All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. In Illinois, the main types of tax sales to collect delinquent property taxes are:
This article focuses on procedures related to the annual 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.
Again, all states, including Illinois, have laws allowing the local government to sell a home through a tax sale process to collect delinquent taxes.
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).
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).
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).
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).
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.
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.
In Illinois, if the property has a dwelling of six or fewer units, the redemption period is two years and six months after the sale. (35 Ill. Comp. Stat. Ann. § 200/21-350).
If the property is abandoned, the purchaser can ask the court to reduce the redemption period to two years after the sale date. (35 Ill. Comp. Stat. Ann. § 200/21-350).
The purchaser from the tax sale can choose to extend the redemption period up to three years after the sale. (35 Ill. Comp. Stat. Ann. § 200/21-385).
If the period of redemption is extended, you must redeem on or before the extended redemption date. (35 Ill. Comp. Stat. Ann. § 200/21-350).
To redeem the home, you'll have to pay various amounts, including:
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:
Even though you'll get a redemption period after an Illinois tax sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable.
You could, for example, find out if you meet the criteria for a property tax exemption or try to reduce the amount of taxes that you must pay by challenging the taxable value of your home (if you think the valuation is too high).
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.