Tax Sales: Buying & Redeeming Real Estate For The Delinquent Property Taxes

by
Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC

HOW THE COUNTY COLLECTS DELINQUENT PROPERTY TAXES

Legally, property taxes are a lien against real estate. If they are not paid by the due date, the county deems that taxes as “delinquent”. Then the property owner must pay an interest penalty of one and one-half percent on the amount due for each month or part of a month that the payment is late. This interest penalty continues until the taxes are paid – or the property is forfeited in Cook County and other counties that have adopted an accelerated billing procedure.

The interest penalty is not charged in certain circumstances, including …

— When the property owner is a member of the U.S. armed forces reserve and is called to active duty for deployment outside the continental U.S. and is on active duty on the installment due date. (The taxes must be paid 30 days after the owner returned from active duty.)

— When the property owner is eligible for a grant under the Senior Citizens and Disabled Persons Property Tax Relief and Pharmaceutical Assistance Act. If the property owner does not pay the taxes, the county will begin collection action in circuit court.

TAX SALES

Tax sales are one way the county enforces the collection of property taxes.

Annual tax sale
After the due date for the final tax installment, the county collector lists all delinquent parcels and other necessary information in the Annual Tax Judgment, Sale, Redemption, and Forfeiture Record.

Next, usually in October, the county collector applies to the circuit court for judgment and order of sale for the taxes on the delinquent properties. If judgment is entered, the county offers for sale a lien on the property in the amount of unpaid taxes and other associated costs. The property itself is not sold. The property owners receive in the mail an advance notice of the intended collection action and the county collector also publishes an advertisement in a local newspaper before appearing in court.

The property owner or any lienholder may pay the taxes to the county collector any time before the sale.

Both the county collector and county clerk or their deputies must attend the tax sale. A lien for each delinquent property is sold separately and consecutively.

The tax buyer’s bid for the property, which cannot exceed 18 percent interest for each six months or fraction of a month, is the successful tax purchaser.

Tax purchasers receive a certificate of purchase when the sale is complete. This certificate describes the property lien sold and lists the sale date and amount of taxes and other associated costs paid by the tax purchaser.

If the property owner (or other person with an interest in the property) does not redeem the property in the allotted time, the tax purchaser may petition the circuit court for a tax deed.

Sale of forfeited taxes and scavenger sales
If no one buys the lien for a parcel of delinquent property at the annual tax sale, the county may offer the forfeited taxes for sale in the future. If the taxes are delinquent for two years or more, the county collector may offer the property tax lien at a scavenger sale. For more information, contact the county clerk or county treasurer.

When to redeem properties sold for delinquent taxes
Property sold for delinquent taxes may be redeemed by the property owner or any other person who has an interest in the property (except for an undisclosed beneficiary of an Illinois land trust). The redemption period is based on the type of property and ranges from six months to two and one-half years. The tax purchaser may extend the redemption period for up to three years from the date of the sale.

How much must be paid to redeem the property
The amount paid to redeem a property sold at the annual tax sale is equal to (1) all of the taxes (including all subsequent taxes paid by the purchaser), special assessments, interest, penalties, and costs paid by the purchaser; (2) the accrued penalties; and (3) most other fees or costs paid by the purchaser after the sale. The county clerk computes the required amount of redemption. The redemption computation is similar for forfeited taxes and scavenger sales.

Tax deed proceeding
If the property owner (or other person who has an ownership interest in the property) does not redeem the property in the allotted time, the tax purchase may petition the circuit court for a tax deed. Property owners, occupants and other parties who have an ownership interest in the property must receive advance notice of the tax deed proceeding. The circuit court hears the case and enters a judgment ordering a tax deed if the tax purchaser complies with all statutory requirements.