What Happens If I Don't Pay Property Taxes in Illinois?

If your property taxes are delinquent and you live in Illinois, you might eventually lose your home after a tax sale.

People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value. If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien is a claim against your home to ensure you'll pay the debt; it effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. Accordingly, when an Illinois homeowner doesn't pay the property taxes, the overdue amount becomes a lien on the home. The lien exists from and including the first day of January in the year in which the taxes are levied until the taxes are paid or until the property is sold at a tax sale. (35 Ill. Comp. Stat. Ann. § 200/21-75).

The main types of tax sales in Illinois are:

  • annual sales
  • scavenger sales, and
  • forfeiture sales.

If property taxes for the immediately preceding tax year are delinquent on a parcel, they're offered for sale at the annual tax sale. Another kind of tax sale—a scavenger sale—is for properties that have delinquent taxes for three or more years, which weren't purchased at an annual tax sale. (35 Ill. Comp. Stat. Ann. § 200/21-145). Forfeiture sales are when no one bids at the sale, so the lien for taxes goes to the state, and then someone buys the forfeited lien from the county.

This article focuses on procedures related to the annual tax sale.

How Tax Sales in Illinois Work

When you don't pay your property taxes in Illinois, the county collector can apply to the court for a judgment against the property for the taxes and costs, as well as an order of sale. If you don't get caught up on what you owe, the court will issue a judgment, and then the county collector will hold a sale to sell the delinquent tax debt. (35 Ill. Comp. Stat. Ann. § 200/21-190).

But the purchaser at the sale doesn't buy the title to the home. Instead, the buyer gets a certificate of purchase, which represents a lien on the property. (35 Ill. Comp. Stat. Ann. § 200/21-250).

Notice Before the Judgment and Sale

No less than 15 days before applying to the court for a judgment and order of sale, the county collector must mail you a notice about the application. (35 Ill. Comp. Stat. Ann. § 200/21-135). The collector must also publish notice of the application in a newspaper before applying for the judgment. (35 Ill. Comp. Stat. Ann. § 200/21-110, § 200/21-115).

Stop the Sale By Getting Caught Up

At any time on or before the business day immediately before the sale, you can pay the taxes and costs due, which will stop the sale. If you live in a county with 3,000,000 or more residents, you'll have to pay the taxes, special assessments, interest, and costs due. (35 Ill. Comp. Stat. Ann. § 200/21-165).

How to Redeem the Property

Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.

How the Right to Redeem Usually Works

In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.

In other states, though, the redemption period happens before the sale.

Right to Redeem the Property After an Illinois Tax Sale

Under Illinois law, the redemption period is typically two years and six months after the sale, although the time frame might be different depending on your particular circumstances. (35 Ill. Comp. Stat. Ann. § 200/21-350).

What Happens If You Don't Redeem the Home

If you don't redeem your Illinois home during your allotted redemption period, the purchaser can get a deed (title) to the property. The purchaser files a petition with the circuit court asking that the court direct the county clerk to issue a tax deed if the property isn't redeemed from the sale. (35 Ill. Comp. Stat. Ann. § 200/22-30). The circuit court will then enter a judgment ordering a tax deed in favor of the purchaser so long as all legal requirements for obtaining a deed are met, including:

  • preparing a notice of sale, which includes information about your right to redeem, within four months and 15 days after the sale (for the county clerk to mail to you) (35 Ill. Comp. Stat. Ann. § 200/22-5), and
  • serving you a notice containing the redemption period expiration date (and publishing the notice in a newspaper) at least three months—but not more than six months—before the expiration date. (35 Ill. Comp. Stat. Ann. § 200/22-10, § 200/22-15).

Does a Mortgage Survive a Tax Sale in Illinois?

Property tax liens almost always have priority over other liens, including mortgage liens and deed of trust liens. (For purposes of this discussion, the terms "mortgage" and "deed of trust" are used interchangeably.) Because a property tax lien has priority, if you lose your home through a tax deed process, mortgages get wiped out. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. The servicer will then demand reimbursement from you (the borrower).

The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don't reimburse the servicer for the tax amount it paid, you'll be in default under the terms of the mortgage, and the servicer can foreclose on the home in the same manner as if you had fallen behind in monthly payments.

Your Servicer Might Set Up an Escrow Account

After demanding repayment of the amount it paid for the taxes, penalties, plus interest (and assuming you repay this tax debt), your servicer will probably set up an escrow account for the loan. Each month, you'll have to pay approximately one-twelfth of the estimated annual cost of property taxes—and perhaps other expenses, like insurance—along with your usual monthly payment of principal and interest. This money goes into the escrow account. The loan servicer then pays the cost of the taxes and other escrow items on your behalf through the escrow account.

The downside to having an escrow account is that you'll have to make a bigger payment to the servicer each month. On the positive side, having an escrow account saves you from having to come up with a large amount of money when tax bills, and perhaps other bills, are due.

Getting Help

If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay. If you're already facing a property tax sale in Illinois and have questions or need help redeeming your property, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.

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