Cook County Found Liable for Property Tax Sale Violations

Takeaway: A federal court has held Cook County liable for knowingly operating an unconstitutional tax sale system that strips homeowners of equity without compensation, a ruling that will drive reforms to Illinois property tax laws and may affect tax revenues statewide.

On May 11, 2026, a federal judge ruled that Cook County is liable under 42 U.S.C. § 1983 for constitutional violations arising from its property tax sale system. Earlier this year, we discussed the ruling that the tax sale system was unconstitutional, as it violated both the Fifth and Eighth Amendments to the United States Constitution by allowing the County to effectuate the transfer of property to tax buyers without ensuring that former owners receive just compensation for surplus equity.

Following a bench trial on municipal liability, the court concluded that the County satisfied the requirements for liability under Monell v. Department of Social Services. Specifically, the court found that the County had actual or constructive notice that its practices caused constitutional injuries. Evidence at trial demonstrated that it was widely understood that the tax sale process frequently resulted in homeowners losing their equity without compensation, and that the County possessed or could readily obtain data confirming both the prevalence and magnitude of these losses. The court further highlighted the inadequacy of the County’s indemnity fund, noting that only a small percentage of affected homeowners—approximately five percent—received compensation, leaving the overwhelming majority uncompensated.

The court also determined that the County acted with deliberate indifference to this known or obvious risk of constitutional violations. Despite its awareness, the County failed to take any meaningful action to provide compensation or to evaluate potential remedies. Instead, it continued to conduct tax sales while knowing that property owners were routinely deprived of substantial equity without redress. This inaction, the court held, constituted a disregard of an objectively obvious need to protect constitutional rights.

In reaching its decision, the court rejected the County’s defenses, including its assertions that it lacked authority under state law to provide compensation and that it lacked sufficient notice of constitutional violations prior to developments in related Supreme Court precedent. The court emphasized that the obligation to provide just compensation is longstanding and independent of state statutory frameworks, and that the County’s failure to analyze or address the issue did not excuse its conduct.

Accordingly, the court held Cook County liable for constitutional violations suffered by the plaintiffs and the certified class. The next steps are likely to determine the appropriate relief at this stage and to bring the matter to a resolution.

As we reported earlier this year, this case may affect how surplus proceeds from tax sales are distributed and how damages are calculated in related cases. It also signaled that the Illinois General Assembly will need to revise the state’s property tax framework to comply with these constitutional requirements, and such reforms could ultimately impact the amount of property tax revenue collected by entities like school districts.

Late last month, the Illinois General Assembly passed a major property tax reform bill led by Cook County Treasurer Maria Pappas that would require surplus equity from foreclosed properties to be returned to former owners. The legislation also phases out private tax buyers in Cook County by 2030 and replaces the system with county-run auctions and more flexible payment options to better protect homeowners facing financial hardship.

If you have any questions about how this ruling or future changes to the Property Tax Code may impact your school or school district, please contact a Franczek attorney.