary interest. Often that holder will be an adjoining
landowner.
7

Certainly, the ICRR may also hold land it obtained by deed. Particularly where the ICRR
holds land used for non-mainline routes, the member should look for deeds to the ICRR
from private landowners. Should a deed turn up, examine the deed for the parties intent,
as discussed below
B. Non-Illinois Central Railroad Property
Abandonment of railroad property involves a factual determination that the railroad no
longer uses the property and that others have acquired the title to it by adverse possession
or otherwise. Abandonment can never be presumed from mere non-use of the property. In
any case, call the ATG underwriting department to discuss the matter with an
underwriter.
If the railroad received only an easement of right-of-way, then the member must
determine whether the railroad has abandoned its interest in the property. If the railroad
has abandoned railroad operations then the right-of-way automatically terminates and the
land is no longer burdened by the easement. In Illinois, a railroad abandons its right-of-
ATG Basic Underwriting - Illinois Page 14-3
ATG
way when: (1) it applies to the Illinois Commerce Commission and receives approval to
abandon, and (2) it ceases using the right-of-way.
8
These two acts together are sufficient
to prove both the intent and act of abandonment. Remember, the rule for railroad
easements is similar to the rule for easements in general: mere nonuse of an easement for
a fixed period is not of itself sufficient to establish an abandonment.
Furthermore, any rail carrier not operating solely in the state of Illinois must apply to the
Interstate Commerce Commission to abandon a railway right-of-way. The Staggers Act
sets forth comprehensive standards for abandonment of rail lines. Official
9
abandonment
is granted only if the Interstate Commerce Commission finds that the present or future
public convenience and necessity require or permit the abandonment or discontinuance
of the railway line.
10
Once an application is filed and the ICC issues a certificate, the
railroad right-of-way is officially abandoned.
When examining title and it appears that a railroad has or will convey part or all of the
railroad property, the following exception should therefore be raised:
Upon a conveyance or a mortgage of the land, ATG must be furnished
with a certified copy of the petition filed with the Illinois Commerce
Commission and the Interstate Commerce Commission (for interstate
railroads) for approval of said sale or mortgage, and the Commissions
order or certificate authorizing the sale or mortgage.
Where the deed or mortgage is already of record, the following exception will be
appropriate:
A certified copy of the petition filed with the Illinois Commerce
Commission for approval of the sale (mortgage) of the land and the
Commissions order or certificate authorizing said sale (mortgage) should
be furnished.
III. CONCLUSION
Railroads often attempt to convey property upon which they only hold an easement of right-of-
way and not in fee simple. Carefully examine any chain of title including a railroad to determine
the nature of the railroads ownership interest, and raise the appropriate exceptions for the
interests of the fee titleholder.

Page 14-4 ATG Basic Underwriting - Illinois
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[NOTES]
ATG Basic Underwriting - Illinois Page 14-5
ATG

1
City of Maroa v. Illinois Cent. R.R., 170 Ill.Dec. 224, 229, 592 N.E.2d 660, 229 Ill.App.3d 503 (4
th
Dist. 1992
2
170 Ill.Dec. at 229
3
Sowers v. Illinois Cent. Gulf R.R. Co., 105 Ill.Dec. 76, 78, 152 Ill.App.3d 163, 503 N.E.2d 1082 (5
th
Dist. 1987)
4
McVey v. Unknown Shareholders of Inland Coal and Washing Co., 56 Ill.Dec. 135, 137, 100 Ill.App.3d 584, 427 N.E.2d
215 (5
th
Dist. 1981) (deed entitled Deed for Right-of-Way and granting clause contained language, for the purposes of
constructing, maintaining, and operating thereon a single or double track railroad, conveyed only an easement, not fee
title.); City of Urbana v. Solo Cup Co., 22 Ill.Dec. 786, 66 Ill.App.3d 45, 383 N.E.2d 262 (4
th
Dist. 1978) (granting clause
contained language, for the location, construction, maintenance, repair, renewal, operation and use of a railway track and
for all railroad purposes, and then specifically provided for a reverter when railroad abandoned.)
5
McVey, 100 Ill.App.3d at 586
6
Dept. of Conservation v. Fairless, 210 Ill.Dec. 541, 547, 273 Ill.App.3d 705, 653 N.E.2d 446 (Ill. App. Ct. 1995); Penn
Cent. Corp. v. Commonwealth Edison Co., 111 Ill.Dec. 214, 215, 159 Ill.App.3d 419, 512 N.E.2d 118 (Ill. App. Ct. 1987);
Sowers, 105 Ill.Dec. at 78, 80; Urbaitis v. Commonwealth Edison, 159 Ill.Dec. 50, 56, 143 Ill.2d 458, 575 N.E.2d 548 (Ill.
1991) (conveys connotes an intent to convey fee simple title)
7
Maroa, 170 Ill.Dec. at 230; see also City of Buckley v. Burlington N., 106 Wash.2d 581, 584, 723 P.2d 434, 437.
8
70 ILCS 1905/27; Schnabel v. County of DuPage, 101 Ill.App.3d 553, 563, 428 N.E.2d 67, 157 Ill.Dec. 121, (2
nd
Dist.
1981); Natl Bank of Bloomington v. Norfolk & W. Ry. Co., 73 Ill.2d 160, 176, 383 N.E.2d 919, 23 Ill.Dec. 48, (Ill. 1978
9
(49 U.S.C. 10101 et seq.)
10
49 U.S.C. 10903(a







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ATG Basic Underwriting - Illinois Page 15A-1
ATG
CHAPTER 15A SPECIAL POLICIES:
CONSTRUCTION


This policy is specifically designed to insure a mortgage that contemplates multiple disbursements
during an ongoing construction project.
The Insuring Provisions of the ALTA Construction Mortgagee Policy (MPC) give the same coverage as
the ALTA Mortgagee Policy except that insuring provision number seven on the Mortgagee Policy has
been deleted, thus giving no mechanics lien/construction lien coverage.
I. EXCLUSIONS FROM COVERAGE
1. - 5. Paragraphs one through five of the Exclusions from Coverage are the same as the ALTA
Mortgagee Policy.
6. Mechanics lien/construction lien claims for work, whenever performed, except for
claims recorded as of the Date of the Policy.
Although no mechanics lien/construction lien coverage is given under the Insuring
Provisions (see above), this Exclusion makes it clear that there is no such coverage,
except for liens already in the public record as of the Date of Policy, and not excepted
from coverage on Schedule B.
7. Lack of priority of the Insured mortgage by reason of the failure to disburse the loan
proceeds by the Date of Policy.
Since it is the very nature of a construction loan to disburse the proceeds over an
extended period of time as construction is completed, the lien of the mortgage may lose
its priority if the disbursements occur beyond any state law requirements.
8. Paragraph eight of the Exclusions from Coverage is the same as paragraph seven of the
Exclusions from Coverage in the ALTA Mortgagee Policy.
II. CONDITIONS AND STIPULATIONS
1.-6. Paragraphs one through six of the Conditions and Stipulations are identical to the ALTA
Mortgagee Policy.
7. Determination and Extent of Liability.
This paragraph has been modified to limit the extent of the title companys liability to the
least of:
(i) The Amount of Insurance on Schedule A;
(ii) The amount of the loan proceeds disbursed as of the Date of Policy plus any
additional disbursements made after the Date of Policy (up to the Amount of
Insurance on Schedule A), plus any amounts advanced by the lender to protect the
lien of the insured mortgage, plus interest thereon; or

Page 15A-2 ATG Basic Underwriting - Illinois
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(iii) The difference in value of the estate as insured and the value of estate subject to
the defect, lien, or encumbrance.
8. Limitation of Liability.
This paragraph has been modified to delete subparagraph (d) of the ALTA Mortgagee
Policy, which subparagraph provides that the title company has no liability for any
indebtedness or construction loan advances made subsequent to the Date of Policy,
except construction loan advances for an improvement to the property, which the Insured
lender was obligated to make.
Obviously, such coverage is precisely what a construction lender wants, and such
mechanics lien/construction lien coverage is given to the lender by the following
endorsement:
Construction Loan Disbursement Endorsement provides mechanics lien/construction
lien coverage for any lien for labor, materials, etc., through a specific date, but not for
any lien for work already performed but shown on the general contractors or owners
sworn statement as being unpaid. The endorsement also limits the title companys
liability to the amount of the insured mortgage actually disbursed to date.
9.-16. Paragraphs nine through sixteen of the Conditions and Stipulations are identical to the
ALTA Mortgagee Policy.
III. SCHEDULE A
ATG Construction Mortgagee Form Schedule A is a separate document from the actual MPC
cover. It sets forth the specific details of the transaction and of the real estate. Schedule A
includes the following essential elements:
Policy Number: The Serial Number, the number imprinted on the cover of the MPC jacket.
Date of Policy: The last date of the search of the public records for title information;
remember, nothing is covered prospectively.
Amount of Insurance: The amount of the mortgage.
Name of Insured: The name of the lending institution. The name appears exactly as the
lender states it in its instructions (for example, The Lending Institution, its successors and/or
assigns etc.)
The estate is at the Effective Date vested in: The name of the party who is in title.
The mortgage referred to and the assignments thereof are described as follows: The
description of the mortgage, including the recording information.
The land referred to is described as follows: The full legal description of the property
being insured.
Issued by: The issuing agents firm name, member number, authorized signature, and
address.
ATG Basic Underwriting - Illinois Page 15A-3
ATG
IV. SCHEDULE B
ATG Construction Mortgagee Form Schedule B also relates specifically to the real estate in
question and sets forth matters for which no coverage is given to the Insured and the title
company has no duty to defend.
Policy Number: The Serial Number, the number imprinted on the cover of the MPC jacket.
Standard Exceptions: The preprinted Standard Exceptions from the Commitment will be
raised unless the following are provided:
(1) Construction Lien and Possession Affidavit (ALTA Statement);
(2) Survey, or a Construction Lien and Possession Affidavit and, if applicable, an
Affidavit in Lieu of Survey;
(3) Special assessment search; and
(4) Other documents, depending on property or specific transaction (e.g., mechanics
lien/construction lien waivers, utility company letters, etc.).
Special Exceptions: The Special Exceptions (#1 - ?) that raise specific title matters that relate
to the specific real estate are listed here. The first Special Exception is lien of taxes and is
preprinted on Schedule B. Additional exceptions (mortgages, other liens or restrictions,
easements, etc.) that represent encumbrances on or defects in title to the property are set forth
in the remainder of Schedule B.
Issued by: The issuing agents number and authorized signature are on the bottom of the
form.


