Illinois Property Tax Foreclosure System Unconstitutional

When will Illinois fix this unconstitutional snatching of homeowner equity?

Illinois is the only state in the country where homeowners who lose their homes to tax foreclosure are not guaranteed any return of their remaining equity. The system has cost Black homeowners in Cook County tens of millions of dollars.

Since 2019, more than 1,000 owner-occupied homes in Cook County, including at least 125 owned by seniors, have been lost through property tax foreclosure, Injustice Watch and the Investigative Project on Race and Equity reported. Most were located in predominantly Black neighborhoods such as Roseland, Englewood and Chicago Heights.

In many cases, the original tax debts were small: over half stemmed from debts of $1,600 or less, and a dozen from as little as $200. Private investors who paid the tax debts at auction ultimately took title to the homes, which together were worth over $100 million. The homeowners walked away with nothing.

The practice was declared unconstitutional in 2023 by the U.S. Supreme Court in Tyler v. Hennepin County, but Illinois has yet to reform its system.

More than a dozen other states have passed laws in the wake of the ruling to return excess equity to former homeowners. Critics say Illinois’ inaction has left it out of step and exposed to legal risk.

The system disproportionately impacts older and lower-income residents, many of whom struggle with medical costs, home repairs or limited income. Cook County sold more than 800 seniors’ homes at auction due to tax debts last year, the most in over a decade.

Officials in seven Illinois counties, including Lake, DuPage, Will and Kane, have filed federal lawsuits against the state over the tax sale process, arguing it forces them to run foreclosures that violate homeowners’ constitutional rights. The suits aim to ensure any surplus value from property sales is given back to owners and not claimed by tax buyers, or by the counties themselves.

Some of those affected, like 77-year-old Velma Lewis, repurchased their homes at market rates after losing them to foreclosure. In Lewis’ case, she took out a 30-year mortgage to buy back the property her mother had paid off decades earlier. She now faces tens of thousands in repair costs due to code violations and vandalism during the vacancy.

State lawmakers have proposed reforms to reduce fees and interest rates and ensure homeowners receive a portion of their equity, but none have yet passed. Illinois Gov. J.B. Pritzker has not publicly backed any specific changes.

— Judah Duke