In this post, we discuss property tax sales in Illinois and look at the example of the Star Centre Mall in Marion, Illinois and it’s sale of delinquent taxes.
On May 4th The owners of The Illinois Star Centre LLC declared bankruptcy.
According to the Williamson County Treasurer’s office, the Illinois Star Centre LLC failed to pay taxes during 2014 and 2015 to the amount of $1,112,295.70. Those taxes were purchased by GSRAN-Z, a tax buyer out of Atlanta at a tax lien sale.
The buyers wound up owning the property when they did not intend to and were eventually unable to make the tax payments themselves.
This case makes a good example to undertand the issue of tax sales.
What is a tax sale?
The most common and efficient way to collect delinquent taxes is by tax sale.
A tax sale happens when the landowner fails to pay taxes on their property. A legal claim can then be made by the city or county to place a lien on the property which cannot be sold or refinanced until the taxes are paid and the lien is removed.
The county will hold a public auction, and investors can bid for the right to collect on the delinquent taxpayer’s debt.
Tax sales in Illinois
Once the property taxes are delinquent for a long enough time, the taxing authority will start a tax sale.
In Illinois, tax sales require judicial proceedings which usually begin with a published list that states the name of the taxpayer, the property, as well as the amount of tax due. In addition to publication, the taxpayer will receive a notice in the mail that acts as a summons.
You have the right at any time on or before the day before the sale to end the it by getting caught up on the costs due.
If you do not get caught up on what you owe the sale will be held by the county collector to sell the delinquent tax.
Tax Sale at Star Centre Mall
If the deed is not redeemed the lien buyer has a legal right to take the title and ownership of the property.
In the case of the Illinois Star Centre Mall in Marion, Illinois, they found themselves owning property they did not anticipate owning.
The tax buyers were able to benefit the community though, because Illinois Star Centre LLC bought the taxes for the mall, Williamson County was able to distribute money to the taxing bodies associated with the property.
Related: Short sale vs deeds in lieu
What happens when your property taxes are sold?
If you are not able to get caught up on what you owe, the court will issue a judgment and a sale will be held to sell the delinquent tax debt.
The purchase of a delinquent tax does not cause the immediate loss of property. It differs from state to state but there is usually about 18 months to redeem the sold delinquent tax before the tax buyer can acquire the deed.
Buying tax lien is not a risk-free investment because the tax lien may not be redeemed by the property owner, as was the case with the Illinois Star Centre Mall.
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