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SCOTUS rules government can’t take more than what’s owed from property owners. Learn what states need to do to reform their unconstitutional laws.

Illinois

Why It Matters

Illinois - Home Equity Theft

In Illinois:

  • 70% of homes were forcibly seized for tax debts less than the price of a 10-year-old Chevy Impala.
  • Investors were able to keep $148 million more than what was owed to them.

Patricia Hill achieved her American Dream in 2003 when she bought a home in a Chicago suburb for $315,000.1 Ever since, she has lived in this home, where she raised her two daughters. Unfortunately, Cook County has burdened Patricia with higher and higher property taxes.

In 2003, the property tax bill for Patricia’s home was $2,700. A decade later, the bill had ballooned to more than four times that amount. Patricia could not afford it and was almost forced into foreclosure.

Although her property tax burden has fallen since, in part because she became eligible for a senior exemption, Patricia continues to fear that an unpredictable tax hike may one day cause her to lose her home.

Combining the second-highest property tax rate in the country2 with a predatory tax foreclosure law leaves countless Illinois homeowners fearing tax foreclosure. For instance, in May 2022, Cook County planned to sell the tax debts on 37,000 properties with delinquent taxes. Of those properties, almost 20,000 had tax debts of less than $1,000.3

In Illinois, county governments sell the delinquent taxes, not the property itself. The purchaser of the delinquent taxes must pay the sum to the county. In exchange, the purchaser takes a tax lien on the property and collects interest from the homeowner on the amount of the delinquent tax debt. If the owner does not redeem the property by paying the taxes and interest within, typically, two and a half years, the purchaser can petition the court for a deed to the property, and the former owner receives nothing for her home.

If there are no purchasers for the delinquent taxes, the county can sell the property once the redemption period expires and keep the surplus home equity beyond the amount of taxes and interest the homeowner owed. If private investors get the deed to the property, then they get to keep the surplus. In short, the property owner can lose everything invested in the house over a lifetime, no matter how small her tax debt was.

According to Pacific Legal Foundation’s analysis of home equity theft across the 11 most populous Illinois counties, 3,539 homes were taken and sold from 2014 to 2021. On average, homeowners lost 85% of the value of their homes to private investors and the government.

Home equity theft threatens all property owners, but it disproportionally affects Illinois’s most vulnerable citizens, who have the hardest time keeping up with escalating tax payments. Home equity theft can leave affected Illinois residents financially devastated and hopeless.

According to an analysis by the University of Chicago Harris School of Public Policy, Cook County has been assessing the value of the least expensive homes at a rate almost twice as high as the rate for the most expensive homes.4 Owners of less-valuable homes therefore face a greater property tax burden and may be more likely to become victims of home equity theft.

The U.S. Constitution protects homeowners’ rights to just compensation for seized properties and freedom from excessive fines. These laws require Illinois counties and private investors to return to homeowners the difference between what they owed and what the government and private investors took. To address this unfair practice, PLF’s legal team is working to pass legislation in the Illinois General Assembly to end home equity theft in the state.

Pacific Legal Foundation is a 501(c)(3) nonprofit organization. © Pacific Legal Foundation, 2022.