Legal Question in Real Estate Law in Illinois

In Illinois, property taxes are paid in "arrears", meaning that 2010 property taxes were payable in 2 installments in 2011. The first installment was due in April and is always 55% of the prior years' (2010) total taxbill. The second installment varies as to when it becomes due, but by statute, and in most of the State, it is due September 1st. In Cook County, historically, for example in 2010, the 2nd installment 2009 taxbill was due in December.

Generally, taxes due but not paid timely are subject to a penalty of interest at the rate of 1-1/2% per month (18% per annum), or any part of a month.

Any real estate taxes not paid by the due date become a first lien superior to all other liens

and encumbrances on the property.

At some point after the second installment becomes due, the County Collector may apply to the Circuit Court to get a "judgment" against each property that has unpaid taxes owing, and to allow for the sale of those parcels of property. The Collector must then publish notice of the sale and identify those properties that will be offered at a public sale for the amount of the property taxes and costs due.

The tax lien, not title to the property, is transferred to the successful bidder. Unless the property owner redeems the property by paying the taxes, interest, and penalties, the purchaser at the sale can request a tax deed for the property.

The tax purchaser pays the taxes, penalties, and fees that are owed to the county and receives a certificate of purchase. Only if the property is not redeemed by the owner or an interested party within the redemption period does the tax purchaser have the right to petition for a tax deed to obtain title to the property.

A person may still pay the taxes, costs, and interest due after the application is made and before the actual sale of the individual properties that are delinquent.

Generally, it takes several months after the 2nd installment due date before the Collector can identify the parcels that are delinquent, petition the Circuit Court for a Judgment and order of sale, provide statutory public notice of the sale, allow bidders time to apply to bid at the sale and post bonds qualifying their action to bid in the sale.

The sale is commenced and continues until all property has been offered for sale. The first time that a property is offered for sale is known as the "annual sale".

The property unpaid taxes are not sold to the highest bidder; instead, the successful bidder is the one who accepts the smallest rate of penalty if the owner redeems the property. In other words, the bidder bids a penalty rate that he or she is willing to accept from a redeeming property owner. The maximum rate is 18 percent. Many successful bidders bid at a 0% rate.

Once payment is made, the collector issues the purchaser a receipt, a copy of which is filed

with the County Clerk. The County Clerk then issues a certificate of purchase

that is countersigned by the collector and that includes all amounts paid as the purchase price.

If a property is not sold at the "annual" tax sale, the property is "forfeited" to the State of Illinois.

The state doesn't actually take title to the property or have any interest in the property. Forfeiture merely means that the property was not sold at the annual tax sale. The property owner or interested party may still redeem the property at a penalty rate of 12 percent per year, or any part thereof.

Once offered at the "annual" sale, if a property's taxes are not sold, those properties that were not bid on, or went "unsold" at the annual sale, can be re-offered at a subsequent "scavenger" sale. Any property not sold again at the "scavenger" sale, is the "forfeited".

Once forfeited, the property then becomes available to anyone wishing to apply with the County Clerk to purchase the forfeiture. Upon such application, the Clerk will send notice to the taxpayer requiring redemption within 30 days. If the property is not redeemed, the clerk will issue a certificate of purchase upon payment of the forfeiture amount, any fees, and previous delinquent taxes. The certificate of purchase and redemption period after a foreclosure sale are the same as after the annual tax sale, except that the penalty rate is limited to 12 percent for each year or part thereof.

If the property is not redeemed or a sale in error is not ordered, the certificate holder may

petition the court for a tax deed. The court will grant the petition if the certificate holder has

complied with all of the notice, payment, and redemption provisions in the Property Tax Code.

From beginning to end, from the annual sale to the point where a tax purchaser, or certificate holder can obtain a tax deed to the delinquent property can take approximately 2-1/2 years.