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Tuesday, May 23, 2023

Annexation Agreement Binds Successor Owners of Portion of Undeveloped Land in Subdivision

The Illinois Supreme Court ruled in favor of a municipality in a motion to dismiss its lawsuit that alleged that a successor owner breached an annexation agreement between the municipality and a successor owner. Village of Kirkland v. Kirkland Properties Holdings Co., LLC. We wrote about the Appellate Court ruling in this case last year which also had ruled in favor of the municipality here.

The Village had filed a lawsuit against the successor owner of a portion of land that had been annexed and approved for a subdivision claiming that the successor owner (who had purchased an undeveloped portion of the subdivision) refused to provide a letter of credit to secure the completion of roads within the subdivision. The successor owner argued that the annexation agreement did not apply to the successor owner because it had only purchased a portion of the land subject to annexation. The trial court agreed with the owner and dismissed the municipality's lawsuit. On appeal, the Appellate Court reversed, ruling that the municipality's case could proceed. The successor owner appealed to the Illinois Supreme Court, which also ruled in the municipality's favor.

The Illinois Supreme Court first looked at the language in the annexation agreement itself, noting that it contained express language requiring the posting of a letter of credit to secure completion of all public improvements, including subdivision roads. The Court also noted that the annexation agreement had been recorded against the property, and included specific language that it would "run with the land" and apply to successor landowners. The Court pointed to language in Section 11-15.-4 of the Illinois Municipal Code that states that annexation agreements are "binding upon the successor owners of record of the land which is the subject of the agreement..." as legislative intent that the rights and obligations in an annexation agreement will bind future owners. The Court rejected the successor owner's argument that only a successor owner of all of the land would be bound by the agreement. Finally, the Court held that language in the annexation agreement contemplated a "phased" development where improvements would be constructed as phases of the subdivision were constructed, and it was reasonable for the municipality to require the developer to post security for phased improvements as each phase proceeded. 

In sum, the Court held that the municipality had sufficiently pleaded that the successor owner was bound by the terms of the annexation agreement and remanded the case back to the circuit court to allow the municipality's case against the owner to proceed.


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