Saying Illinois' property tax collectors are continuing an unconstitutional system in direct defiance of a ruling from the U.S. Supreme Court, a group of Illinois homeowners have filed a class action lawsuit against some of Illinois' most populous counties, seeking to end those counties' property tax buying regime, and secure refunds for people who were stripped of hundreds of thousands of dollars in equity when their homes were seized by the counties under Illinois law over unpaid property taxes.
Earlier this month, attorneys from the firms of Guin Stokes & Evans; Teske Law; Reinhardt Wendorf & Blanchfield; and Gustafson Gluek filed the lawsuit in Chicago federal court.
Defendants named in the lawsuit include the county clerks and treasurers from DuPage County, Kane County, Lake County, Will County, Winnebago County, Boone County, Carroll County and Peoria County.
Charles Watkins
| Guin Stokes & Evans
The lawsuit comes about six months since the U.S. Supreme Court ruled so-called "total forfeiture" delinquent property tax buying systems like those allowed and practiced under Illinois state law to be unconstitutional.
In that decision, in the case docketed as Tyler v Hennepin, the high court justices sided with a 94-year-old Black homeowner against her county government in Hennepin County, Minnesota.
In that case, Hennepin County had seized Tyler's one-bedroom condominium over $2,300 in unpaid taxes, plus $12,700 in penalties, interests and costs. The county then sold the condo for $40,000, while keeping all of the proceeds from the sale, in a practice dubbed by critics as "home equity theft."
In an unanimous ruling, however, the U.S. Supreme Court ruled Hennepin County's tax sale amounted to an unconstitutional taking of private property under the Fifth Amendment.
In the ruling, Chief Justice John Roberts said Tyler's loss of $25,000 in equity from the sale amounted to "a far greater contribution to the public fisc than she owed."
"The taxpayer must render unto Caesar what is Caesar's, but no more," Roberts wrote.
Other justices, led by Justice Neil Gorsuch, said such "equity theft" also amounts to violations of the Eighth Amendment's ban on "excessive fines."
In Illinois, such "equity theft" has been a longstanding practice for counties tasked with collecting property taxes to fund cities, public schools, park districts, highway departments, townships, counties and dozens of other local forms of government and taxing districts.
Under Illinois' tax sale process, taxpayers who fall behind on their taxes risk losing their homes. First, the tax debt is sold by the county, typically to a real estate investor seeking profit by either selling the property or keeping it to rent to others.
Illinois state law gives homeowners a limited period of time to redeem the property by paying off the tax lien. That redemption process, however, can be complicated by the addition of quickly elevating interest and fees. Ultimately, the investor and county can choose to seize the property, evict the residents and sell the property for full market value, potentially reaping massive profits in the process.
Critics in Illinois have noted this process has typically victimized those least able to absorb the blow, including the elderly and Black and other racial minority homeowners living in low income communities.
Despite the U.S. Supreme Court's ruling in Tyler v Hennepin, the new lawsuit against the northern Illinois counties claim Illinois has done nothing to change its system. So, they say the courts must step in to force change and compel the counties to pay back those whose properties were unconstitutionally seized for relatively small unpaid taxes.
"The shocking result of (Illinois') system is that if a homeowner is unable to pay real estate taxes, resulting in $10,000 in tax-related debt on a property worth $252,000 (the median value of a home in Illinois), and is unable to pay the past due amount during the redemption period, the Tax Buyer would get the title to the home while the owner receives nothing - losing $242,000 in equity, an amount which may represent the owner's life savings," the plaintiffs wrote.
The plaintiffs are represented by many of the same attorneys who successfully guided the Tyler case up to and through the U.S. Supreme Court, including Charles R. Watkins, of Guin Stokes & Evans, of suburban Oak Park; Garrett D. Blanchfield and Roberta A. Yard, of Reinhardt Wendorf & Blanchfield, of St. Paul, Minnesota; and Vildan Teske, of Teske Law PLLC, of Minneapolis.
The individual named plaintiffs in the action include Michel Sharritt, whose former home in Naperville was seized and sold at tax sale by DuPage County for unpaid taxes;
Dareios Little, a Michigan resident who owned residential property in DuPage County that was seized by the county for unpaid taxes;
Karl Lee, whose home in downstate Chilicothe was seized by Peoria County;
Melody Cannon and Maurice Cross, whose home in downstate Shannon was seized by Carroll County; and
Christopher Meyer, whose home in Belvidere was seized by Boone County.
The complaint does not specify how much the property owners had owed in delinquent property taxes, nor how much their properties were worth at the time they were seized, nor the amounts which the county governments received from the tax sales.
The plaintiffs seek to expand the action to include anyone living in DuPage, Kane, Lake, Will, Peoria, Winnebago, Boone and Carroll counties whose residential property was seized and sold at tax sale over unpaid property taxes.
They are asking for a court order declaring such tax sales to be unconstitutional, under both the U.S. and Illinois state constitutions.
And they are asking the court to order the counties to pay unspecified "just compensation" to the plaintiffs and class members for the allegedly unconstitutional property takings, plus interest and attorney fees.
The county defendants have not yet responded to the lawsuit.