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Appellate Court Sheds Light on Murky Tax Sale Process Under Property Tax Code

Higher Education K-12 Education

A large and growing source of property tax refunds in Cook County are generated when a Court reverses or vacates the sale of delinquent taxes.  A recent Appellate Court decision provides a good overview of the tax sale process and how these sales can generate refunds from Illinois taxing districts. In In re Application of the County Treasurer & ex officio County Collector, the Appellate Court upheld a decision ruling that the County Assessor’s error in a property description on the Assessor’s website did not meet the threshold for “sale in error” as defined under the Property Tax Code. The Court determined the County’s mistake did not threaten the buyer’s investment or void the tax sale. Moreover, the Court stated the Property Tax Code does not mention any responsibility of the Assessor to maintain legal property descriptions on its website.

Facts of case:

At the Cook County 2015 annual tax sale, an investor purchased approximately $1.4 million in delinquent taxes on a shopping center located in Calumet City, Illinois. Due to an error on the Assessor’s website misstating the location of the property as located on Dolton Avenue rather than Dolton Road, the investor petitioned the Circuit Court to vacate the tax sale based on the Property Tax Code’s sale in error provision. The Circuit Court originally granted the petition for a sale in error. Upon reconsideration, however, the Court denied the application, determining the mistake did not affect a substantial right of ownership or rise to the level of a sale in error as intended by the legislature. The investor appealed, claiming the trial court wrongly applied the plain language of the sale in error provision of the Property Tax Code. 

Ruling by Court:

Because the issue was based on the interpretation of specific sections of the Property Tax Code, the Appellate Court looked to the language and intent of the statutory provisions in question found in Section 21-310. The Court paid specific attention to the provision for sales made “in error.” Of note, provision (5) allows for a sale to be declared in error when, “the assessor, chief county assessment officer, board of review, board of appeals, or other county official has made an error (other than an error of judgment as to the value of any property).” Plaintiffs argued the plain language of the statute warranted a determination that the tax sale was made in error.

In addition to considering the plain language of the statute, the Appellate Court considered its context, its purpose, the problems it sought to be remedied, and the consequences of construing it one way or another. The Court determined that interpreting the county’s error as broadly as the investor proposed, “would frustrate the purpose of the statute and yield absurd results.” The Court noted the purpose of the sale in error section of the Property Tax Code was meant to protect buyers from suffering an “inadvertent loss” rather than for alleviating any error, even one that is “inconsequential and has no effect on the tax sale process.” The Court determined the legislature did not intend for section (a)(5) to create a loophole for buyers to request a sale in error based on a harmless County mistake that that in no way jeopardizes the investor’s investment or implicates the tax sale process.

The tax sale process is generally invisible to taxing districts and serves as an effective way to get delinquent properties back on the tax-paying rolls. As this case illustrates, there are ways for the investor to unwind a tax sale. Here the Courts have rebuffed an effort to have a tax sale declared ‘in error’ when there really was no error and the investor’s investment in the tax sale was never in jeopardy. The ruling provides some direction to tax buyers and County officials and serves as a mild deterrent for unnecessary or unwarranted property tax refunds.