Click to download the full white paper about the Illinois Tax Sale Process by John Stanko.
Attorney John Stanko began working with tax lien investors while still in law school, and has now been involved with Illinois tax sales law for more than 30 years. He spent over a decade as Corporate Counsel for two of the largest tax purchasers in Illinois, before becoming a partner in the Stanko McCarthy Law Group in Chicago. His tax sale and tax deed litigation clients range from private investors to large corporate tax purchasers and servicing agents as well as private property owners, mortgage companies, banks, title companies, and municipalities. Stanko joined Tax Sale Resources' CEO, Brian Seidensticker, on a podcast to share his expertise regarding tax sales in the Prairie State.
An Illinois Tax Lien Sales Overview
In Illinois there are three types of delinquent property tax collection sales, namely 1) annual sales, 2) forfeiture sales, and 3) scavenger sales, and certificate holders are referred to as tax buyers or tax purchasers. Some tax sales are conducted in person, while the majority of them are done electronically, online. If there are ties in these electronic auctions, the winning bid is chosen by computerized random selection. There are 102 counties in Illinois, and Cook County is approximately five times bigger than the next largest county. Due to its relative size, Cook County’s tax sales rules and processes can differ from elsewhere in Illinois, in significant ways.
Illinois Notification Process
Once you own the tax lien you have to do notifications that are delivered within “four months plus 15 days” of the date the lien sold. In Cook County in particular, judges may be extra strict in enforcing compliance regarding how you fill out notification paperwork and perform your notifications, so be sure it’s done correctly. In fact, it is strongly recommended that if you’re not an experienced tax buyer you may want to engage the services of a qualified tax sales attorney to help ensure that your notifications are fully compliant.
Annual Lien Sales
The annual sale is the first offering of the property after it becomes delinquent, and properties offered at these sales have been delinquent for two years. So, for instance, sales that take place in 2023 are to collect taxes from 2021. These are bid-down sales, started at a rate of 9% interest per six months or a maximum of 18% per year.
Forfeiture Sales in Illinois
If the parcels at the annual tax sale are not purchased, they are forfeited to the state and an interested purchaser may then purchase them over the counter. All past delinquencies and penalties must be purchased and paid for at that time. The tax certificate purchaser earns a 12% penalty per six months that must be repaid upon redemption.
Illinois Scavenger Sales
Once a parcel is three or more years delinquent, it is then offered at a scavenger sale. These sales occur every other year, and are bid up from a minimum bid set by the county. There is a structured penalty applied to the parcels sold. The penalty is “12% per six months or fraction thereof for the first 24 months (except that the penalty is only 3% if the property is redeemed within two months from the date of sale), and 6% per year thereafter.” However, no penalty is applied to overbid amounts.
Redemptions Based on Property Type
Any party that holds an interest in a property has the right to redeem, and redemption periods vary across Illinois, depending upon the specific type of property. For residential properties that include six or fewer units, the redemption period is two years plus six months. For vacant, non-farm, commercial, industrial, and residential properties that have seven or more units, the redemption period is six months, and for all other types of property it is two years.
Learn More about Illinois Tax Sales
Tax sales investment in Illinois can be highly lucrative, but the procedures and requirements are unique and can be challenging for those who don’t first do their homework. For much more detailed information regarding tax lien and deed sales, you can read John Stanko’s comprehensive white paper and be sure to also listen to his full podcast interview with Brian Seidensticker.