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Thursday, October 4, 2018

Homeowners May Not Enforce Terms of Annexation Agreement




A recent Illinois appellate court decision examined who is a “successor in interest” under an annexation agreement and state law.  The result is informative for municipalities and developers seeking to better understand what rights and obligations flow to successors in interest of all or a portion of the property subject to such agreements.  

In 1990, a developer entered into an annexation agreement with a village to develop a subdivision over approximately 828 acres.  The agreement included a requirement that the developer design and construct a storm drain system for the subdivision.  In 2004, Patricia and Brian Doyle contracted with the developer to build a home in the subdivision and approximately three years later the Doyles began to notice their sump pump ejecting water every few seconds during times of rain or heavy snow.  Two years later, in March 2010, the Doyles noticed erosion around the storm drain next to their home causing them to file a drainage complaint with the village.  

After attempting several minor fixes, the village eventually corrected the problem in December 2011 but not before the failed system damaged the Doyles’ home.  The Doyles then brought suit including a claim of negligence against the developer for failing to install a properly working storm drain system.  The Doyles claimed the developer breached its duty under the annexation agreement to install a functioning sewer system and the Doyles had standing to recover because the annexation agreement was binding on “successor owners of record of the Subject Property.”  The trial court dismissed the Doyles’ claim and, on appeal, the First District Court of Appeal agreed. 

In Doyle v. Village of Tinley Park and Malone, the appellate court found that both the annexation agreement, and the Illinois Municipal Code provisions governing these agreements bind successor owners of land subject to an annexation agreement and that any party to such an agreement may bring a civil action to enforce its provisions. However, the Court added that these provisions did not apply to subsequent purchasers of each and every lot in a subdivision.  To do so, the Court explained, would result in absurd results such as a village being able to sue homeowners for a developers failure to construct a working sewer system. 

The court held that the phrases used in the annexation agreement (“successor owners of record of the Subject Property”) and in the statute (“successor owners of record of the land) were intended to only mean those successors who take title to the entire subject property.  If the agreement or statute intended otherwise, the Court wrote, it would have expressly stated that it applied to successor owners of the subject property “or any portion thereof.

The decision has practical implications for parties drafting annexation agreements who are seeking to clarify what provisions will remain enforceable by and against subsequent owners.  As the court pointed out, in order to make provisions of an annexation agreement specifically applicable to subsequent purchasers, the parties must expressly provide say so in the agreement rather than merely relying on generalized assignment and successor in interest provisions.       

Post Authored by David Warner, Ancel Glink         

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