Chicago’s Cook County Faces Class Action Over Tax-Lien Sales

A federal judge just gave hundreds of homeowners the green light to sue Cook County over tax lien sales.

A federal judge granted class status to a lawsuit filed in 2022 by former homeowners and housing groups alleging the county’s embattled tax sale process strips property owners of their equity, in violation of the U.S. Constitution, Crain’s reported. The decision, handed down Monday by U.S. District Judge Matthew Kennelly, means the case can now move forward on behalf of as many as 1,700 Cook County homeowners.

The ruling stems from the 2023 Supreme Court decision in Tyler v. Hennepin County, which found that counties cannot keep the full value of a home when collecting unpaid property taxes, only what’s owed. Anything more, the court said, amounts to an illegal taking.

In Illinois, however, the tax buyer ends up with the property, and the homeowner walks away with nothing, often losing tens or even hundreds of thousands of dollars in equity. In one case cited in the suit, a Maywood homeowner lost nearly $164,000 in equity over just $2,340 in back taxes. In another, an Evanston homeowner forfeited a $389,000 home over a $9,000 debt.

The Cook County Treasurer’s Office, led by Maria Pappas, has long argued it’s simply following state law. The county doesn’t pocket the excess value; private tax buyers do. But Illinois is now the only state affected by Tyler that hasn’t changed its laws. Pappas recently postponed this year’s tax sale to 2026 in hopes lawmakers will act this fall.

In the meantime, the lawsuit is moving ahead.

Plaintiffs include former homeowners Michelle Kidd and Goyce Rates as well as advocacy groups Southwest Organizing Project and Palenque LSNA. Their attorneys argue the system not only violates the Fifth Amendment but also the Eighth and Fourteenth, amounting to excessive punishment without due process.

“The members in this class are not sophisticated parties who can afford to embroil themselves in individual lawsuits,” Judge Kennelly wrote in his ruling. “Rather, they are homeowners who lost their homes due to their inability to pay property taxes. The time and resources necessary to conduct such individual suits are likely not within many of the class members’ reach.”

— Judah Duke