Cook County Races Clock on Tax Sale Liability

Cook County is barreling toward a tax sale it may not legally be able to afford.

Unless Springfield lawmakers act within days, the county’s annual auction of delinquent property tax debts will move forward in March, potentially compounding what housing advocates and legal experts say is a mounting constitutional liability. Crain’s reported that the urgency stems from the U.S. Supreme Court’s 2023 decision in Tyler v. Hennepin County, which found that governments violate the Fifth Amendment when they seize and sell a property over unpaid taxes and keep the excess equity.

Illinois has yet to overhaul its tax sale system to comply.

That leaves Cook County Treasurer Maria Pappas in a bind. Without legislative authorization to delay again, she may have to proceed with a sale that could include as many as 40,000 properties with unpaid 2023 taxes. Each certificate sold could add another potential claimant if courts ultimately require counties to return surplus equity to dispossessed owners.

“Every tax certificate an Illinois county sells is going to add to the county’s potential liability,” Bob Palmer, policy director of Housing Action Illinois, told the outlet. Matt Kreis, general counsel for the Center for Community Progress, echoed that concern, warning additional March sales could deepen financial exposure down the line.

The sale was already pushed from its traditional August date to March 25, 2026, after lawmakers signaled a fix was imminent. That fix never came. By law, owners must be notified 30 days before the auction, meaning notices would need to go out by late February — or sooner, given the logistics of printing and mailing tens of thousands of certified letters and placing legal ads.

FOIA documents obtained by the publication show the March sale would cost roughly $190,000 in upfront expenses for printing and publication alone. Meanwhile, federal judges in two Illinois districts have declined to shield counties from liability, though no court has yet determined how past victims of so-called equity theft should be compensated.

Other Illinois counties are improvising. Rock Island and White counties required tax buyers to sign waivers acknowledging they — not the county — would bear responsibility for excess equity claims. Participation held steady and bidding ticked up slightly, suggesting investors may pivot toward interest earnings rather than windfalls from forfeited equity, according to the outlet.

In Springfield, Sen. Celina Villanueva introduced legislation that would require counties to return surplus proceeds after taxes are paid. But with the notification deadline days away, Cook County may be forced to proceed under a system the Supreme Court has already called unconstitutional, and hope the bill comes through before lawsuits do.

— Eric Weilbacher