Illinois Compiled Statutes
735 ILCS 5/15-1401 (2026)
Deed in Lieu of Foreclosure
✓ current as of May 2026
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(735 ILCS 5/15-1401)
(from Ch. 110, par. 15-1401)
Sec. 15-1401.
Deed in Lieu of Foreclosure.
The mortgagor and
mortgagee may agree on a termination of the mortgagor's interest in the
mortgaged real estate after a default by a mortgagor. Any mortgagee or
mortgagee's nominee may accept a deed from the mortgagor in lieu of
foreclosure subject to any other claims or liens affecting the real estate.
Acceptance of a deed in lieu of foreclosure shall relieve from personal
liability all persons who may owe payment or the performance of other
obligations secured by the mortgage, including guarantors of such
indebtedness or obligations, except to the extent a person agrees not to be
relieved in an instrument executed contemporaneously. A deed in lieu of
foreclosure, whether to the mortgagee or mortgagee's nominee, shall not
effect a merger of the mortgagee's interest as mortgagee and the
mortgagee's interest derived from the deed in lieu of foreclosure.
The mere tender of an executed deed by the mortgagor or the recording of
a deed by the mortgagor to the mortgagee shall not constitute acceptance by
the mortgagee of a deed in lieu of foreclosure.
(Source: P.A. 86-974.)
Notes of Decisions
Cited in 7
cases (1 in the last 5 years), 2013–2024 · leading case: Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380 (Ill. App. Ct. 2013).
Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380 (Ill. App. Ct. 2013). “735 ILCS 5/15-1401 (West 2010). However, acceptance of such a deed is at the lender’s sole option, and nothing in this record suggest that defendants offered such a deed.”
In re Primes, 518 B.R. 466 (Bankr. N.D. Ill. 2014). “Section 15-1401, entitled “Deed in Lieu of Foreclosure,” provides that a “mortgagor and mortgagee may agree on a termination of the mortgagor’s interest in the mortgaged real estate after a default by a mortgagor.”
In re Michael Bahary & Steven Bahary P'ship, 523 B.R. 642 (Bankr. N.D. Ill. 2015). “The statute provides that a mortgagee or mortgagee’s nominee may accept a deed from the mortgagor in lieu of foreclosure subject -to any other claims or liens affecting the real estate. Acceptance of a deed in lieu of foreclosure relieves from personal liability all persons who…”
Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380 (Ill. App. Ct. 2014). “735 ILCS 5/15-1401 (West 2010). However, acceptance of such a deed is at the lender’s sole option, and nothing in this record suggests that defendants offered such a deed.”
Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380 (Ill. App. Ct. 2014). “735 ILCS 5/15-1401 (West 2010). However, acceptance of such a deed is at the lender’s sole option, and nothing in this record suggests that defendants offered such a deed.”
RM 1534 S. W., LLC v. The Music Zone Rehearsal Studios, LLC., 2024 IL App (1st) 221694 (Ill. App. Ct. 2024). “15–1401) specifies that a deed in lieu of foreclosure does not create a merger); see also 735 ILCS 5/15-1401 (West 2014). ¶ 57 Even assuming 1600 Western’s reading of the Forbearance Agreement is correct, it cites no authority supporting the proposition that the IRS form…”
Bank of Com. v. Fyre Lake Ventures, LLC, 84 F. Supp. 3d 807 (C.D. Ill. 2015). “In a paragraph entitled “Tender of Deeds in Lieu of Foreclosure,” the parties agreed: In consideration for the FDIC-Receiver releasing all actual and potential claims [it] has against the Released Parties, the Released Parties agree to tender to FDIC-Receiver ' the…”
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