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EXHIBIT 15A-1: CONSTRUCTION LOAN TITLE INSURANCE POLICY (page 1 of 4)


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EXHIBIT 15A-1: CONSTRUCTION LOAN TITLE INSURANCE POLICY (page 2 of 4)



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EXHIBIT 15A-1: CONSTRUCTION LOAN TITLE INSURANCE POLICY (page 3 of 4)




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EXHIBIT 15A-1: CONSTRUCTION LOAN TITLE INSURANCE POLICY (page 4 of 4)



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EXHIBIT 15A-2: CONSTRUCTION LOAN DISBURSEMENT AGREEMENT











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ATG Basic Underwriting - Illinois Page 15B-1
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CHAPTER 15B SPECIAL POLICIES:
LEASEHOLD POLICIES














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ATG Basic Underwriting - Illinois Page 15C-1
ATG
CHAPTER 15C SPECIAL POLICIES:
U. S. GOVERNMENT


This policy is designed to insure title when the owner is the United States of American or a U.S. Agency
or department, such as the Department of the Interior. The official name of this policy is the 1991 ALTA
U.S. Policy Form. It is an owners form only and is very similar to the regular ALTA Owner Policy. It
insures against defects, liens, or encumbrances and does not provide for defense costs. The overall
coverage provided is substantially less than for a regular Owner Policy.
The USOPA adds an assurance against loss or damage by reason of:
.5. In instances where the Insured acquires title to the land by condemnation, failure
of the commitment for title insurance, as updated to he date of the filing of the lis
pendens notice or the Declaration of Taking, to disclose the parties having an
interest in the land as disclosed by the public records.
However, the policy does not insure against the invalidity or insufficiency of such a proceeding except
to the extent as set forth above.
Under this policy, only the Attorney General of the United States has the authority to undertake the
defense of any title claim and ATG may not represent the Insured without the Attorney Generals
authorization.
This policy is frequently requested by the United States when they have obtained an environmental
easement over farmland, thereby preserving wetlands or other habitat and preventing the use of the land
for improvements or cultivation.
If you are requested to provide a U.S. Policy, please contact the ATG Underwriting department
for advice and to obtain a serialized U.S. Policy.




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EXHIBIT 15C-1: U.S. GOVERNMENT OWNER TITLE INSURANCE POLICY (page 1 of 4)


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EXHIBIT 15C-1: U.S. GOVERNMENT OWNER TITLE INSURANCE POLICY (page 2 of 4)


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EXHIBIT 15C-1: U.S. GOVERNMENT OWNER TITLE INSURANCE POLICY (page 3 of 4)



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EXHIBIT 15C-1: U.S. GOVERNMENT OWNER TITLE INSURANCE POLICY (page 4 of 4)


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[NOTES]













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ATG Basic Underwriting - Illinois Page 15D-1
ATG
CHAPTER 15D SPECIAL POLICIES:
SHORT FORM RESIDENTIAL


This policy reduces the ALTA Mortgagee Policy to a single-page policy. It incorporates by reference the
Insuring Provisions, Exclusions from Coverage, and the Conditions and Stipulations of the ALTA Loan
(Mortgagee) Policy Form.
I. SCHEDULE A
Schedule A of the Short Form Policy references the actual recorded insured mortgage for the
Effective Date of the policy, the description of the land covered by the policy, and the party(ies)
in whom title is vested (the borrower(s) shown on the insured mortgage). The remainder of the
Schedule A information (policy number, Amount of Insurance, mortgage amount, mortgage date,
name of Insured, name of borrower(s), and property address) are completed by the insurer.
II. SCHEDULE B
Schedule B automatically excludes the following matters:
1. Taxes and special assessments becoming due after the Date of Policy;
2. Covenants, conditions, and restrictions of record. The policy gives specific
assurances that such covenants, etc., have not been violated, and that any
future violation will not result in a reversion or forfeiture of title, and that
the lien of the mortgage will not be extinguished, subordinated, or
impaired by the covenants, etc.
3. Easements or servitudes of record. The policy gives specific assurance
that there are no encroachments of the improvements upon the easements
and that the use of the easements will not interfere with or damage the
improvements (including lawns, shrubbery, and trees).
4. Any mineral rights, lease, or reservation of record. The policy insures (for
residential one-to-four family dwelling purposes) that the mineral rights
will not interfere with the residential use, and also insures against any
damage to the residential improvements (including lawns, shrubbery, and
trees) from the use of the surface of the land in the exercise of the mineral
rights. There is no coverage for subsidence.
5. The policy gives coverage for survey matters (both encroachments of the
improvements on the insured premises onto adjoining land and vice
versa).

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III. ENDORSEMENTS
The Short Form policy incorporates by reference the following ALTA endorsements:
Endorsement 4 Condominium Comprehensive
Endorsement 5 Planned Unit Development
Endorsement 6 Variable Rate (A.R.M.) Mortgage
Endorsement 6.2 Variable Rate (A.R.M.)
Endorsement 8.1 Environmental Protection Lien
Mortgage with Negative Amortization
Endorsement 7 Manufactured Housing
The endorsement coverage is given merely by checking the appropriate box on the Short Form
Policy. Any additional endorsements not listed on the Short Form Policy may be given by merely
attaching them to the policy.
IV. ADDENDUM TO SCHEDULE B
Finally, if there are additional exceptions that have priority over the insured mortgage, or for
which the title company is unwilling to insure, an Addendum to Schedule B setting forth those
exceptions may be attached to the Short Form.

ATG Basic Underwriting - Illinois Page 15D-3
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[NOTES]





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ATG Basic Underwriting - Illinois Page 16A-1
ATG
CHAPTER 16A SUBDIVISION OF LAND:
CONDOMINIUMS


The condominium market has been expanding in Illinois for a number of years both for residential and
commercial property. A policy written on a condominium unit poses certain problems due to the unique
nature of condominium ownership. This chapter will deal with the issuance of a title policy for the sale
of a residential condominium unit. The procedures set forth in this chapter should also apply to the sale
of a commercial condominium unit, but you may wish to contact the ATG underwriting department to
discuss specific problems encountered if a commercial condominium unit is to be insured. Also, ATG
has procedures for the issuance of a master condominium policy when an ATG member is representing a
developer in the construction or conversion of a condominium development. For information on the
preparation of a condominium master policy, which is much like a subdivision master policy, please
contact the ATG underwriting department.
Probably the best definition of a condominium comes from the former Act which provided that a
condominium is a form of cooperative ownership wherein units are owned individually and the
appurtenances of those units, both building and land, are owned as tenants in common with all other unit
owners. Thus, condominium ownership carries with it the right to own an individual unit along with a
co-ownership right in the common elements. In order to create such a unique beast, strict compliance
with the Illinois Condominium Property Act, Ill. Rev. Stat., c. 30, 301 et seq. is required. In order to
submit the property to the Illinois Condominium Property Act, and thereby create a condominium, three
essential documents must be of record. They are the declaration of condominium, the plat of survey and
the bylaws. Until these documents have been approved and recorded, the condominium does not exist.
Therefore, no policy could be written insuring a condominium unit until after recording of these
documents.
I. DECLARATION
Section 4 (c. 30, 304) sets forth the requirements for the declaration. The declaration contains
the essential elements concerning the condominium such as the name of the development, a legal
description of the parcel, the legal description of each unit (which may be designated by a unit
number), the city and county where the condominium is located, the percentage of ownership
interest in the common elements allocated to each unit (which is to be based upon the value of
each unit in relation to the value of the property as a whole), a description of both the common
and limited common elements, and other applicable matters as outlined in that section of the Act.
The declaration usually will set forth the restrictive covenants, easement rights, pre-emptive
rights of the board and other matters on the use and occupancy of the premises. The declaration
must be executed and acknowledged by all owners of the property and any party having an
interest therein. Therefore, if the property is subject to a mortgage at the time of its submission to
the Act, the mortgagee must join in the declaration.
II. PLAT
Along with the declaration, a plat of survey is to be recorded in accordance with the
requirements set forth in Chapter 30, 305. The plat will describe the improvements to be
submitted and set forth the exterior boundaries of the parcel, the location and linear
measurements of all buildings and improvements on the parcel, elevations of the interior surfaces

Page 16A-2 ATG Basic Underwriting - Illinois
ATG
of the floors and ceilings, and set forth the measurements for the interior surfaces of perimeter
walls along with other data which will permit identification of the individual units.
III. BYLAWS
Sections 17 and 18 (c. 30, 317 and 318), set forth the requirements for the bylaws which are to
be recorded along with the declaration. The bylaws are to describe the management of the
condominium which shall be administered by a board of managers. Paragraph 318 sets forth
certain requirements for the election of the board of managers by the unit owners and the conduct
of meetings by the board. The bylaws will also outline the duties and powers of the board.
It is necessary that the three documents listed above be examined before the first policy is written
on a condominium unit since each document will contain information which could affect use and
occupancy of the premises. Once a policy has been written and appropriate exceptions have been
made for matters set forth in those documents, the issuing attorney needs to check whether there
have been any amendments since the date of the prior policy which would modify the prior
exceptions.
IV. PREPARATION OF THE POLICY
In preparing a commitment for a condominium unit, Schedule A is prepared in its regular
fashion. The only difference would be in the legal description, which would be for the
condominium unit rather than a subdivision lot or a metes and bounds description. An example
of a legal description for a condominium unit is set forth below:
Unit #* in (Name of Condominium) as delineated on the survey of the following
described parcel of real estate: (insert legal description of base tract) in *
County, Illinois, hereinafter referred to as parcel, which survey is attached as
Exhibit A to the declaration of condominium for (Name of Condominium)
executed by * and recorded in the office of the recorder of * County, Illinois, in
Book * at Page * as Document * together with an undivided * percent interest in
the common elements of said parcel.
Schedule B of the commitment will contain the following exceptions:
1. Terms, provisions, covenants, conditions, options, rights, and easements
established by the Declaration of Condominium Ownership recorded on *
as Document * (in Book * at Page *).
2. Limitations and conditions imposed by the Illinois Condominium Property
Act.
3. We must be furnished with a certificate executed and acknowledged by the
secretary of the board of managers stating that compliance has been made
by the owners with the provisions of Article * of the Condominium
Declaration, or that said provisions pertaining to preemptive rights have
been duly waived by the board of managers and the rights of the Board
thereunder have terminated.
4. We must be furnished with a certificate executed and acknowledged by the
secretary of the board of managers stating that there are no unpaid
assessments as per the Condominium Declaration.
ATG Basic Underwriting - Illinois Page 16A-3
ATG
Please note that most condominiums give the board of managers the option to purchase the unit
under the same terms as those offered by a third party to a unit owner. Therefore, the pre-
emptive rights of the board of managers must be waived by the board in writing before the sale
to a third party can be closed.
Upon compliance with the requirements set forth in items 3 and 4 above, those exceptions may
be deleted from the final policy. Items 1 and 2 above will remain as exceptions on the final title
policy. Exceptions 1 and 2 will also be set forth on the Mortgagee Policy if one is issued on
condominium property.
II. ENDORSEMENTS
ATG has available certain condominium endorsements that are often required by lenders making
loans on condominium property. Included at the end of this chapter are Condominium
Endorsements and the combined Condo Endorsement (ALTA).
Condominium Endorsement 1 insures that the property set forth in Schedule A is in fact
condominium property validly created and subject to the Illinois Condominium Property Act.
This endorsement may be attached to either an owners or a Mortgagee Policy.
Condominium Endorsement 2 is used for mortgage policies only. It affirmatively insures that the
property listed in Schedule A is a separate taxable entity for the purpose of imposing liens of real
property taxes, special assessments and other state and local charges. It also affirmatively insures
that such tax liens will not impair the priority of the mortgage lien insured. Chapter 30, 310
provides that real property taxes, special assessments and any other special taxes or charges for
the state of Illinois or any political subdivision thereof or other lawful taxing or assessing body
shall be assessed against and levied upon each unit and the owners corresponding percentage of
ownership in the common elements as a tract and not upon the property as a whole. Therefore,
once there has been a division so that the unit is being taxed separately, it will continue to be
taxed and assessed individually, the same as a lot within a subdivision. However, please note that
prior unpaid taxes against the development as a whole remain as a lien against each unit. Contact
the ATG underwriting department for instructions when a search discloses that taxes on the
underlying property remain unpaid.
Condominium Endorsement 3 is also for mortgage policies only. It affirmatively insures that the
mortgage lien has priority over any common expenses assessed to the unit listed in Schedule A.
Issuance of this endorsement requires that there are no unpaid assessments at the time of the
recording of the mortgage and that the mortgage contains a mailing address in the state of Illinois
where a notice may be mailed to the mortgagee by the board of managers in the event there are
future unpaid assessments. See c. 30, 309.
Condominium Endorsement 4 affirmatively insures that there are no present violations of any
building and use restrictions referred to in the condominium declaration and that any present or
future violation will not give rise to any right of re-entry or result in a forfeiture or reversion of
title. The form further insures against any loss or damage by reason of an exercise or attempt to
exercise any such termination of title based upon a violation of said restrictions. In order to issue
this endorsement, the building and use restrictions referred to in the condominium declaration
must be reviewed. This endorsement is generally requested by the mortgagee, but may also be
attached to an Owner Policy, if requested.
Condominium Endorsement 5 insures against any loss or damage sustained due to
encroachments by existing improvements. This includes unintentional encroachments of the

