Redemption Beware

Imagine you owe delinquent taxes for any particular tax year.  You plan on paying those taxes.  When the time arrives that you have saved enough money to pay the delinquent taxes, you learn that the original delinquency amount has increased astronomically.   You panic.  Here is what property owners need to know and understand about the Illinois property taxation scheme.

The Illinois Constitution Article 9, Section 8(b) provides that “[t]he right of redemption . . . shall exist in favor of owners and persons interested in such real estate for not less than two years following such sales.”   The Property Tax Code provides that the right to redeem property from a tax sale exists “in any owner or other person interested in that property, other than an undisclosed beneficiary of an Illinois land trust,” whether or not the interest in the property sold is recorded or filed. 35 ILCS 200/21-345.   The Property Tax Code also provides that tax purchasers may add all subsequent year tax payments to a tax sale, inclusive of penalty and costs.  35 ILCS 200/21-355.

This blog walks you through a few examples of a tax delinquencies, redemption amount calculations and the surprise you could be in for.  In the first example, the tax delinquency started at $3,324.96 By the time redemption occurred, the amount due was $27,342.09.   First, the 2016 taxes were sold in the amount of $3,324.96.  The prior delinquent tax years 2012 to 2015 were added to this tax sale.  The tax purchaser paid the 2017 and 2018 first installment subsequent tax years, and posted those payments to the tax sale.  The penalty amount on the subsequent tax years was added to the tax sale.  The tax purchaser’s fees and costs in filing the Section 22-5 notice, Section 22-30 petition for tax deed, Section 22-10 notices, Section 22-20 publication notice, and Section 22-25 notice were posted and added to the tax sale. By the time redemption was made, the amount to redeem in comparison to the original tax delinquency increased by 822%.

The portion of the estimate of redemption that supports this fact scenario is as follows:

In the next example, the tax delinquency started at $132.61. By the time redemption occurred, the amount due was $813.37.   First, the 2016 taxes were sold in the amount of $132.61.  The subsequent delinquent 2018 tax year was added to this tax sale. The penalty amount on the subsequent tax years was added to the tax sale.  The tax purchaser’s fees and costs in filing the Section 22-5 notice were added to the tax sale.  By the time redemption was made, the amount to redeem in comparison to the original tax delinquency increased by 613%.

The portion of the estimate of redemption that supports this fact scenario is as follows:

Illinois property owners and those interested in redeeming taxes must be aware that the amount required to redeem can be anywhere from 100% to 1000% or more than the original tax delinquency.

The amount required to redeem includes:

(a) the certificate amount, which shall include all tax principal, special assessments, interest and penalties paid by the tax purchaser together with costs and fees of sale and fees paid under Sections 21-295 and 21-315 through 21-335;

(b) the accrued penalty, computed through the date of redemption as a percentage of the certificate amount, as follows:

        (1) if the redemption occurs on or before the expiration of 6 months from the date of sale, the certificate amount times the penalty bid at sale;

        (2) if the redemption occurs after 6 months from the date of sale, and on or before the expiration of 12 months from the date of sale, the certificate amount times 2 times the penalty bid at sale;

        (3) if the redemption occurs after 12 months from the date of sale and on or before the expiration of 18 months from the date of sale, the certificate amount times 3 times the penalty bid at sale;

        (4) if the redemption occurs after 18 months from the date of sale and on or before the expiration of 24 months from the date of sale, the certificate amount times 4 times the penalty bid at sale;

        (5) if the redemption occurs after 24 months from the date of sale and on or before the expiration of 30 months from the date of sale, the certificate amount times 5 times the penalty bid at sale;

        (6) if the redemption occurs after 30 months from the date of sale and on or before the expiration of 36 months from the date of sale, the certificate amount times 6 times the penalty bid at sale. In the event that the property to be redeemed has been purchased under Section 21-405, the penalty bid shall be 12% per penalty period as set forth in subparagraphs (1) through (6) of this subsection (b).

(c) the total of all taxes, special assessments, accrued interest on those taxes and special assessments and costs charged in connection with the payment of those taxes or special assessments, which have been paid by the tax certificate holder on or after the date those taxes or special assessments became delinquent together with 12% penalty on each amount paid for each year or portion thereof intervening between the date of that payment and the date of redemption.

(d)           Any amount paid to redeem a forfeiture occurring subsequent to the tax sale together with 12% penalty thereon for each year or portion thereof intervening between the date of the forfeiture redemption and the date of redemption from the sale.

(e)           Any amount paid by the certificate holder for redemption of a subsequently occurring tax sale.

(f)            All fees paid to the county clerk under Section 22-5.

(h)           All fees paid the circuit clerk and the sheriff, a licensed or registered private detective, or the coroner in connection with the filing of the petition for tax deed and service of notices under Sections 22-15 through 22-30 and 22-40 in addition to (1) a fee of $35 if a petition for tax deed has been filed, which fee shall be posted to the tax judgement, sale, redemption, and forfeiture record, to be paid to the purchaser or his or her assignee; (2) a fee of $4 if a notice under Section 22-5 has been filed, which fee shall be posted to the tax judgment, sale, redemption, and forfeiture record, to be paid to the purchaser or his or her assignee; (3) all costs paid to record a lis pendens notice in connection with filing a petition under this Code; and (4) if a petition for tax deed has been filed, all fees up to $150 per redemption paid to a registered or licensed title insurance company or title insurance agent for a title search to identify all owners, parties interested, and occupants of the property, to be paid to the purchaser or his or her assignee. The fees in (1) and (2) of this paragraph (h) shall be exempt from the posting requirements of Section 21-360. The costs incurred in causing notices to be served by a licensed or registered private detective under Section 22-15, may not exceed the amount that the sheriff would be authorized by law to charge if those notices had been served by the sheriff.

(i)            All fees paid for publication of notice of the tax sale in accordance with Section 22-20.

(j)            All sums paid to any county, city, village or incorporated town for reimbursement under Section 22-35.

(k)           All costs and expenses of receivership under Section 21-410, to the extent that these costs and expenses exceed any income from the property in question, if the costs and expenditures have been approved by the court appointing the receiver and a certified copy of the order or approval is filed and posted by the certificate holder with the county clerk. Only actual costs expended may be posted on the tax judgment, sale, redemption and forfeiture record.   35 ILCS 200/21-355.

In addition, the redemption amount includes the clerk’s redemption fees and cost of estimate of redemption, which total $13.00.  See above examples of estimates of redemption.

If you have questions regarding any estimate of redemption you obtain, you should contact an attorney.

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