Frequently Asked Questions
What is the Illinois Redemption Period?
It varies by the nature of the property based upon the properties classification under the Illinois Constitution and the Property Tax Code. Through the proper procedure, it can be extended. It can be no longer than three years from the date of the sale of the tax certificate.
What is due diligence?
This is what a reasonable man would do in attempting to notify a property holder(s), interested parties and occupants, that a tax buyer is seeking to foreclose against the property.
What is a Sale in Error?
This is a statutory procedure to reclaim your investment in the event that the tax buyer is unable to obtain an order to issue a tax deed. This can occur for a number reasons such as a failed but good faith attempt at proper service, bankruptcy of the property owner, pollution contamination of the land, encumbrances by certain types of municipal liens etc.
Why is the Illinois tax foreclosure process more complicated than other States?
Essentially, the Illinois tax foreclosure process is a constitutionally supported legal method to clear title to the land. As such, it has been drafted to comport with the due process notions of clearing the title to the property to all other inferior liens, judgment and encumbrances of any type. It is a plenary procedure in its scope. When compared to other States, it is more extensive because it does something that most State do not - provision for issuance of a tax deed which is merchantable. The extensiveness of the procedure is what makes Illinois a useful State to invest in. The notice procedures foster redemption as well as the "cleansing" of the chain of title. This is not to say that after issuance problems can not occur. These after issuance issues arise under 735 ILCS 5/2-1401 of the Illinois Code of Civil Procedure. If you have an after issuance issue or have been served with a 735 ILCS 5/2-1401 Petition see your attorney immediately.
Are Tax Certificates "Guaranteed"?
No, nor are certificates or liens in other states guaranteed by the State or otherwise. However, in Illinois, the tax buyer does obtain a first lien on the real estate, which if foreclosed, is superior in right to all other lien holders. This means a tax lien's priority is greater than a first mortgage, it is greater than mechanics lien and greater than most other liens that exist. A property tax lien often, but not always, is superior to a federal tax lien.
How do the Bankruptcy Courts affect my tax lien?
The short answer is that upon notice to the tax buyer, the stay comes into effect thereby precluding the foreclosure from going forward. If the bankruptcy is a chapter 7 liquidation, the tax lien should pass through the bankruptcy unaffected but the Illinois tax buyer needs to do one of two procedures: (1) file a motion to lift the stay so that foreclosure can proceed or (2) file for a sale in error. The decision of which procedure to use is a question of economics.
How do federal tax liens affect my tax lien?
The short answer is that if the federal tax lien is later in time to the property tax lien then the property tax lien should be superior to the federal tax lien. However, the tax buyer must comply with special federal procedures as to notice in order to so qualify. This can be complicated, call your attorney. Or, you may want to file for a sale in error.
What if the land that is subject to the tax lien is contaminated with pollutants?
Again, this is a question of economics. Some Illinois "brownfields" have more utility than others. Nonetheless, if you foreclose on it you may have to clean it up - which can be very expensive. The other option is to file for a sale in error.
Is a Tax Deed from a County Clerk, in Illinois, merchantable?
Yes. That is why the Illinois procedure is as extensive as it is. It has been described as follows:
When a tax deed is placed of record within the time prescribed by law, § 22-55 of the Property Tax Code provides that the tax deed convey merchantable title. The courts have defined the tax deed grantee's title as "a new and independent title, free and clear from all previous titles and claims of every kind and character". City of Bloomington v. John Allen Co., 18 Ill.App.3d 569, 310 N.E.2d 437, 441 (4th Dist. 1974)(city lien was declared invalid). See also Vulcan Materials Co., v. Bee Construction, 96 Ill.2d 159, 449 N.E.2d 812, 70 Ill.Dec. 465 (1983); Wilder v. Finnegan, 267 Ill.App.3d 422, 642 N.E.2d 496, 204 Ill.Dec. 795 (5th Dist. 1994)(tax deed extinguished interests of former owner who received no notice of tax deed proceedings); Jacobsen v. Conlen, 14 Ill.App.3d 306, 302 N.E.2d 471 (1st Dist. 1973)(mechanics liens created prior to tax deed were declared invalid); Olmstead v. GHS Enterprises, Ltd., 269 Ill.App.3d 821, 646 N.E.2d 1275, 207 Ill.Dec. 188 (1st Dist. 1995)(tax deed extinguished existing lease); ... Lincoln Park Federal Savings & Loan Association v. DRG, Inc., 175 Ill.App.3d 176, 529 N.E.2d 771, 124 Ill.Dec. 790(1st Dist. 1988)(reacquisition of title by former owner from tax deed grantee did not reinstate prior existing mortgage voided upon issuance of tax deed).
The Property Tax Code states as follows on the issue of Merchantability:
§ 35 ILCS 200/22-55. Tax deeds to convey merchantable title
Sec. 22-55. Tax deeds to convey merchantable title. This Section shall be liberally construed so that tax deeds shall convey merchantable title. In the event the property has been taken by eminent domain under Article VII of the Code of Civil Procedure, the tax purchaser shall be entitled to the award which is the substitute for the property. Tax deeds issued pursuant to this Section are subject to Section 22-70
Is the Illinois Property Tax Code free from Constitutional challenge?
It is important to remember, that in a free society, the right to defend and make claim in the Courts of the State and Federal government is a cherished right. As such, controversy of claims and defense arise in Court. As a free Nation, we as a People have reserved the right to make claims to the individuals and business associations of our Nation. Anyone can make a claim. Simply because it is "claimed" does not make it so. It is for the processes of the Courts to sort out the contention between that which is claimed and defended. With the above proviso, the following is of import to the question.
When the Illinois Property Tax Code has been challenged the following quote is demonstrative, from In re McKeever, 132 B.R. 996 (N.D. Ill. 1991):
The constitutionality of the Illinois Revenue Act notice provisions has been upheld by numerous reviewing courts. The tax deed proceeding has been held to adequately protect the property rights and constitutional due process rights of the property owner and other interested parties. See e.g., Rosewell v. Chicago Title & Trust Co., 99 Ill.2d 407, 76 Ill.Dec. 831, 459 N.E.2d 966, app. dis. Blum v. Rosewell, 467 U.S. 1237, 104 S.Ct. 3503, 82 L.Ed.2d 813 (1984); Cherin v. R. & C. Co.,11 Ill.2d 447,143 N.E.2d 235 (1957); Balthazar v. Mari, Ltd., 301 F. Supp. 103(N.D.Ill.), aff'd 396 U.S. 114, 90 S.Ct. 397, 24 L.Ed.2d 307 (1969); Catoor v. Blair, 358 F. Supp. 815 (N.D.Ill.), aff'd 414 U.S. 990, 94 S.Ct. 345, 38 L.Ed.2d 231 (1973), reh. den. 414 U.S. 1172, 94 S.Ct. 934, 39 L.Ed.2d 121 (1974).
What is Post Judgment Relief?
In Illinois this is controlled by 735 ILCS 5/2-1401. The short answer is that this statute allows, under certain circumstances, for the filing of a cause of action to set aside a judgment. It must generally be brought within two years of a judgment.
The Illinois Property Tax Code also contains authority that may limit some instances of post judgment relief under 35 ILCS 200/22-45. Currently, the First and Second District Appellate Courts of Illinois have taken different positions on various aspects of 35 ILCS 200/22-45 application.