Page 16A-4 ATG Basic Underwriting - Illinois
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common elements upon any unit or of any unit upon the common elements or another unit.
Reference to the plat of survey should be sufficient to determine whether or not any such
encroachments do exist. This endorsement may be attached to either an owners or a Mortgagee
Policy.
ATG has also prepared a Condominium Endorsement (ALTA 4) which incorporates all of the
five previous Condominium Endorsements and also adds a provision protecting against any loss
or damage arising by reason of the failure of title due to the exercise of a right of first refusal
which could have been exercised at the date of the policy. This endorsement may be used for
mortgagee policies only. The requirements listed above also apply to this endorsement. The
combined Condominium Endorsement has become the most widely requested condominium
endorsement.
ATG Basic Underwriting - Illinois Page 16A-5
ATG
EXHIBIT 16A-1: CONDOMINIUM ENDORSEMENT 1


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EXHIBIT 16A-2: CONDOMINIUM ENDORSEMENT 2


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EXHIBIT 16A-3: CONDOMINIUM ENDORSEMENT 3


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EXHIBIT 16A-4: CONDOMINIUM ENDORSEMENT 4


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EXHIBIT 16A-5: CONDOMINIUM ENDORSEMENT 5


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EXHIBIT 16A-6: CONDOMINIUM BLANKET ENDORSEMENT 1









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ATG Basic Underwriting - Illinois Page 16B-1
ATG
CHAPTER 16B SUBDIVISION OF LAND:
PLANNED UNIT DEVELOPMENTS


NOTE: This subchapter, Subdivision of Land: Planned Unit Developments, is reserved.











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ATG Basic Underwriting - Illinois Page 16C-1
ATG
CHAPTER 16C SUBDIVISION OF LAND:
SUBDIVISIONS


I. CREATION OF SUBDIVISIONS
A. The most important document to create a subdivision is the plat.
B. 765 ILCS 205/1 et seq. establishes the following matters be shown on a plat to subdivide
property:
1. all public streets, alleys, ways for public service facilities, ways for public
utilities, CATV, parks, playgrounds, schools, etc. along with the names, width,
course and extent of all public streets, alleys, and ways for public service
facilities;
2. all tracts, parcels, lots or blocks, and the numbering of all tracts, parcels, lots or
blocks by progressive numbers;
3. the precise dimensions of all tracts, parcels, etc.;
4. the angular and linear data along the exterior boundaries of the original tract being
subdivided;
5. the location of known and permanent monuments from which future survey may
be made;
6. the location of the markers set by the surveyor at the time of making the survey, at
the following locations:
a. the external boundaries of the original tract being subdivided;
b. all corners;
c. each end of all curves and at the point where a curve changes its radius;
d. at all angle points in any line and at all angle points along a meander line,
the points to be not less than 20 feet back from the normal water elevation
of a lake, or from the bank of a stream;
e. when such corners or points fall within a street or proposed future street,
the monuments must be placed in the right of way line of the street;
f. all internal boundaries, corners and points, block corners, each end of all
curves at the points where a curve changes radius, and at all angle points
in any line; and
g. all lots (by two or more monuments).

Page 16C-2 ATG Basic Underwriting - Illinois
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7. A topographical study must be submitted showing the elevation prior to any
changes being made and the change, if any, in the flow of surface waters or
elevations caused by the contemplated development. The study must have on its
face a signed statement by a Registered Professional Engineer and the owner (or
the owners attorney) that the surface drainage will not be changed by the
subdivision construction, or if it will be changed, that reasonable provision has
been such drainage;
8. The plat must also comply with any local municipal official plan;
9. The owner of the land (or the owners attorney) must acknowledge the plat in the
same manner as deeds are acknowledged. The surveyor must also attach his
statement to the plat;
10. The plat must be approved by the local municipality if within its corporate limits,
or by the county if outside any municipality;
11. The Illinois Department of Transportation or the local highway authority must
approve the plat if access to the subdivided property is by means of a state or local
highway;
12. The plat must be at least 8 by 14 inches and no more than 30 by 36 inches;
13. The plat, with all appropriate approvals, must be recorded in the county (or
counties) where the land is located. In counties of 1,000,000 or more population
the original plus six copies must be submitted to the recorder. In all counties, the
plat must contain the current mailing address of the person submitting the plat for
recording;
14. Any changes in the unrecorded plat must be made by the original surveyor, or in
the event of his death, incapacity, or absence, by another Registered Land
Surveyor, who shall specifically identify the changes made on the face of the plat.
C. Once the plat is recorded, all streets, parks, etc. shown on the plat as dedicated to the
public vest fee title in the municipality once the municipality accepts the dedication.
D. ATG regulations require ATG members to submit the plats, condominium declaration,
and supporting documents to the ATG underwriting department for approval prior to
issuing any commitment or policy for any portion of the property.
II. MISCELLANEOUS PROBLEMS
A. Concurrently with any property subdivision, a tax decision should be made. The county
clerks office will have the appropriate forms to divide the tax parcel into new parcels
complying with the subdivision plat.
B. Frequently, immediately after the subdivision has been created, a title indemnity escrow
will need to be established for the unpaid current real estate taxes and special assessments
so that coverage can be given to the purchasers and their mortgagees.
C. Title indemnity escrows may be established to insure over other matters of a liquidated
amount (e.g., mechanics lien claims, tax liens, judgments, etc
ATG Basic Underwriting - Illinois Page 16C-3
ATG
D. Frequently, the developer will request a deed and money escrow for each closing as the
parcels are sold from the new subdivision or condominium. This allows the developer to
deposit documents, etc., with the title company at any time and to not have to personally
appear at each closing.
III. SUBDIVISION/CONDOMINIUM MASTER POLICIES
ATG Regulation No. 5 established two methods of issuing subdivisions/condominiums master
policies.
A. Method 1 - Insuring ultimate purchasers and mortgagees
1. Prepare policy in developers name and in lieu of proposed Amount of
Insurance on Schedule A, insert Master Policy for * Subdivision.
2. Send original policy to ATGs Champaign office along with ATG copies - there is
no premium due since there is no liability to the developer.
3. As individual parcels/units are sold, individual policies to buyer and/or lender are
issued (cut-off policies). The premium will be based on the reissue rate. Identify
master policy number on Accounting Information Sheet of cut-off policies. If a
special reissue rate was given by an ATG underwriter, that reissue rate may be
used for the total number of units/lots originally committed for, for which the
special rate was given.
B. Method 2 - Insuring Developer
1. Issue the commitment showing developer as proposed Insured.
2. Amount of Insurance should be the total expected sales prices for all lots/units.
3. Call a staff attorney for a special rate.
4. Once title is transferred to developer, issue the master policy in its name.
5. Raise the following Schedule B exception:
As the policy holder sells individual parcels covered by this policy,
the coverage under this policy will be reduced by the amount of the
policy on the individual parcel and this policy will be amended by
endorsement to reflect the reduced coverage until such time as the
entire coverage is reduced to zero.
6. On the Accounting Information Schedule, identify the policy as a master policy
and send it to ATGs Champaign office along with the premium for the full
amount of coverage.
7. As each lot/unit is sold, issue normal OPA and MPA cut-off policies to the
buyer and lender.
8. The premium for each cut-off policy (OPA and MPA) is the concurrent rate in
effect for that county.

Page 16C-4 ATG Basic Underwriting - Illinois
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9. On Accounting Information Schedule for the cut-off policies, identify the policy
number of the master policy.
10. Upon receipt of the cut-off policies, ATG Policy Processing in Champaign will
calculate the balance remaining on the prepaid insurance under the master policy
and notify the member.
11. Once the total amount of prepaid insurance on the master policy has been used,
the premium for any additional cut-off policies will be calculated at the reissue
rate.

ATG Basic Underwriting - Illinois Page 16C-5
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[NOTES]











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ATG Basic Underwriting - Illinois Page 16D-1
ATG
CHAPTER 16D SUBDIVISION OF LAND:
TOWNHOUSES


NOTE: This subchapter, Subdivision of Land: Townhouses, is reserved.















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CHAPTER 16E SUBDIVISION OF LAND:
VACATED STREETS AND ALLEYS


The Illinois General Assembly revised the law that allows municipal authorities to vacate streets and
alleys, effective J uly 23, 1997.
1
This amendment altered the process of examining title to vacated ways.
Following is a summary of the amendment and guidelines on examining title to vacated ways.
I. THE AMENDMENT
Formerly, the statute allowed a municipality to transfer title only to the abutting property owners.
The changes now provide that title may pass to the owners of adjacent parcels of property. The
statute clearly provides that this change will allow an owner or owners of a single parcel of
adjacent property to buy title to the entire vacated way. Specifically, the statute provides that the
vacation ordinance may contain a provision that the vacation does not become effective until
the owners of all property or the owner or owners of a particular parcel or parcels of property
abutting upon the street or alley, or part thereof so vacated, shall pay compensation.
2

Furthermore, the purchasers must pay fair market value for the street as determined by the
corporate authorities.
II. EXAMINING THE VACATING ORDINANCE
Traditionally, when a street was vacated, devolution of title occurred in one of two ways. If the
street was created by common law dedication, then it reverted to the owner (i.e., the dedicator) of
the fee, unless the dedicating instrument said otherwise. This outcome remains the same under
the recent amendment to the statute. Alternatively, if the street was created by a statutory
dedication, (i.e. by a plat of subdivision that fully complies with the Plat Act) then the vacated
parcel was divided among the abutting landowners. This simply required a title examiner to
inspect the plat and identify the abutting parcels of property. However, the amendment to the
statute may change this outcome.
In the past, title examiners could assume that each abutting owner obtained title to the portion of
the street adjacent to his or her land, up to the center of the street, as long as each adjoining
parcel was part of the original subdivision that created the street or alley.
3
Now an examiner
must review the ordinance, in addition to the plat, to discover if and how the street is to be
divided and if anyone actually paid compensation.
In order to insure title to a vacated street or alley, examine the vacation ordinance to determine
that it contains the following items:
A. The street or alley was vacated for a public purpose. (If the ordinance does not specify a
purpose, then it is assumed to be a public purpose).
B. The vote was held at a regular meeting.
C. The vote passed by a three-fourths vote or greater.
D. The vote was cast by ayes and nos.
E. The vote was recorded.

