Chicago’s Cook County Pauses Unconstitutional Tax Lien Sales

Cook County hit the brakes on tax lien sales after the U.S. Supreme Court deemed them unconstitutional.

The county will halt delinquent property tax sales, a move that could ripple across the state as officials grapple with the ruling, Crain’s reported.

The decision aims to provide Illinois legislators a window to overhaul state law.

Cook County Treasurer Maria Pappas said the county’s annual August tax sale will be postponed for seven months, pushing the next sale to March. The delay was authorized by legislation passed in Springfield last week and is intended to allow time for collaboration on comprehensive property tax foreclosure reform. The move comes as legal and legislative pressure mounts on Illinois’ decades-old tax-sale system.

The urgency for reform stems from the 2023 Supreme Court decision in Tyler v. Hennepin County, Minnesota.

The court found that the practice of counties taking the full value of a home to satisfy a tax debt, including any equity beyond what was owed, violates the Fifth Amendment’s prohibition against government taking private property without just compensation. This process, where tax buyers can take full ownership of a property for the amount of back taxes, has been termed “equity theft” by some housing activists.

Illinois is reportedly the last of 12 states affected by the Tyler ruling to amend its tax sale laws. While other states have updated their systems, a last-minute amendment introduced by state Sen. Celina Villanueva to place a moratorium on tax sales statewide failed in the Illinois legislature last week.

Pappas, who has advocated for changes to the tax sale system for years, said the Supreme Court’s decision “presented my office with an opportunity to push for changes I’ve wanted for a long time.” She had previously introduced incremental changes to make it easier for homeowners and small developers to acquire delinquent taxes.

The delay is seen as a crucial step to align Illinois’ practices with the Supreme Court’s directive.

In the two years since the Tyler decision, multiple lawsuits have been filed against Illinois state and county officials challenging the existing tax sale system. It remains to be seen if other Illinois counties will follow Cook County’s lead in pausing their sales.

— Judah Duke