We believe that both the Chicago and Cook County registration and maintenance requirements would apply to a lender holding a collateral assignment of interest in a land trust, given that the land trust owns vacant residential properties subject to the ordinances.

Both Chicago and Cook County’s ordinances impose registration and maintenance responsibilities on holders of mortgages. Both ordinances define “mortgage” as “a written instrument which grants or retains an interest in real estate to secure a debt or other obligation.” Here, the assignment of a beneficial interest grants a property interest to secure your bank’s debt. It could be argued that the assignment of a beneficial interest does not grant an interest in real estate because the beneficial interest in a land trust is personal property, not real property. However, we believe the ordinances were intended to cover land trusts — both ordinances’ definitions of “mortgagor” address land trusts and state that “where a mortgage is executed by a trustee of a land trust, the mortgagor is the trustee and not the beneficiary or beneficiaries.” Consequently, we believe that your bank should comply with the Chicago and Cook County ordinances as to vacant residential properties held by the land trust.

One point on which the ordinances differ is the cost of property registration. The Chicago ordinance was amended in 2016 to increase registration fees (to $400 or $700, depending on whether the property is in default or is vacant when registered), with annual renewal fees of $700. The Cook County ordinance imposes a $250 registration fee and does not impose annual renewal fees.

For resources related to our guidance, please see:

• Illinois Code of Civil Procedure, 735 ILCS 5/15-1202 (“‘Collateral assignment of beneficial interest’ means any pledge or assignment of the beneficial interest in a land trust to any person to secure a debt or other obligation.”)

• Hoxha v. LaSalle Nat. Bank, 847 N.E.2d 725, 730 (1st Dist. 2006) (“In an Illinois land trust . . . [t]he interest retained by the beneficiary . . . is a personal property interest rather than a real property interest in the legal or equitable title.”)

• Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1106 (“[T]he following shall be foreclosed in a foreclosure pursuant to this Article: . . . (3) any collateral assignment of beneficial interest made on or after the effective date of this amendatory Act of 1986 . . . .”)

• Chicago Municipal Code § 13-12-126(a)(1), Vacant Buildings — Mortgagee required to act (“The mortgagee of any building which is not registered pursuant to this section or Section 13-12-125(a) of this Code shall, within the later of: (A) 30 days after the building becomes vacant and unregistered or (B) 10 days after a default, file a registration statement with the department of buildings on forms provided by that department for such purposes and pay a registration fee. If the mortgagee elects to file upon condition (A) above, the initial registration fee shall be $700. If the mortgagee elects to file upon condition (B) above, the initial registration fee shall be $400. The registration shall remain valid for twelve months from the date of registration. The mortgagee shall be required to renew the registration every twelve months, at a renewal fee of $700, as long as: (i) the building remains vacant and unregistered by an owner pursuant to Section 13-12-125, or (ii) the mortgagor remains in default and the mortgagee has not assumed ownership, thereby becoming subject to Section 13-12-125. . . .”)

• Chicago Municipal Code § 13-12-126(e)(2), Vacant Buildings — Mortgagee required to act (“‘Mortgage’ shall mean any consensual lien created by a written instrument which grants or retains an interest in real estate to secure a debt or other obligation. The term includes, without limitation: (A) mortgages securing reverse mortgage loans; (B) mortgages securing revolving credit loans; (C) every deed conveying real estate, although an absolute conveyance in its terms, which shall have been intended only as a security in the nature of a mortgage; and (D) equitable mortgages.”)

• Chicago Municipal Code § 13-12-126(e)(3), Vacant Buildings — Mortgagee required to act (“‘Mortgagor’ shall mean (A) the person whose interest in the real estate is the subject of the mortgage and (B) any person claiming through a mortgagor as successor.  Where a mortgage is executed by a trustee of a land trust, the mortgagor is the trustee and not the beneficiary or beneficiaries.”)

• Cook County Code § 102-19, Vacant Buildings — Mortgagee required to act (“The mortgagee of any residential building that has become vacant and which is not registered pursuant to this section or Section 102-5 of this Code shall, within the later of 30 days after the building becomes vacant and unregistered or 60 days after a default, file a registration statement with the Department of Building and Zoning on forms provided by that department for such purposes and pay a registration fee of $250.00. The mortgagee shall be required to renew the registration every year as long as the building remains vacant. There shall be no fee for such renewal. . . .”)

• Cook County Code § 102-4, Definitions (“Mortgage means any consensual lien created by a written instrument which grants or retains an interest in real estate to secure a debt or other obligation. The term includes, without limitation: (A) mortgages securing reverse mortgage loans; (B) mortgages securing revolving credit loans; (C) every deed conveying real estate, although an absolute conveyance in its terms, which shall have been intended only as a security in the nature of a mortgage; and (D) equitable mortgages.”)

• Cook County Code § 102-4, Definitions (“Mortgagor means the person whose interest in the real estate is the subject of the mortgage and any person claiming through a mortgagor as successor.  Where a mortgage is executed by a trustee of a land trust, the mortgagor is the trustee and not the beneficiary or beneficiaries.”)