Page 16E-2 ATG Basic Underwriting - Illinois
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F. The identity of the owner and the compensation to be paid, if a particular owner or
owners are to pay compensation for the vacated street or alley.
G. The method to be used for dividing the vacated street or alley.
H. The contingencies, if any, that must be satisfied for the vacation to become effective.
Additionally, title examiners must look for the date the ordinance was passed. An amendment to
the conveyancing statute
4
that became effective on October 3, 1969, changed the way in which
title to the vacated street vests in the owner or owners of the adjacent parcel. If the vacation
ordinance was passed before the 1969 amendment, then the title to the vacated parcel had to be
separately conveyed to any subsequent purchaser or mortgagee.
On the other hand, if the municipal ordinance was passed after the 1969 amendment took effect,
then title to the vacated street or alley passes automatically with the conveyance of the adjacent
lot. Thus, any instrument, including a will, that conveys, transfers, encumbers, leases, or releases
the adjacent parcel also automatically includes title to the vacated street or alley, and the two
parcels are kept together. This amendment eliminates some confusion in examining title to
vacated streets and alleys.
III. INSURING TITLE TO A VACATED PARCEL
In order to insure title to a vacated street or alley, the vacation ordinance must be examined to
determine that the ordinance complies with the vacation statutes above. Once it has been
determined that the ordinance properly vacates the street or alley, the original plat of subdivision
that created the street or alley must be examined. The statute provides that upon vacation, title to
the vacated way shall pass to the adjoining owners to the same extent as though the street or ally
had been dedicated by a common law plat.
5
A common law plat is a subdivision of land that does
not comply with all the requirements of the Plat Act.
6
A common law plat vests in the
municipality an easement only in the street, with the fee in the street passing from the dedicator
to the adjoining landowners upon conveyance of the adjoining lot.
7
However, the vacation
statute does state that if the deed or other instrument that created the dedication provides for the
devolution of title upon vacation, that instrument shall control. Thus, the plat must be examined
to determine if it provides for the devolution of title upon vacation of streets or alleys. Even if
the plat does not provide for the passing of title upon vacation, it must be examined further to
determine that the adjoining parcels were all part of the subdivision that created the vacated way.
If the adjoining parcels on either side of the vacated way were all part of the subdivision, and the
plat does not provide otherwise, title to the vacated way passes one-half to each of the adjoining
landowners. If the street or alley is on the perimeter of the subdivision, with the parcels on one
side only being part of the subdivision that created the street or alley, then upon vacation the
parcels in the subdivision receive the entire vacated way.
Once it has been determined that the street was properly dedicated and then properly vacated,
and the quantity of land that passes to each landowner has been ascertained through examination
of the ordinance, the vacated way may be added to the legal description on Schedule A of the
commitment and policies using the following form:
Parcel 1: [insert legal for the main parcel]
Parcel 2: The [direction, e.g. East, North] * feet of the vacated [street]
[alley] lying [direction] and adjoining Parcel 1.
ATG Basic Underwriting - Illinois Page 16E-3
ATG
The following exceptions would then need to be raised on Schedule B of the commitment:
1. Rights of the State of Illinois, the municipality, the public, and the
adjoining landowners in and to the vacated [street] [alley] lying * and
adjoining the land.
2. Rights of public and quasi-public utilities, if any, in the vacated [street]
[alley] lying * and adjoining the land for maintenance therein of poles,
sewers, etc.
[3. Reservation of easement contained in the ordinance of vacation dated *
[and recorded * as Document no. * [Book * at Page *]].]
In addition to the ordinance, look for certain exceptions when examining a vacated street or
alley. Determine whether the vacated way has been assessed for taxes and whether the taxes have
been paid. An exception must be raised if the vacated way has not been assessed. In addition, the
following exception must be raised for all vacated streets or alleys:
Rights of the municipality, State of Illinois, the public, and adjoining owners in
and to vacated [street] [alley] lying * and adjoining the insured premises.
The reason for this exception is that the public may still be using the street or alley as a public
way, even though title has passed from the municipality to the adjoining owner.
Determine the rights of utilities in the vacated way. The following exception is for the rights of
utility companies in the vacated way as evidenced by the existence of utility poles, pedestals,
access covers, etc.:
Rights of public and quasi-public utilities, if any, in the vacated [street] [alley]
lying * and adjoining the insured premises for maintenance therein of poles,
sewers, etc.
In order to waive this exception, information must be obtained from the municipality and the
various utility companies serving the area, stating that they have no easement or other rights in
the property.
If the vacating ordinance reserves utility rights, then the following exception must be raised:
Reservation of easement contained in the ordinance of vacation dated * and
recorded * as document no. * for the benefit of [list municipality utilities as
appropriate] for [list purposes] (affects parcel *).
On the other hand, if there is no reservation in the vacating ordinance and no poles, conducts, or
other physical utility structures exist on the property, then you may avoid the exception. Obtain
letters from the municipality and utilities releasing any interest in the vacated way.
IV. CONCLUSION
Vacated streets and alleys have always been difficult parcels to insure. The recent amendment
hopefully will encourage vacating ordinances to specifically identify owners who take title to the
vacated ways, which will make your job a bit easier. If you have a vacated street or alley to
insure, please call one of the ATG underwriters for guidance.

Page 16E-4 ATG Basic Underwriting - Illinois
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[NOTES]
ATG Basic Underwriting - Illinois Page 16E-5
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1
65 ILCS 5/11-91-1
2
Id.
3
Counselman v. Wisconsin Lime & Cement Co., 299 Ill. 85, 87 (1921)
4
765 ILCS 5/7a
5
65 ILCS 5/11-91-2
6
765 ILCS 205/1, et seq.
7
Prall vs. Burkhartt, 299 Ill. 19, 132 N.E. 280 (1921)





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CHAPTER 16F SUBDIVISION OF LAND:
ZONING


I. INTRODUCTION
Zoning matters are eliminated from coverage under both the owners and mortgagee policies
pursuant to Paragraph 1 of the Exclusions from Coverage, which provides:
The following matters are expressly excluded from the coverage of this policy:
1. Any law, ordinance or governmental regulation (including but not limited
to building and zoning ordinances) restricting or regulating or prohibiting
the occupancy, use or enjoyment of the land, or regulating the character,
dimensions or location of any improvement now or hereafter erected on
the land, or prohibiting a separation in ownership or a reduction in the
dimensions or area of the land, or the effect of any violation of any such
law, ordinance or governmental regulation.
II. ZONING COVERAGE BY ENDORSEMENT
ATG does, however, provide special zoning coverage through special zoning endorsements for
both the owners and mortgagee policies.
A. Zoning Endorsement No. 1
Zoning Endorsement No. 1 (ALTA Zoning Endorsement 3.0) insures that the property in
question has the specific zoning classification set forth in the endorsement. Also, the
endorsement describes the use or uses that are permitted under that classification. In order
to issue this endorsement, ATG member must examine the municipalitys current zoning
map and ordinance to determine the zoning classification of the property and the
permitted uses under the applicable classification.
ATG specifically denies any liability under this endorsement for any claim based upon
the invalidity of the ordinances or any amendments thereto until such time as a final
decree of a court of competent jurisdiction adjudicates such invalidity, the effect of which
would be to prohibit such use or uses. In other words, even if the zoning ordinance is
held invalid but the use is allowed to continue, there is no liability in the endorsement.
ATG specifically excludes from coverage any loss or damage based upon this
endorsement which is or may be incurred by reason of any person failing to purchase,
lease, or lend money on the premises in question due to a failure of the specific
assurances in the zoning endorsement. In other words, the so-called marketability
coverage is eliminated in zoning matters.
Zoning coverage involves the assumption of a unique risk. We cannot rely on zoning
coverage under a prior policy by another title insurer, nor would another company likely
rely on an ATG zoning endorsement. Therefore, no hold harmless letters could be issued
pursuant to this coverage.

Page 16F-2 ATG Basic Underwriting - Illinois
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B. Zoning Endorsement No. 2
Zoning Endorsement No. 2 (ALTA Zoning Endorsement 3.1) is generally provided with
respect to completed improvements. That is, where the Insured is purchasing property
that is already improved, ATG may be willing to insure that the improvements are, on the
date of the policy, in compliance with the current zoning provisions. The provisions of
paragraph 1 of the endorsement are identical with the provisions of Zoning Endorsement
No. 1.
The second paragraph contains provisions that insure that the improvements as existing
on the date of the policy do not violate any provision of the applicable zoning ordinance.
ATG agrees to indemnify the Insured for loss suffered by reason of the entry of a court
order prohibiting the use of the land as identified in subparagraph (b) of Paragraph 1.
Furthermore, ATG agrees to indemnify the Insured in the event that such a court order
requires an alteration or complete removal of the improvements due to the fact that the
improvements violate the zoning ordinance in any of the four specifically enumerated
matters:
2. Area, width, or depth of the land as a building site for said structure.
3. Floor space of said structure.
4. Setback of said structure from the property lines of the land.
5. Height of said structure.
In order to issue this endorsement, an ATG member must examine the applicable zoning
laws, zoning ordinances, and zoning maps. In addition, if the survey does not disclose the
appropriate information, an on-site inspection may be required. It may be necessary to
obtain architects or engineers certifications on these four items if there is any question
as to compliance. Note that neither of these zoning endorsements insures against future
changes in the zoning scheme of the municipality. No coverage is afforded, for example,
if the zoning ordinance is amended in such a way so as to prohibit the current use,
rendering it a nonconforming use which could require its forced removal at the end of a
specified number of years.
An ATG member is free to charge an appropriate fee for issuance of the endorsements
commensurate with the work involved.
ATG Basic Underwriting - Illinois Page 16F-3
ATG
EXHIBIT 16F-1: ZONING ENDORSEMENT 3


Page 16F-4 ATG Basic Underwriting - Illinois
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ATG Basic Underwriting - Illinois Page 16F-5
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EXHIBIT 16F-2: ZONING ENDORSEMENT 3.1









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CHAPTER 17 WATERWAYS


NOTE: This chapter, Waterways, is reserved.












