Navigating the Consumer Contract Reciprocal Attorney's Fees Act (CCRAFA) in Illinois.

The State of Illinois recently enacted the aptly named Consumer Contract Reciprocal Attorney's Fees Act (CCRAFA), which is aimed at providing balance when it comes to awarding attorney’s fees in residential evictions and actions involving consumer contracts filed in small claims court.

The CCRAFA broadly defines “consumer contract” to include agreements for services and property (i.e. residential leases) in addition to traditional consumer loans, but it only applies to actions seeking less than $10,000, exclusive of interest and costs. It does not apply to consumer contracts if both parties were represented by counsel during the negotiations.

Under the CCRAFA, if a plaintiff seeks to recover its attorney’s fees when enforcing a consumer contract, then a prevailing defendant is entitled to recover their attorney’s fees. Winning scenarios for the defendant include: a court judgment in their favor, a successful motion to dismiss, and a voluntarily dismissal of the case after a trial date is scheduled in an action subject to the single refiling rule. If a plaintiff does not include a request for its attorney’s fees in the complaint, then the defendant cannot recover their attorney’s fees.

Servicers of residential mortgage loans are not impacted by the CCRAFA since the Illinois Mortgage Foreclosure Law has permitted a prevailing defendant to recover reasonable attorney’s fees and costs since 2009. The Illinois Forcible Entry and Detainer Act contains no comparable provision, however, so residential landlords and other creditors seeking to recover attorney’s fees when enforcing a consumer contract should be mindful of this change.

The Act becomes effective January 1, 2024. If the plaintiff is a Debt Buyer as defined in Section 2 the Collection Agency Act, then the CCRAFA applies irrespective of the date the consumer entered into the contract. For any other plaintiff, it only applies to actions involving consumer contracts entered into after the effective date.