Keeping Current-Property

• Pages: 10-15
• Date: 01 November 2023
• Subject Matter: Administrative & Public Law

November/December 2023

10

Published in Probate & Property, Volume 37, No 6 © 2023 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be

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KEEPING CURRENT

PROPERTY

CASES

ANNEXATION: Annexation agree-

ment binds purchaser who acquires

only part of annexed subdivision.

In 2003, the Village of Kirkland and a

landowner entered into an annexation

agreement, providing that the village

would annex 114 acres of land to be

developed as a residential subdivision.

The recorded agreement was executed

under the Illinois Municipal Code sec-

tions titled “Annexation Agreements,”

65 Ill. Consol. Stat. §§ 5/11-15.1-1 to

11-15.1-5, the goal being to allow the vil-

lage to ensure orderly growth and quality

of life in a manner that served the best

interests of all. In 2017, Kirkland Proper-

ties Holding Company acquired title to 34

of the 82 lots in the subdivision subject

to the annexation agreement. The village

f‌iled suit when Kirkland Properties failed

to comply with provisions of the agree-

ment, including completion of the roads.

The trial court dismissed the village’s

complaint with prejudice because Kirk-

land Properties had purchased less than

the whole of the annexed land and thus

was not a successor under the annexation

agreement to be bound by its provi-

sions. The appellate court reversed, and

the supreme court armed, rejecting the

assertion that the absence of language in

the Municipal Code or annexation agree-

ment expressly stating the agreement

is binding on successor owners of the

entire parcel or any portion thereof, freed

Kirkland Properties of successor liabil-

ity. Indeed, the opposite reasoning was

compelling—nothing in the code states

that an annexation agreement is binding

only upon successor owners of the entire

trial court also determined that the doc-

trine of laches did not apply. Silvernagel

appealed, and the intermediate appellate

court reversed, holding that the balance

of the mortgage became due upon the

bankruptcy discharge, at which point the

lender’s claim accrued and the statute

of limitations began to run. Because six

years had passed since the discharge, the

court determined that US Bank’s claim

had expired. The supreme court reversed.

The court explained that an acceleration

of the debt requires a “clear, unequivocal”

armative act by the lender, but all Sil-

vernagel alleged was that the lender “did

not commence any action to enforce its

rights under the note within six years” of

his default. This was not an acceleration,

and Silvernagel could not unilater-

ally accelerate the payments by f‌iling

bankruptcy. Nor did the discharge in

bankruptcy operate to accelerate the debt.

Aer bankruptcy, a mortgagee’s only

recourse is against the property. Although

the debtor is no longer personally liable

on the note, if the debt is not voluntarily

paid, the debtor risks losing the property

in foreclosure. US Bank Nat. Ass’n. v. Sil-

vernagel, 528 P.3d 163 (Colo. 2023).

EASEMENTS: Easement granting

“absolute water rights” allows ease-

ment holder to grant rights to neighbors

to use servient estate. In 1961, Duke

Power Company purchased an ease-

ment from the Kisers covering 280 acres

of largely dry land to create a lake. Duke

also purchased an interest in the sur-

rounding lakebed property to construct

a dam under a federal license it held to

operate a long-term hydroelectric proj-

ect. Duke later f‌looded the land, now

known as Lake Norman, and the Kis-

ers retained some land, now known as

Kiser Island, which they partially subdi-

vided and sold as waterfront lots. Duke

later implemented shoreline manage-

ment guidelines and issued permits to

the owners of the waterfront lots to build

parcel annexed. The court read the dic-

tionary meaning of “successor” to mean

all lot owners who purchased land in the

annexed subdivision. Also, the annexa-

tion agreement expressly required its

provisions to be binding on successors as

the subdivision developed in stages. Vil-

lage of Kirkland v. Kirkland Prop. Holdings

Co., 2023 Ill. LEXIS 327 (May 18, 2023).

BANKRUPTCY: Bankruptcy discharge

does not accelerate balance on note

secured by mortgage to start statute

of limitations on lender’s foreclosure

action. In 2012, a bankruptcy court dis-

charged Silvernagel’s personal liability

on his mortgage debt under Chapter 7

of the Bankruptcy Code, see 11 U.S.C.

§ 727 (2018), but the discharge did not

extinguish the mortgage on the debt-

or’s home. In 2019, US Bank threatened

to foreclose on the property if Silverna-

gel did not make payments. In response,

Silvernagel requested declaratory relief

to prevent US Bank’s enforcement of

the mortgage. He argued that US Bank’s

interest was extinguished by the six-year

statute of limitations. Alternatively, he

asserted that the doctrine of laches pre-

vented enforcement of the agreement.

US Bank moved to dismiss, arguing that

the loan’s maturity date was in 2036 and

that its claim had not accrued, such that

the relevant statute of limitations had

not commenced. The trial court granted

US Bank’s motion and dismissed the

case, concluding that the remaining debt

was not yet due because US Bank never

accelerated payment on the note. The

Keeping Current—Property

oers a look at selected recent

cases, literature, and legislation.

The editors of Probate &

Property welcome suggestions

and contributions from readers.

Keeping Current—Property Editor: Prof.

Shelby D. Green, Elisabeth Haub School of

Law at Pace University, White Plains, NY

10603, sgreen@law.pace.edu. Contributing

Authors: Prof. Darryl C. Wilson and

Jesudunsin Awoyeye.