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ATG Basic Underwriting - Illinois Page 24-1
ATG
CHAPTER 24 SPECIAL EXCEPTIONS


The following chapter lists special exception language for typical title insurance transactions. Please call
the ATG underwriting department for specific exception language not shown in this section or for
instructions on raising and waiving or insuring over Schedule B exceptions.
NOTE: Special exception language is shown in Italics.
NOTE: The language [in Book *, at Page *] should be used only in those counties in which the
recorders office uses book and page references.
ACCESS
Commitment
1. No Access
The public records do not show any means of ingress or egress to or from
the land, and, by reason thereof, this commitment and our policy, if and
when issued, should not be construed as insuring against any loss or
damage by reason of lack of access to and from the land.
Policy
1. No Access
Notwithstanding the insuring clauses of this policy, ATG does not insure
against any loss or damage by reason of lack of access to and from the
land.
ASSOCIATIONS
General
1. Charter
A certified copy of the charter and amendments thereto, if any, and of the
bylaws of *, an unincorporated association, should be furnished, and this
Commitment is subject to such forth exceptions, if any, as may then be
deemed necessary.
2. Resolution
Upon a conveyance or mortgage of the land, a certified copy of a
resolution passed by the members of the party in title or acquiring title
authorizing the execution or acceptance of the instrument of conveyance
or execution of the mortgage should be furnished, together with a
certificate by the custodian of records establishing (1) the identity of the
president and secretary of the association; (2) proof of proper notice of

Page 24-2 ATG Basic Underwriting - Illinois
ATG
the meeting to consider the question of conveying or mortgaging the land
was given to all members; (3) the umber of members present at such
meeting; and (4) the number of ayes and nays voted on such question.
BANKRUPTCY
1. Statutory Powers
Statutory rights, powers, and duties of the Trustee in Bankruptcy in the
bankruptcy proceeding filed by * on *, in the Federal District Court for
the * District of Illinois in case *, notice of which was recorded on * as
Document *.
CO-OWNERSHIP
Partial Interest
1. Creditors Rights
The right of a creditor, trustee, or debtor in possession to sell the entire property
in the event of a bankruptcy of any co-tenant of the land.
2. Partition
Rights of co-tenants to partition, contribution, and possession.
3. Tax Sale
The right of the United States government to sell the entire property to
enforce a tax lien against any co-tenant of the land.
CONDOMINIUM
General
1. Assessments
Furnish ATG with a certificate, executed and acknowledged by the
Secretary of the Board of Managers, stating that there are no unpaid
assessment liens arising by reason of the nonpayment of assessments as
per the Condominium Declaration.
2. Declaration
Terms, provisions, covenants, conditions, and options in, rights and
easements established by the Declaration of Condominium Ownership
recorded *, [in Book * at Page *] as Document *.
3. Preemptive Rights
Furnish ATG with a certificate, executed and acknowledged by the
Secretary of the Board of Managers, stating that compliance has been
made by the owners with the provisions of the Condominium Declaration
ATG Basic Underwriting - Illinois Page 24-3
ATG
or that said provisions relating to preemptive rights have been duly
waived by the Board of Managers and the rights of the Board thereunder
have terminated.
4. Statute
Limitations and conditions imposed by the Illinois Condominium Property
Act.
CORPORATIONS
Dissolved
1. Foreign
*, a corporation of *, was dissolved by *, on *. We note the following with
respect thereto and this Commitment is subject to the following
exceptions:
(1) Rights of the creditors of said corporation including the United States
of America.
(2) Statutory conditions and limitations, if any, imposed by the laws of the
State of * upon conveyances by the successors in title to the real estate of
said corporation.
(3) Franchise tax in favor of the State of Illinois against *, a corporation
of *.
We should be furnished a duly certified list of all of the successors in title
to the real estate of said corporation and this Commitment is subject to
such further exceptions, if any, as may then be deemed necessary.
2. Illinois
*, an Illinois corporation, was dissolved by *, on *. We note the following
with respect thereto and this Commitment is subject to the following
exceptions:
(1) Rights of the creditors of said corporation including the United States
of America;
(2) Right, title and interest of the stockholders/members of said
corporation and those claiming under them.
(3) Franchise tax in favor of the State of Illinois.

Page 24-4 ATG Basic Underwriting - Illinois
ATG
Foreign
1. Certificate of Authority
The certificate of authority of * to do business in Illinois issued by the
Secretary of State should be produced, and in default thereof, the policy or
policies to be issued will contain the following exception:
Consequences, if any, that may result because of the failure of the party in
title to the estate or interest in the land described in Schedule A to comply
with the applicable doing business laws of the State of Illinois.
2. Charter
A certified copy of the charter and amendments, if any, and of the bylaws
of *, should be furnished, and this Commitment is subject to such further
exceptions, if any, as may then be deemed necessary.
3. Not-for-Profit
A certified copy of the charter and amendments thereto, if any, and of the
bylaws of the corporation in title should be furnished, and this
Commitment is subject to such further exceptions, if any, as may then be
deemed necessary.
2. Upon a conveyance or mortgage of the land, a certified copy of proper
resolutions, passed by the stockholders and directors of the party in title in
conformity with the laws of the State of *, authorizing the execution of the
deed of conveyance or mortgage should be furnished.
3. The certificate of authority of * to do business in Illinois issued by the
Secretary of State should be produced, and in default thereof, our policy
will contain the following exception:
Consequences, if any that may result because of the failure of the party
in title to the estate or interest in the land described in Schedule A to
comply with the applicable doing business laws of the State of Illinois.
General
1. Franchise Tax
Franchise tax in favor of the State of Illinois against * a corporation
existing under the laws of the State of *.
2. Resolution
Upon a conveyance or mortgage of the land provide a certified copy of
proper resolutions, passed by the stockholders and directors of the party
in title, authorizing the execution of the deed of conveyance or mortgage.
ATG Basic Underwriting - Illinois Page 24-5
ATG
Hospital
1. Hill-Burton Act
Rights of the United States of America and the State of Illinois, or either of
them, to recover any public funds advanced under the provisions of one or
more of various federal statutes relating to health care or the Illinois
Hospital Construction Act.
Municipal
1. Conveyance
Upon a conveyance or mortgage of the land, we should be supplied with
satisfactory proof of compliance with the provisions of the Illinois
Compiled Statutes regarding sale or lease of land by a municipal
corporation, as well as a copy of the ordinance approving the conveyance
of the land, and this Commitment is subject to such further exceptions, if
any, as may then be deemed necessary.
Not-For-Profit
1. Resolution
Upon a conveyance or mortgage of the land, a certified copy of proper
resolutions passed by the members and directors of the party in title
authorizing the execution of the deed of conveyance or mortgage, together
with a properly certified copy of the bylaws of said corporation, should be
furnished.
Religious
1. Resolution
Upon any conveyance or mortgage of said land, a certified copy of the
bylaws and a resolution passed by the members of the party in title
authorizing the execution of the instrument of conveyance or mortgage
should be furnished, together with a certificate by the custodian of records
establishing: (1) the names of all persons elected members of the board of
trustees at the last election; (2) the form of notice for the election; (3) the
total number of members entitled to vote on corporate matters; (4) proper
notice of the meeting to consider the questions of conveying or mortgaging
the land was given to all members; (5) the number of members present at
such meeting; and (6) the number of the ayes and nays voted on such
question.

Page 24-6 ATG Basic Underwriting - Illinois
ATG
University
1. Higher Education Act
Rights of the United States of America to recover any public funds
advanced under the provision of the Higher Education Facilities Act of
1963.
DECEDENTS ESTATE
General
1. Claims
Claims against the estate of *, deceased.
2. Devisees Interest
Right, title and interest of *, devisee(s) under the unproven will of *,
deceased.
3. Estate Taxes
Federal and Illinois Estate Taxes, that may be charged against the estate
of *.
4. Formal Proof of Will
Right of any person to demand formal proof of the will of *, deceased,
within the time provided by the Probate Act.
5. Heirship
A satisfactory table of the heirship and proof of the death, testacy or
intestacy, and of the value of the estate of *, deceased, should be
furnished, and this commitment is subject to such further exceptions, if
any, as may then be deemed necessary.
6. J oint Will
Right, title and interest of *, as ultimate beneficiary(s) under the unproven
will and mutual will of *, deceased and * and all of the persons claiming
by and through them.
7. Mandatory Sale
This Commitment is made on the assumption that title to the land is to be
derived through a conveyance by *, the personal representative, pursuant
to the power of sale conferred under the last will and testament of *,
deceased.
ATG Basic Underwriting - Illinois Page 24-7
ATG
8. Power of Sale
Power of sale conferred upon *, Executor, by terms of the will of *,
deceased.
9. Proceedings
Proceedings pending in the Circuit Court of * County entitled Estate of *,
Deceased, under Case No. *.
10. Release of Estates Interest
If title is to be derived through a deed by one other than the personal
representative of the estate of *, deceased, during the pendency of said
proceeding, [a proper order should be entered divesting said personal
representative of the right and powers granted under] [an instrument of
distribution and release should be recorded pursuant to] the Probate Act.
11. Renunciation of Will
Statutory rights of *, surviving spouse of the decedent, to renounce the will
of deceased and take statutory share.
12. Statutory Powers
Statutory rights, powers, and duties of the personal representative of said
decedent if and when appointed.
13. Will Contest
Right of any person interested to contest the will of *, deceased, within the
time allowed by law.
Sale
1. Court Ordered Sale
Order entered on *, in the proceeding entitled Estate of *, Deceased, Case
No. *, providing that the land be sold as provided in said order.
2. Power of Sale in Will
Any conveyance of the land by the personal representative should recite
that it is executed pursuant to the power and authority vested in the
personal representative by the last will of *, deceased, and should recite
therein the full consideration for which it is given. In addition, the
personal representative should file the bond required by Section 12-9 of
the Probate Act.

Page 24-8 ATG Basic Underwriting - Illinois
ATG
3. Purchasers Interest
Right, title, and interest of *, purchaser of the land as disclosed by court
order entered in the proceedings entitled Estate of *, Deceased, Case No.
*.
4. Sale by Independent Representative
If the conveyance is to be made pursuant to the provisions of the Probate
Act regarding sale by the independent representative, the conveyance
should so recite and the full consideration therefor should be recited.
DISABLED ADULTS ESTATE
General
1. Appeal Rights
Right of any interested party, in the time allowed by law, to have modified,
set aside or reversed the orders entered in the Estate of *, a disabled
adult, Case No. *.
2. Conveyance
Any conveyance of the land must be made by the guardian of the Estate of
*, a disabled adult, pursuant to a proper order entered in Case No. * and
such conveyance should recite that the same is executed pursuant to a
proper order entered in Case No. * ordering the conveyance and should
recite therein the full consideration for which it is given. In addition, the
guardian should file the bond required by the Probate Act.
3. Proceedings
Proceedings pending in the Circuit Court of * County entitled Estate of *,
a disabled adult, under Case No. *.
4. Purchasers Interest
Right, title and interest of the purchaser under court order entered in the
Estate of *, a disabled adult, Case No. *, ordering that the land be sold to
purchaser.
5. Statutory Powers
Statutory right, powers and duties of the guardian of the Estate of *, a
disabled adult.
ATG Basic Underwriting - Illinois Page 24-9
ATG
EASEMENTS
General
1. Access
The public records do not show any means of ingress or egress to or from
the land and by reason thereof, this commitment and our policy, if and
when issued, should not be construed as insuring against any loss or
damage by reason of lack of access to and from the land.
2. Dedicated Road
Rights of the public, the State of Illinois, and the municipality in and to so
much of the land dedicated for road purposes by instrument dated * and
recorded * as Document No. * in Book *, Page *].
3. General
Easement for *[purpose] as set forth in *[instrument creating easement]
dated * and recorded * [in Book * at Page *] as Document *, from * to *.
4. Party Driveway
A *-foot party driveway located on the property described in Schedule A
and the land *[direction] and adjoining and all rights ensuing thereunder
in favor of said adjoining land.
5. Party Wall
Rights of adjoining property owners in and to the *[direction] wall of the
*[improvement] located on the property described in Schedule A hereof.
6. Prescriptive
Easement in favor of the public and quasi-public utilities and the
municipality over the *[location and distance] feet of the property as
evidenced by poles, conduits, sewers, etc.
7. Right of Way-Drainage
Rights of way for drainage tiles, ditches, feeders and laterals.
8. Right of Way-Roads
Rights of the public, State of Illinois, and the municipality in and to that
part of the premises in question taken, used, or dedicated for roads or
highways.

