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BMO Harris N.A. v. Kautz

Court of Appeals of Illinois, Second District

August 22, 2014

BMO HARRIS N.A., formerly known as Harris, N.A., Plaintiff-Appellee,
v.
WILLIAM R. KAUTZWILLIAM R. KAUTZ, KAUTZ FARM.ORG NFP, PAULA KAUTZ, KAUTZ EQUIP, LTD., and UNKNOWN OWNERS and NONRECORD CLAIMANTS, Defendants-Appellants

Appeal from the Circuit Court of Kane County. No. 13-CH-2101. Honorable Leonard J. Wojtecki, Judge, Presiding.

SYLLABUS

In mortgage foreclosure proceedings for property consisting of 5.67 acres used primarily as farmland, but with one large building containing a show room, a lunch room area, an office, meeting rooms, a maintenance area, and an apartment used as the primary residence of the mortgagor and his family, the appellate court reversed the trial court's order giving plaintiff mortgagee the presumptive right to possess all of the property, except the apartment, and the right to have a receiver appointed, and remanded the cause based on the findings that the entire property was residential real estate, defendants had the presumptive right to possession and plaintiff had the right to rebut that presumption, since the property had only one dwelling unit occupied by the mortgagor and should have been classified as residential real estate pursuant to section 15-1219 of the Code of Civil Procedure.

JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Justices Hutchinson and Hudson concurred in the judgment and opinion.

OPINION

Page 921

JORGENSEN, J.

[¶1] This appeal arises out of foreclosure proceedings initiated by plaintiff, BMO Harris, N.A. (formerly Harris, N.A.), against defendants, William and Paula Kautz, Kautz Farm.org NFP, Kautz Equip, Ltd., and unknown owners and nonrecord claimants (collectively, the Kautzes).[1] It concerns the trial court's interlocutory order to appoint a receiver over a portion of the subject property as requested by BMO Harris. Because the trial court erred in giving BMO Harris the presumptive right to possess the property and thus the right to have a receiver appointed, we reverse and remand, giving the Kautzes the presumptive right to possess the property and giving BMO Harris an opportunity to rebut the presumption, if it so chooses.

[¶2] I. BACKGROUND

[¶3] According to the documentation submitted by the parties, the property at issue is located on Route 38 in Geneva. It consists of 5.67 acres, which are primarily used as farmland. The produce grown on the farmland is either consumed by the Kautzes, given to friends and neighbors, or donated to a local food bank. There is only one building on the property. It is a 7,673-square-foot, L-shaped building. It contains a show room, a lunch room area, office and meeting rooms, and a maintenance area. The Kautzes have used the building for various purposes. They operate a bakery out of the first floor. They also have used the building to work on race cars and tractors. Finally, the building contains a 750-square-foot apartment,[2] which the Kautzes have used as their primary residence at all times relevant to this case.

[¶4] In 2010, the Kautzes defaulted on their mortgage. As of the maturation date, $259,000 in principal remained on the loan. Additionally, Kautz Equip, Ltd., which had served as a guarantor, was involuntarily dissolved.

[¶5] As a result, in September 2013, BMO Harris initiated foreclosure proceedings

Page 922

against the Kautzes. BMO Harris also moved for the appointment of a receiver. The trial court granted the motion as to all portions of the property except for the living quarters, or " dwelling unit," in which the Kautzes maintained their primary residence. The court's decision was based on its finding that the majority of the property (excepting the dwelling unit) was nonresidential real estate. Where a property is nonresidential real estate, the mortgagee, here BMO Harris, has the presumptive right to ...


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