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Eye On Illinois: Tax law sale debacle requires good government, not shrewd politics

Here at Eye On Illinois, a primary goal is to put more focus on government than politics. But doing so often runs headlong into the awareness of just how frequently political considerations interfere with sensible government outcomes.

One fine example of this conundrum is the ongoing struggle to rectify state laws regarding sales of properties whose owners are delinquent on tax payments. As the Illinois Answers Project reported Thursday, “Illinois is the only state that has yet to reform” such laws after a 2023 U.S. Supreme Court opinion ruling the status quo violates homeowners’ constitutional rights.

Tyler v. Hennepin County, a Fifth Amendment decision stemming from Minnesota, functionally held that a government can’t foreclose on and sell a property without compensating the original owner for their equity. That’s how the system works here, where an investor who pays a county what it’s owed on back taxes and interest can, under certain circumstances, ask a state court to declare them the owner of the property and evict any current occupants.

Usually, the winner doesn’t want to occupy the property, but sells it for a tidy profit while the original owner loses out on whatever equity they had in the home or mortgage.

“Following the ruling, states rushed to reform their laws to avoid legal fallout,” according to Sidnee King Pineda. “All except Illinois, where serious efforts continue to flounder in the statehouse as competing special interests clash over the best route to reform.”

The obvious solution is in Pineda’s report, attributed to Cook County Treasurer Maria Pappas and other advocates: counties would take possession and auction the homes, not the tax bills. When the dust settles, the original owner can get back whatever equity their mortgage company calculated.

Anything past that is more complex than necessary, but lawmakers considered such options because doing so was politically prudent. Groups representing homeowners suggested a state equity fund so the counties wouldn’t have to pay through indemnity judgments. House Bill 3146 offered something of a hybrid auction approach that started with using outstanding taxes, interest and fees as a minimum bid but created pathways to refunding equity if a sale price exceeded what was owed.

I’ll admit to simplifying the issue in the name of expedience and commend the report for exploring the indemnity process and how those rules often force homeowners to hire lawyers to battle the government to prove the right to keep their own houses. Then there’s the larger debate on the property tax structure altogether and whether there are better ways of funding public services.

But the Supreme Court made it clear: Illinois is uniquely violating the Constitution. Lawmakers should take the clearest path to right that wrong and disregard the politics.

• Scott T. Holland writes about state government issues for Shaw Local News Network. He can be reached at sholland@shawmedia.com.

Scott Holland

Scott T. Holland

Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.