Page 24-10 ATG Basic Underwriting - Illinois
ATG
Subdivision
1. Building Setback
A * foot building line from the *[direction] line of the property as shown
on the Plat and recorded * [in Book * at Page *] as Document *.
2. Covenants and Restrictions
Covenants, conditions, and restrictions contained in * [plat] [deed]
[miscellaneous recording] dated * and recorded * [in Book * at Page *]
as Document *, but omitting therefrom any covenant or restriction based
on race, color, religion, sex, handicap, familial status, or national origin,
relating to *[describe nature of restriction].
3. Public Utility-General
Easement over and upon the * [location and distance] feet of the land for
public utilities and drainage as recorded * [in Book * at Page *] as
Document *.
4. Public Utility-Specific
Easement over the * [location and distance] feet of the land for the
purpose of installing and maintaining all equipment necessary for the
purpose of serving the Subdivision and other property with telephone and
electric service, together with the right to overhang aerial service wires
and also with right of access thereto and for the purpose of installation,
maintenance, relocation and removal of gas mains and appurtenances as
granted to Illinois Bell Telephone Company, Commonwealth Edison
Company and Northern Illinois Gas Company and their respective
successors and assigns and as shown on the Plat of Subdivision recorded
* [in Book * at Page *] as Document *
Termination
1. Senior Lienholder
The easement created by instrument dated * and recorded * as Document
No. * [in Book *, Page *] was not executed by * a senior lienholder on the
servient tenement. In the absence of such execution or other consent to the
creation of the easement, this commitment and all policies issued pursuant
hereto shall be subject to the consequences of such absence of lienholder
execution or consent.
ATG Basic Underwriting - Illinois Page 24-11
ATG
ENCROACHMENTS
Adjoining Land
1. Lot Line
A survey discloses an encroachment by *[improvement or part thereof]
located on the property *[direction] and adjoining onto the insured
premises by approximately *[distance] feet.
Insured Land
1. Building Line
A survey discloses an encroachment of the *[improvement] over the
*[direction] building line by *[distance] feet.
2. Easement
A survey discloses that the *[improvement or part thereof] located upon
the insured premises encroaches onto the utility easement located on the
*[direction and distance] of the land by *[distance] feet.
3. Lot Line
A survey discloses that the *[improvement or part thereof] located upon
the insured premises encroaches upon the property *[direction] and
adjoining by *[distance] feet.
ENVIRONMENTAL
General
1. Environmental Lien
Environmental lien filed by * against * on * as Document No. * [in Book
*, Page *] in the office of the Recorder of * County, Illinois, in the sum of
$*.
IRPTA
1. Fact Exception
The fact, as disclosed by the liens recorded *, as Document No. *, [in
Book * at Page *] in the Office of the Recorder of * County, Illinois, that
some violation of environmental protection laws may have or has
occurred which may affect the land.
2. IRPTA Document
Environmental disclosure document for transfer of real property dated *,
and recorded *, as Document No. * [Book *, at Page *] in the Recorders
Office of * County, Illinois

Page 24-12 ATG Basic Underwriting - Illinois
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FORECLOSURE
Mortgage
1. Certificate of Sale Interest
Right, title, and interest of * under a certificate of sale dated * and
recorded * as Document No. * [in Book *, at Page *] and issued pursuant
to judgment of foreclosure entered * in the case filed by * and against * in
the Circuit Court of * County, Illinois, Case No. *, and all persons
claiming thereunder.
2. Foreclosure Deed Interest
Right, title, and interest of * under a sheriffs (judges) deed dated * and
recorded * as Document No. * [in Book *, at Page *] and issued pursuant
to judgment of foreclosure entered * in the case filed by * and against * in
the Circuit Court of * County, Illinois, Case No. *, and all persons
claiming thereunder.
3. Minutes of Foreclosure
In order that we may insure title after completion of any proceeding
brought to foreclose the lien of the mortgage/trust deed noted at Schedule
B No. * and recorded as Document No. *, we note the following and this
commitment is subject to:
a. Our policy when issued will be subject to direct attack upon the
judgments and orders entered in the proceeding.
b. Our policy when issued will be subject to any right or asserted right of
a creditor, trustee, or debtor in possession in bankruptcy to avoid a
transfer of title by sheriffs deed or otherwise pursuant to Title 11 U.S.C.
(Bankruptcy) or any creditors rights law or state insolvency law.
c. Upon the filing of the complaint, a proper Notice of Foreclosure (Lis
Pendens) under Section 15-1503 of the Code of Civil Procedure must be
recorded in the Recorders Office of * County, Illinois.
d. The following persons are necessary parties to any such proceeding:
(1) (Mortgagor or successor in interest), the record owner, as a party
defendant.
(2) (Mortgagee or successor in interest), as party plaintiff.
e. The following persons must be made parties defendant to the
foreclosure if it is desired that their interests be barred by the proceeding:
All parties acquiring rights in the premises subsequent to the date of this
commitment and prior to a complete Notice of Foreclosure (Lis Pendens).
ATG Basic Underwriting - Illinois Page 24-13
ATG
(2) Any person other than those herein named known to the Plaintiff or the
Plaintiffs attorney to have or claim an interest in the premises.
(3) All persons in possession of any part of the premises in question and
all persons whose rights would be disclosed by an inspection of the
premises.
(4) United States of American by reason of Exception No. *.
NOTE: Compliance should be had with the provisions of Section 2410 of
the Federal Judicial Code, 28 U.S.C.A., [and in connection therewith the
following information is furnished:
The Notice of tax lien noted at Exception No. * was filed by the District
Director of Internal Revenue, at *, Illinois against * in the office of the
Recorder of Deeds of * County, Illinois on * as Document No. *.]
NOTE: Attention is directed to the provisions in Section 2410 of the
Federal Judicial Code requiring that any action to foreclose a mortgage
naming the United States as a party under the Section must seek a
judicial sale. In the event a sale is not sought in the contemplated
proceeding, [such proceeding will not affect the rights of the United States
noted at Exception No. *, and the United States should not be made party
thereto. In addition] we note the consequences of liens, if any, in favor of
the United States that appear of record after the date of this Commitment.
(5) [Second mortgagees, judgment lienors, etc.], by reason of Exception
No. *.
NOTE: If it is known that any of the parties listed herein are deceased,
their heirs or devisees should be made parties by name if known; and if
unknown, by the name and description of UNKNOWN HEIRS OR
DEVISEES OF such deceased person or persons. If it is not known or
cannot be ascertained whether any of said necessary parties be living or
dead, then such parties should be made parties by name, and such persons
as would be their heirs or devisees should also be made parties to the
proceeding as UNKNOWN OWNERS. In this connection, we direct
your attention to Section 2-413 of the Code of Civil Procedure.
NOTE: In the event that there are any persons who are necessary parties
to the contemplated proceeding, but the names of such persons are
unknown and unascertainable, then, and in that event only, such persons
should be made parties under the description of UNKNOWN OWNERS,
unless the contrary is herein indicated.
NOTE: The proceeding will not affect the Standard Exceptions nor the
exceptions noted in Schedule B at Nos. *; and our policy when issued will
be subject to such exceptions unless satisfactory disposition thereof is
otherwise made.

Page 24-14 ATG Basic Underwriting - Illinois
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INSTALLMENT CONTRACT
General
1. Contract Terms
Terms, conditions and covenants of installment contract (or agreement for
Warranty Deed) between * and * dated * [and recorded * [in Book * at
Page *] as Document *.]
2. No Recorded Contract
Consequences, if any, by reason of the failure to record either the
Agreement for Deed or a memorandum thereof.
JOINT TENANCY
Survivor
1. Deceased J oint Tenant
We should be supplied with satisfactory evidence establishing the death,
the testacy or intestacy, and the value of the estate of *, deceased; and this
commitment is subject to such further exceptions, if any, as may then be
deemed necessary.
JUDGMENTS/LIENS
Judgment
1. Certificate of Levy
Certificate of Levy recorded * as Document No. * [in Book *, Page *] by
*, pursuant to a judgment dated *, in Case No. *, in the * Court of *
County, in favor of * and against *.
2. Possible J udgments
We find judgments, liens, and matters of record involving a person or
persons whose names are similar to *. Relative thereto, a Personal
Information Affidavit (ATG form 308) establishing the identity of the
above described person must be supplied in order to facilitate the
exclusion, if possible, of those items.
3. Recorded J udgment
[Transcript] [Certified copy] [Memorandum] of judgment recorded on *
as Document No. * [in Book *, Page *] for judgment rendered on * in the
* court of * County, in favor of * against *, in the amount of $*
ATG Basic Underwriting - Illinois Page 24-15
ATG
Mechanics Lien
1. Mechanics Lien
Mechanics lien filed by * against * on *[date], [in Book * at Page *] as
Document * in the office of the Recorder of * County, Illinois, in the sum
of $*.
2. Property Manager Lien
Rights of a property manager, if any, to a statutory lien on the premises
for its property managers fee.
Mechanics Liens
1. New Construction
ATG must be provided with properly executed sworn contractors
statements, sub-contractors statements, and final lien waivers along with
proof of proper disbursement of any loan funds used for improvement of
the land or the policy when issued will be subject to the following:
a. Any lien, or right to a lien, for services, labor, or material heretofore or
hereafter furnished imposed by law and not shown by the public records.
b. Consequences of the failure of the lender to pay out properly the whole
or any part of the loan secured by the mortgage described in Schedule A
as affecting: (i) the validity of the lien of said mortgage; and (ii) the
priority of the lien over any other right, claim, lien or encumbrance which
has or may become superior to the lien of the mortgage before the
disbursement of the entire proceeds of the loan.
2. Recorded Lien
Claim for lien dated *, and recorded *, made by * and filed against *, in
the sum of *.
Proceedings
1. Lis Pendens
Lis Pendens Notice dated * filed by * against in Case No. * in the Circuit
Court of * County, Illinois, and recorded on *, [in Book * at Page *]as
Document *.
Tax
1. Chicago Transfer Tax
Notice of lien claimed by the City of Chicago under the provisions of
Section 3-33-120 of the Municipal Code against * in the sum of $*, which
notice was recorded * [in Book * at Page *].as document *. Also, every
document transferring property in the City of Chicago must include the

