Pritzker Signs Law Ending Predatory Tax Sales

Illinois Gov. JB Pritzker signed a bill into law July 10 that phases out a process where property owners who were behind on their taxes had their equity taken away to pay off the balance.

Effectively, the new law ends the predatory practice of tax buyers, who could charge homeowners interest on their back taxes, and eventually take their home if they didn’t cough up the change in time. Cook County treasurer Maria Pappas, who championed the bill, told Crain’s in a statement that the new law restores even-handedness to the process.

“When someone loses a property because of unpaid taxes, the government should collect what’s legally owed and nothing more,” Pappas said.

The new law immediately overrides the previous system, which came under legal challenge from those who lost their homes in recent decades. Liability has been stacking up on the government’s shoulders to the tune of potentially upwards of $10 million from property tax sale constitutional rights violations.

The U.S. Supreme Court declared the previous system unlawful about three years ago. Multiple cases are still hanging around in court, and could impact county-level governments across the Chicago area. Previously, judgements in federal court that went against the practice warned counties that they can, in fact, be held liable, even if they only technically collected the back taxes. In May, a federal judge expressly stated that Cook County was liable for tax sale violations in the Kidd v. Pappas class action lawsuit.

While the new law brings the state in line with the constitution, the system could need some tweaks in the future. A potential pitfall of the new system is that it leaves unanswered what can occur if a county attempts back tax collection when there are no bids on a property long underwater, according to the outlet. The states that rectified the previous process before Illinois have had to follow up with additional legislation to fix that issue, as well as several others, according to the outlet.

— Hunter Cooke