Across Illinois, homeowners are losing their homes and all their equity over minor tax debts, with private investors reaping the profits. Illinois is one of the remaining states hasn’t reformed this unconstitutional practice.
Imagine losing your home over a debt smaller than the price of a 10-year-old Chevy Impala.
That’s what happened to more than 1,000 homeowners in Cook County since 2019 – including 125 senior citizens – when they couldn’t keep up with property taxes. Their debts totaled just $2.3 million, but the homes taken were worth over $108 million. The government or investors kept the difference. That’s not just tax collection; that’s legalized home equity theft.
And it should not be happening still. The U.S. Supreme Court ruled the practice unconstitutional in 2023, but Illinois has yet to fix its laws to stop equity theft when taxes are owed. Considering Illinoisans pay the nation’s highest property tax rate, this should be more of a priority for state leaders.
Across Illinois, this story has played out thousands of times, especially in counties where the property taxes are among the highest effective property tax rates in the nation such as Will, Lake, DuPage and Cook counties.
In Illinois, if you miss a property tax payment, your debt can be sold at auction to private investors called tax buyers. If you don’t repay the full amount, plus interest and fees, within 30 months for most properties starting in 2024, the tax buyer can take your home. The worst part? They get to keep all of its value, not just what you owed.
In May 2022, 37,000 properties in Cook County were planned for delinquent tax sale. Of those, 54% had tax debts of less than $1,000. In Illinois, 70% of homes seized in tax foreclosure were taken over for debts less than the value of a 10-year-old Chevy Impala. Investors kept $148 million more than what was owed.
As property taxes rise to cover government costs, more people fall behind. But when homes are seized and families displaced, neighborhoods lose stability and local governments lose more of their long-term tax base. Plus, taxpayers lose all of what is typically their biggest investment.
In 2023, the U.S. Supreme Court unanimously ruled the practice of home equity theft unconstitutional in Tyler v. Hennepin County, a case out of Minnesota. Geraldine Tyler, a grandmother, had her condo seized for a $2,300 tax debt that grew to $15,000 with interest and fees. The tax buyer kept the entire $40,000 from the condo sale and Tyler sued.
If there were ever a state that needed to change, especially with the nation’s highest effective property tax rates, it’s Illinois. Since the decision, more than a dozen states have passed reforms, but not Illinois.
There has been some effort made. In the most recent legislative session, state Rep Will Guzzardi, D-Chicago, filed House Bill 3146 to ensure money collected in excess of the tax debt owed from the sale of the property was returned to the homeowner.
While this bill failed to make it out of the Rules Committee this session, the General Assembly was able to pass a measure in House Bill 2755 allowing counties to postpone their county tax sales. Cook County Treasurer Maria Pappas accepted the opportunity, postponing the tax sales that usually happen in August to March 2026. Other counties generally hold their tax auctions in the fall, but may delay them as a result of the legislation.
Illinois should end home equity theft. Lawmakers should consider measures such as HB 3146 and align Illinois law with the Fifth Amendment’s protection against the government taking more than it’s owed, upheld in Geraldine Tyler’s case. That means stopping private investors from keeping full ownership of a home over a small debt, and ensuring any remaining equity is returned to the homeowner.
Illinoisans deserve better than a system that strips wealth from struggling families and gives it to private speculators. It’s time to protect the property rights of homeowners and lower government spending, allowing for the delivery of real property tax relief.