Page 24-16 ATG Basic Underwriting - Illinois
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proper amount of transfer stamps or be marked exempt pursuant to one of
the City of Chicago transfer tax exemptions.
2. Federal Tax
Notice of lien claimed by the United States of America under the
provisions of *[applicable statute] against * in the sum of $*, which
notice was recorded *[in Book * at Page *] as Document *.
3. State Income Tax
Notice of lien claimed by the State of Illinois under the provisions of the
Illinois Income Tax Act against * in the sum of $ *, which notice was
recorded * [in Book * at Page *] as Document *.
4. State Mobil Home Services Tax
Notice of Lien claimed by the county of * under the provisions of the
Mobile Home Local Services Tax Act against * in the sum of $*, which
Notice was recorded *, as Document No. *, [in Book *, Page *]
5. State Public Aid
Notice of Lien claimed by the State of Illinois under the provisions of the
Public Aid Code against * in the sum of $*, which notice was recorded *
as Document No. *, [in Book *, Page *]
6. State Sales Tax
Notice of Lien claimed by the State of Illinois under the provisions of the
Retailers Occupation Tax Act against * in the sum of $*, which Notice
was recorded * as Document No. *, [in Book *, Page *]
7. State Unemployment Compensation
Notice of Lien claimed by the State of Illinois under the provisions of the
Unemployment Compensation Act against * in the sum of $* which Notice
was recorded * as Document No. *, [in Book *, Page *]
LEASEHOLDS
Leases/Tenancies
1. Unrecorded Leases
Existing unrecorded leases and tenancies and all rights thereunder of the
lessees and tenants and of any person claiming by, through or under the
lessees.
ATG Basic Underwriting - Illinois Page 24-17
ATG
LIMITED LIABILITY COMPANIES
General
1. Certificate of Good Standing
A certificate of good standing issued by the Secretary of State should be
produced, and in default thereof, the final policy or policies will contain
the following exception:
Consequences, if any, that may result by reason of the failure of the party
in title to the estate or interest in the land described in Schedule A to
comply with the applicable doing business laws of the State of Illinois.
2. Commitment Preamble
The following exceptions will appear on all policies issued pursuant to
this Commitment except to the extent the same are cleared to ATGs
satisfaction.
3. Conveyance
Upon a conveyance or mortgage of the land, we should be supplied with
satisfactory proof of compliance with the terms of the articles of
organization and the operating agreement governing *, a limited liability
company, and this Commitment is subject to such further exceptions, if
any, as may then be deemed necessary.
4. Examination
The articles of organization and the operating agreement establishing the
limited liability company of * together with all amendments thereto,
properly identified in writing by all the members as being the terms and
provisions of the articles and agreement under which the limited liability
company acquired and [holds title] [held title until *], should be
furnished; and this Commitment is subject to such further exceptions, if
any, as may then be deemed necessary.
5. Operating Agreement
Terms, provisions and limitations of the articles of organization and
operating agreement for *, a limited liability company
6. Resolutions
Upon a conveyance or mortgage of the land, a certified copy of the proper
resolutions authorizing the execution of the deed or mortgage by *, an
Illinois limited liability company, should be produced to ATG for
examination, and this commitment, and any policies committed for
thereunder, are subject to such further exceptions as may then be deemed
necessary.

Page 24-18 ATG Basic Underwriting - Illinois
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MARRIAGE/DISSOLUTION
Child Support
1. Child Support Lien
Child support judgment filed against *, in Case No. * in the Circuit Court
of * County, Illinois, a
memorandum of which was recorded on *, as Document No. *, [in Book *,
Page *].
Dissolution
1. Dissolution Proceedings
Dissolution of marriage proceedings filed by * against * in the Circuit
Court of * County as case *.
MINORS ESTATES
General
1. Conveyance
Any conveyance of the land must be made by the guardian of the Estate of
*, a minor, pursuant to a proper order entered in Case No. * and such
conveyance should recite that the same is executed pursuant to a proper
order entered in Case No. * ordering the conveyance and should recite
therein the full consideration for which it is given. In addition, the
guardian should file the bond required by the Probate Act.
2. Proceedings
Proceedings pending in the Circuit Court of * County entitled Estate of *,
a minor, under Case No. *.
3. Statutory Powers
Statutory right, powers and duties of the guardian of the Estate of *, a
minor.
MISCELLANEOUS
General
1. Break in Chain
* obtained title by mesne conveyances from *. We find no title in *. This
should be explained, and this commitment, and any policies committed for
thereunder, shall be subject to such further exceptions as may then be
deemed necessary.
ATG Basic Underwriting - Illinois Page 24-19
ATG
Policy
1. Duplicate Policy
This duplicate policy is issued to replace policy no. *, that was lost or
destroyed. It is understood that this duplicate policy evidences the liability
of Attorneys Title Guaranty Fund, Inc. under its original policy and that
such liability is not increased nor diminished by reason of issuance of this
duplicate policy.
Schedule B Part II
1. Preamble
In addition to the matters set forth in Part I of this schedule, the title to the
estate or interest described or referred to in Schedule A is subject to the
following matters, but ATG insures that such matters are subordinate to
the lien or charge of the mortgage upon said estate or interest.
2. Subordination Agreement
Subordination agreement dated * and recorded * [in Book * at Page *] as
Document *, made by * and given to *.
MORTGAGES
Assignment
1. Assignment of Mortgage
Assignment of said mortgage from * to * and recorded * [in Book * at
Page *] as Document *.
2. Assignment of Rents
Assignment of Rents dated * and recorded * [in Book * at Page *] as
Document * executed by *[owner] and given to *[lender].
General
1. Financing Statement
Financing Statement (UCC-1) dated *, and recorded *, as document no. *
[, in Book *, at Page *], made by * as Debtor and given to * as Secured
Party.
2. Mortgage
Mortgage dated * and recorded * [in Book * at Page *] as Document *
executed by *[owner] and given to [lender] to secure a note in the amount
of $* and such other sums as provided therein.

Page 24-20 ATG Basic Underwriting - Illinois
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3. Pre-Recorded Mortgage
The mortgage we have been asked to insure has been placed of record.
Any deed to the buyers must be dated on or before the date of the
mortgage and the mortgage must be re-recorded after the recording of the
deed vesting title in the mortgagors. If the mortgage is not re-recorded
after the instrument vesting title in the mortgagors, then the following
exception will be raised on the final policies:
Lack of priority of the lien of the insured mortgage resulting from the
failure to properly record the mortgage after the recording of the
instrument vesting title in the mortgagor.
4. Subordination Agreement
Subordination agreement dated * and recorded * [in Book * at Page *] as
Document *, made by * and given to *.
5. Trust Deed
Trust Deed dated * and recorded * [in Book * at Page *] as Document *
executed by *[owner] and given to *[lender] to secure a note in the
amount of $* and such other sums as provided therein.
Torrens
1. Assignment of Mortgage-Torrens
Assignment of said mortgage by * to * and registered with the Registrar of
Titles as Document *.
2. Mortgage-Torrens
Mortgage dated * and registered with the Registrar of Titles * as
Document *, executed by *(borrower) and given to *[lender] to secure a
note in the amount of $* and such other sums as provided therein.
NOTES FOR INFORMATION
Municipality
1. Municipal Inspection/Certification
By ordinance of the * [city or village] of * [name of city or village], the
recording/filing of any deed or other instrument of conveyance may be
subject to real estate transfer taxes imposed by the *[city or village] of *
[of city/village] and prior approval by the * [name of city/village]
Department of * [buildings or water] or the * [name of city/village] clerk.
Relative thereto, all deeds submitted to this company for recording must
be accompanied by the appropriate certification together with the
appropriate transfer tax declaration. In lieu thereof, said deeds, etc., must
be property exempted from said tax.
ATG Basic Underwriting - Illinois Page 24-21
ATG
2. Municipal Transfer Tax
By * [city or village] of * [name of city/village] Ordinance No. *, the
recording/filing of any deed or other instrument of conveyance may be
subject to real estate transfer taxes imposed by the *[city. or village] of *
[name of city/village]. Relative thereto, all deeds submitted to this
company for recording must be accompanied with the appropriate
transfer tax stamps and declaration. In lieu thereof, said deeds, etc., must
be properly exempted from said tax.
NOTES-EXCEPTIONS
Covenants/Restrictions
1. Forfeiture/Reversion
NOTE: Instrument contains a provision for forfeiture or reversion of title
in the event of breach thereof.
2. No Forfeiture/Reversion
NOTE: Instrument contains no provision for forfeiture or reversion of title
in the event of breach thereof.
Easements
1. Location
NOTE: Affects the *[location and distance] feet of the land.
Proceedings
1. No Examination
NOTE: No examination of these proceedings has been made, and upon
examination, this commitment, and any policies committed for thereunder,
shall be subject to such other and further exceptions as may then be
deemed necessary.
PARTNERSHIPS
General
1. Commitment Preamble
The following exceptions will appear on all policies issued pursuant to
this Commitment except to the extent the same are cleared to ATGs
satisfaction:
2. Conveyance
Upon a conveyance or mortgage of the land, we should be supplied with
satisfactory proof of compliance with the terms of the agreement

Page 24-22 ATG Basic Underwriting - Illinois
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governing *, a partnership and this Commitment is subject to such further
exceptions, if any, as may then be deemed necessary.
3. Examination
The partnership agreement establishing the partnership of * together with
all amendments thereto, properly identified in writing by all the partners
as being the terms and provisions of the agreement under which the
partnership, or the partners thereof, acquired and [hold title] [held title
until *], should be furnished; and this Commitment is subject to such
further exceptions, if any, as may then be deemed necessary. In addition,
this Commitment is subject to such further exceptions, if any, that may be
disclosed after a name search has been made for judgments and other
matters against all the members of the partnership of *.
4. Partnership Agreement
Terms, provisions and limitations of the partnership agreement for *
partnership.
5. Rights of Partners
Rights of *, partners composing the firm of *, and of all persons claiming
thereunder.
Limited
1. Certificate
The public records do not disclose the existence of a Certificate of Limited
Partnership for *.
2. Partnership Act
Unless compliance is made with the Uniform Limited Partnership Act, this
Commitment and our policy, if and when issued, shall be subject to the
consequences of the failure to comply with the Act.
PROCEEDINGS
Lis Pendens
1. Lis Pendens Notice
Lis pendens notice dated * filed by * against * regarding a suit in the
Circuit Court of * County, case * and recorded on * [in Book * at Page *]
as Document *.
ATG Basic Underwriting - Illinois Page 24-23
ATG
RAILROADS
Illinois Central
1. Rights of USA
Right, title, and interest of the United States of America in and to any
portion of the land falling within the main line right-of-way of the Illinois
Central Railroad Company pursuant to an Act of Congress approved
September 20, 1850.
REAL ESTATE TAXES
General
1. Current Real Estate Taxes
Taxes for the year 20* and thereafter
First installment 20* taxes in the amount of $* are shown *[paid, unpaid
and due, not yet due and payable].
Second installment 20* taxes in the amount of $* are shown [paid, unpaid
and due, not yet due and payable].
20* taxes not yet due and payable.
2. Forfeited Real Estate Taxes
* installment 20* taxes of $* not paid and forfeited on *[date].
3. Sold Real Estate Taxes
* installment 20* taxes of $ not paid and sold on *[date] to *[purchaser]
at * %.
Special Assessments
1. Special Service Areas
The land is located in Special Service Area number * of the City of * and
is subject to levy and assessment, therefor, as part of the general real
estate tax bill.
Special Districts
1. Conservation District
The premises in question are located in the * County Soil Conservation
District and are subject to the rules and regulations thereof.

