When a homeowner is delinquent in paying his property tax bill, the Illinois county in which the property is located can place a tax lien against it for the amount of tax that he owes. Illinois counties hold tax lien auctions at least once a year at which you can bid on a tax lien certificate that may eventually give you legal ownership of a property. The delinquent taxpayer has two years to pay you the back taxes, plus interest. You profit by getting your money back with interest over the life of the lien, or by foreclosing on the property if the tax payer defaults on his payments to you.
Read More: How to Waive Right of Redemption After Foreclosure
Register With the County
You must register as a tax buyer with the county treasurer at least 10 days before the auction. Fill out an application form and put down a deposit, usually around $300 depending on the county. This is a good faith gesture that you will indeed attend the lien auction.
If you attend the auction and purchase a tax lien certificate, the deposit is applied to your purchase amount. If you attend and do not purchase anything, the county refunds your deposit. If you don't show up, the county keeps the deposit.
Get a Catalog
Obtain a tax sale catalog or list of the properties to be auctioned. These are usually available from the county treasurer's office about four weeks before the scheduled auction date. Most Illinois counties charge around $60 for a printed hard copy of the list, and around $50 for a list via email.
Bid on the Property You Want
Bid at the auction on the property that interests you. Your bid should include the amount of back taxes, any penalties, and an interest rate not to exceed 18 percent. The bidder who offers the highest amount for the property wins. Auctions are usually conducted in the traditional public, oral style with a live auctioneer, but some Illinois counties use computers and software programs designed especially for real-time auction bidding.
Pay for the Property
Bring a certified check for the amount you plan to spend at the auction if you are a first-time buyer. Previous buyers of tax lien certificates can pay with a personal check, business check or cashier's check. You must pay the taxes and any penalties on the property immediately after the auction and all sales are final.
Deal With the Property Owner
The delinquent taxpayer has a period of two years to pay you the back taxes, plus the interest rate you determined at the auction, to keep his property. You are responsible for setting the terms of the lien repayment. You may want to consult with a lawyer who specializes in real estate matters.
Foreclosure if Repayments Not Made
Foreclose on the home if the delinquent tax payer does not repay the tax lien plus interest under the terms of your repayment contract. You can then take physical possession of the property.
Consult with a lawyer if you have any questions about the legal aspects of purchasing a tax foreclosure property through a tax lien certificate. The county treasurer's office can't answer legal questions about the process.
- Stephenson County IL Tax Sales
- Joseph E. Meyer & Associates: Tax Deed Foreclosed Property & Assignable Tax Certificates
- Legal Beagle: Why Are Foreclosure Auctions Postponed at the Last Minute?
- Legal Beagle: How to Waive Right of Redemption After Foreclosure
- Legal Beagle: How to Search for a Federal Tax Lien
- Legal Beagle: Auction Vs. Foreclosure
- Keep in mind that you are purchasing a tax lien certificate that gives you ownership of a property that you can’t take physical possession of immediately, unless the delinquent tax payer immediately forfeits the property to you in lieu of paying you the back taxes plus interest. This type of property purchase is different than buying mortgage foreclosures from a bank or through a real estate agent.
- Contact a lawyer who specializes in real estate matters if you have any questions about the legal aspects of purchasing a tax foreclosure property through a tax lien certificate. The county treasurer’s office cannot answer legal questions about the process.
This article was written by Legal Beagle staff. If you have any questions, please reach out to us on our contact us page.