Page 24-24 ATG Basic Underwriting - Illinois
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Tax Sale
1. Tax Deed J udgment
We have examined the proceedings pending in the Circuit Court of *
County, Illinois in Case No. *, on a petition for tax deed pursuant to a tax
sale of the land under the provisions of the Property Tax Code (35 ILCS
200/1-1, et seq.), and note the following:
(a) The question of the willingness of ATG to insure title derived through
the said proceedings should be submitted to an underwriting attorney of
ATG, and this commitment, and any policies committed for thereunder,
shall be subject to such further exceptions, if any, as may then be deemed
necessary.
(b) Right of any interested party by motion, appeal, petition, or other
direct proceeding to have modified, set aside, or reversed the orders
entered in Case No. *, within the time allowed by law.
(c) Right, by reason of military service, of any person interested in the
subject matter of the proceedings in Case No. * to redeem within the time
permitted by the Soldiers and Sailors Civil Relief Act.
2. Tax Deed Proceedings
With respect to the [annual] [forfeiture] [scavenger] tax sale of the land
on *, to * [by virtue of the non-payment of the * general real estate taxes]
[for the non-payment of the forfeited general taxes for the year *] [for the
delinquent taxes for the years * to *], the following is noted:
(a. The question of the willingness of ATG to insure title derived through
the tax deed proceeding should be submitted to an underwriting attorney
of ATG.
(b. A petition in conformity with the provisions of Article 22 of the
Property Tax Code (35 ILCS 200/22-5, e seq.) should be filed in the
Circuit Court of * County, Illinois, in the proceeding wherein the
judgment of sale was entered, and, after due notice has been given to the
persons entitled thereto as provided in sections 22-10, 22-15, 22-20, 22-
25, 22-30, and 22-40 of the Property Tax Code (35 ILCS 200/22-10,
200/22-15, 200/22-20, 200/22-25, 200/22-30, and 200/22-40), an order
should be entered on said petition adjudicating that said petitioner has in
all respects complied with the provisions of the Constitution of the State of
Illinois and the Property Tax Code, entitling the certificate holder to a
deed, and ordering and directing the County Clerk to execute and deliver
a deed.
(c. The deed should be issued and filed for record within the time provided
by Sections 22-85 and 22-90 of the Property Tax Code (35 ILCS 200/22-
85, and 200/22-90).
ATG Basic Underwriting - Illinois Page 24-25
ATG
(d. The notices and deeds issued pursuant to the proceeding should show
the legal description and, where applicable, the permanent real estate
index number.
(e. Notice should be served on the persons set forth below in accordance
with sections 22-10, 22-15, 22-20, 22-25, 22-30, and 22-40 of the Property
Tax Code (35 ILCS 200/22-10, 200/22-15, 200/22-20, 200/22-25, 200/22-
30, and 200/22-40), in the manner and within the time specified therein.
NOTE: In the event that there are any persons who should be served with
notices, but the names of such persons are unknown and unascertainable,
then in that event only, such persons should be served with notice under
the description of Unknown owners or parties interested in said land or
lots.
(1. Any person, other than those herein named, known to the certificate
holder or his or her attorney who may have or claim to have some interest
in the land.
(2. Unknown owners or parties interested in the land, generally.
(3. The County Clerk of * County, Illinois.
(4. All persons in occupancy or actual possession of said land, which
persons must be served personally.
(5. Certificate of Sale holder] as party plaintiff.
(6. Owner(s) of record, contract purchaser(s), etc. or successors in
interest] as party (ies) defendant.
(7. Mortgagees, judgment creditors, lienholders, etc.] by reason of
Exception No(s). *.
(8. The United States of America by reason of Exception No. *.
NOTE: Compliance should be made with the provisions of Section 2410 of
the Federal Judicial Code (28 U.S.C.) and Section 7425 of the Internal
Revenue Code (26 U.S.C.) [, and in connection therewith, the following
information is furnished:
The Notice of Tax Lien noted at Exception No. * was filed by the District
Director of Internal Revenue at *, Illinois against * in the office of the
Recorder of Deeds of * County, Illinois on *, as Document No. *].
NOTE: Attention is directed to the provisions in Section 2410 of the
Federal Judicial Code requiring that any action to foreclose a lien naming
the United States as a party under the Section must seek a judicial
sale. In the event a judicial sale is not sought in the contemplated
proceeding, [such proceeding will not affect the rights of the United States
noted at Exception No(s). *, and the United States should not be made a

Page 24-26 ATG Basic Underwriting - Illinois
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party thereto. In addition,] we note the consequences, if any, in favor of
the United States that appear of record after the date of this commitment.
[(9. The trustee in bankruptcy by reason of Exception No. *.]
[(F. The right of redemption of the United States of America.]
[(g. The right of redemption of the State of Illinois.]
NOTE: The real estate was last assessed for general real estate taxes to
the following taxpayer: *.
NOTE: The proceedings will not affect the Standard Exceptions nor the
exceptions noted in Schedule B at Nos. *, and the final policy or policies
will be subject to such exceptions unless satisfactory disposition thereof is
otherwise made.
STANDARD EXCEPTIONS
Commercial
1. Standard Exception No. 1
To waive Standard Exception No. 1 (Right or claims of parties in
possession not shown by the public records) from the Owner Policy,
furnish ATG with an ALTA Statement (ATG form 304). In addition to
matters disclosed by the ALTA Statement, the following will appear in lieu
of Standard Exception No.1, unless satisfactory disposition thereof is
otherwise made:
(a) Rights of public or quasi-public utilities, if any, in the land
NOTE: To establish the nonexistence of such rights, obtain letters from the
various utilities serving the area in which the land is located stating that
they have no easements, equipment, etc., in said land. Also, obtain a letter
from the official of the municipality in charge of water mains, sewer, etc.,
such as the village engineer, stating that there are no water mains, sewers,
etc., in said land.
NOTE: All existing unrecorded leases affecting the land should be
produced for ATGs inspection, and this commitment is subject to such
further exceptions, if any, as may be deemed necessary. If there are no
unrecorded leases affecting the land, provide an affidavit to this effect by
the owner of the land.
2. Standard Exception No. 2
To waive Standard Exception No. 2 (Encroachments, overlaps, boundary
line disputes, and any matters which would be disclosed by an accurate
survey and inspection of the premises.) from the Owner Policy, furnish
ATG with a land survey made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys as adopted by ALTA/ACSM,
ATG Basic Underwriting - Illinois Page 24-27
ATG
made within six months of the date of this commitment, and this
commitment is subject to such further exceptions, if any, as may then be
deemed necessary.
3. Standard Exception No. 3
To waive Standard Exception No. 3 (Easements, or claims of easements,
not shown by the public records) from the Owner Policy, supply ATG
with a survey in compliance with the requirements noted in Standard
Exception No. 2 above. In addition to matters disclosed by the survey, the
following exceptions will appear in lieu of the Standard Exception No. 3
unless satisfactory disposition thereof is otherwise made:
(a) Rights of public or quasi-public utilities, if any, in the land.
Note. To establish the nonexistence of such rights, comply with the
requirements as set out under Standard Exception No. 1, above
4. Standard Exception No. 4
To waive Standard Exception No. 4 (Any lien, or right to a lien for
services, labor or materials heretofore or hereafter furnished, imposed by
law and not shown by the public records) from the Owner Policy, furnish
ATG with the following:
(a) An ALTA Statement (ATG form 304), or its equivalent, executed by all
parties holding title to the land during the six months preceding the date
of the policy and the purchasers, if any;
(b) Satisfactory evidence of the payment in full of the cost of furnishing
services, labor and materials in connection with any improvement made
on the land within six months of the date of the policy;
(c) Satisfactory indemnification, as may be required.
Residential
1. Standard Exception Waiver
Standard Exception Waiver Endorsement will be approved for issuance
with the Owner Policy upon inspection of a current survey, receipt of a
signed ALTA Statement (ATG form *), a check of the special assessments
and knowledge that no one owns the property adversely.
SUBDIVISIONS/PLATS
Plat
1. Plat Act

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In the event any future conveyances of the premises in question would
divide the subject premises into two or more parts, any part of which is
less than five acres, compliance must be made with the Plat Act.
TORRENS
General
1. Torrens Property
The title to the land has been registered under an Act concerning Land
Titles, known as the Torrens Act. All instruments affecting such title
subsequent to the date hereof must be filed in the office of the Registrar of
Titles.
TRUSTS
General
1. No Full Power Deed
The deed from * to * recorded * as Document No. * [in Book *, Page *]
does not disclose the terms and conditions of the trust. The trust
agreement under which title is held, properly identified in writing by the
grantor, the trustee and the beneficiaries of the trust, should be submitted
for examination, and this Commitment is subject to such additional
exceptions, if any, as may then be deemed necessary.
2. Trust Agreement
The trust agreement under which title to the land is held, properly
identified in writing by the settlor, the trustee, and the beneficiaries of the
trust, should be submitted to be filed of record, and this Commitment is
subject to such further exceptions, if any, as may then be deemed
necessary.
3. Trust Terms
Terms, powers, provisions, and limitations of the Trust under which title
to the property is held.
VACATED STREETS/ALLEYS
General
1. Reserved Easement
Reservation of easement contained in the ordinance of vacation dated *,
and recorded *, as document no. * [in Book *, at Page *] for the benefit of
*.
ATG Basic Underwriting - Illinois Page 24-29
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2. Rights of Public
Rights of the State of Illinois, the municipality, the public, and the
adjoining landowners in and to the vacated [street] [alley] lying * and
adjoining the insured land.
3. Rights of Utilities
Rights of public and quasi-public utilities, if any, in the vacated [street]
[alley] lying * and adjoining the insured land for the maintenance therein
of poles, conduits, sewers, etc.
Not Insured
1. Vacated Parcel
This commitment and any policy issued thereunder, shall not be construed
as insuring any part of the vacated *[street, alley] lying *[direction] and
adjoining the insured premises.
WATERCOURSES
General
1. Flood Risks
Possible flood risks affecting the land and other land as disclosed by *,
recorded * as document no. * [in Book *, at Page *].
Lakes
1. Meandered Lake
Rights, if any, of the United States of America, the State of Illinois, the
municipality, and the public in and to so much of the land, if any, as may
have been formed by means other than natural accretions or may be
covered by the waters of *[lake].
2. Private Rights
Rights of the adjacent property owners in and to the free and unobstructed
flow of the waters of Lake *, a part of which is located adjacent to or
within the insured premises.
3. Public Rights
Rights of the United States of America, the State of Illinois, the
municipality, and the public in and to that part of the land lying, from time
to time, within the bed of * [lake]; and the rights of other owners of land
bordering on the lake in respect to the water of said lake.

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Rivers
1. Meandered River
Rights, if any, of the United States of America; the State of Illinois and the
municipality in and to so much, if any, of the land as may have been
formed by means other than natural accretions and to so much, if any, as
may be covered by the waters of *[river][creek].
2. Private Rights
Rights of owners of land bordering on the * [river] [creek] in respect to
the water of said [river] [creek].
3. Public Rights
Rights of the United States of America, the State of Illinois, the
municipality, and the public in and to that part of the land lying, from time
to time, within the bed of * [river]; and the rights of other owners of land
bordering on the river in respect to the water of said river.

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[NOTES]













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CHAPTER 25 UNDERWRITING BULLETINS AND NOTES