Property Tax Foreclosure As Theft? U.S. Supreme Court Will Decide and Illinois Is In The Crosshairs – Wirepoints

By: Mark Glennon*

Here’s something you don’t see every day: An opinion piece in Minnesota’s very liberal StarTribune aligned with one in libertarian Reason.

This is about when property taxes become theft, and both columns are more applicable to Illinois than Minnesota, which spawned a case now heading to the U.S. Supreme Court.

The issue, specifically, is this: Should, for example, a 93-year old woman lose her home to the government because she was delinquent in paying $2,300 of property taxes? The government ended up taking her home, selling it for $40,000 and pocketing the whole amount with no refund to the woman  Those are the facts in a Minnesota case that the U.S. Supreme Court announced on Friday that it will hear.

Both the StarTribune and Reason opinion pieces say no, that it’s an unconstitutional “taking” of property. Even the ultra left New Republic earlier wrote on this matter, “State governments probably shouldn’t be able to just steal your money.”

The Supreme Court will have to sort out a split between a federal appellate decisions. One ruled in favor of the government in the Minnesota case on those facts and a different federal appellate court ruled against the government in a similar case, which is all described in the Reason column.

Significantly, however, Illinois property tax foreclosures are harsher than Minnesota’s, and are the most unfair in the nation, according to a new research report.

The new report is from the Pacific Legal Foundation, titled When Taxation is Really Theft. Their chart shows, on the left, the number of homes foreclosed on and sold by the government and, on the right, the total amount of home equity thereby lost. Illinois is an outlier — far worse than even the worst others.

Source: Pacific Legal Foundation

The report’s full condemnation on Illinois property tax foreclosure process is linked here.

“The analogy I like to use is: You owe me $10 and I take the $100 bill out of your wallet,” the foundation has said. “I think everybody could understand that’s wrong.”

It should be noted that the legal matter, strictly speaking, may be narrowly limited to what local authorities can and cannot do in foreclosure procedures to collect property taxes.

In other words, the Court does not appear to be taking on what many homeowners may think is the bigger issue, namely, when property taxes become so high that they are an unconstitutional “taking,” regardless of whether a foreclosure results. On that bigger issue the courts have generally let government tax property at will.

We’ve written for years about how Illinois property taxes, which often reach 3%, 4% or even 5% on homes, and much higher on commercial property, are de facto “takings,” even if the courts do not see it that way. “Owners” in many high tax communities, particularly poorer ones, hold what’s really just a residual interest, junior to a first lien securing a tax perpetuity that endlessly expands. That situation is not being directly challenged in the Minnesota case.

What’s nevertheless clear, however, is that Illinois’ process for foreclosing on property tax liens will face a hatchet if the Supreme Court rules firmly against the government in the Minnesota case.

*Mark Glennon is founder of Wirepoints.

47 Comments
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joni
1 year ago

i think its a crying shame that the government even can think this is right, how dare they take a windfall at the expense3 of someone that worked their ewntire life to have a home, its theft anyway you look at it, thosae politicians that think this is ok needs to be voted or booted out of office

Bosco
1 year ago

Taxation IS theft!

Riverbender
1 year ago

Typical of Illinois corruption the former Madison County Treasurer was prosecuted and jailed for big rigging at the tax sales. As usual the case was prosecuted Federally as heaven forbid the Illinois State’s Attorney become involved.

https://www.justice.gov/usao-sdil/pr/pay-play-former-madison-county-treasurer-guilty-structuring-property-tax-sales-reward

Barney Rubble
1 year ago

How to remove your property from the tax roll. – Steve Emerson

Where's Mine ???
1 year ago

For the grandma in Harvey being foreclosed on, how much of the $397 mil in confiscated foreclosure excess value goes to pay for guaranteed upper-income deals of are public sec heros is the moral question for anyone on the progressive left?

nixit
1 year ago

When real estate is sold due to property tax foreclosure, who keeps the “profit” after taxes and legal fees, the county or municipality?

It would be interesting to see what companies purchase county tax foreclosures. Probably a lot of hiding behind multiple LLCs.

SadStateofAffairs
1 year ago
Reply to  nixit

Absolutely yes and spot on. Look no further than the Cook County Land Bank Authority run by Bridget Gainer with Beverly juice and connections. Those LLC’s eventually roll up to many folks profiting off of these distressed sales, often turning those into Section 8 housing. Big money with big players like Pangea. Land Bank Authority employees have been involved in the fraudulent transactions to confiscate these properties themselves because they can get them for pennies on the dollar. It’s so damn crooked. None of this is done on the up and up. I smell envelopes being passed.

The Paraclete
1 year ago
Reply to  nixit

Whoever is next in line in the taxing body. Everyone gets a taste out of fear they’ll spill the beans. It’s called equity!

susan
1 year ago

Big money left on the table. Berrios evidently facilitated this practice, judging by failure to establish protocol for assessors to determine whether properties owned by important rental property owners were actually eligible for homestead exemption. Is there case law on what determines “liable for property taxes”? The problem with civil litigation is, it is very expensive. When a single ordinary p-tax payer notices a grave injustice, Illinois law doesn’t offer a viable route to obtain equitable relief. “Erroneous homestead exemption” means a homestead exemption that was granted for real property in a taxable year if the property was not eligible… Read more »

JackBolly
1 year ago

PS: Miss ‘Susan’ post on the property tax benefits for exemptions not being updated for new owners is but one abuse. A recent one I caught onto due to being in the market again, is large expensive homes transacting well below market. The seller and buyer agreed to sell the homes ‘contents/ furnishings off the books. This is willful tax evasion I believe. Typically the people involved appear to be ‘connected’. I will leave it at that.

Last edited 1 year ago by JackBolly
susan
1 year ago
Reply to  JackBolly

Good catch. You are noticing something that nobody talks about: there is no practical method for p-tax payers to report UNDER-assessments of others…even though that is a major force in raising p-tax rates on honest payers. (Assessment cheaters raise the p-tax rate, and also the equalization factor). This gravely impacts innocent property taxpayers, who are paying a tax rate based upon illegal acts such as described, innocent taxpayers whose assessments are fair valued as opposed to non-uniform underassessments. Such as, for one example, the Astor St. mansion from which Pritzker’s relative claimed (in dispute of contractors testimony) toilets were removed…but… Read more »

Pensions Paid First
1 year ago
Reply to  susan

even though that is a major force in raising p-tax rates on honest payers. (Assessment cheaters raise the p-tax rate, and also the equalization factor).”

Then when their grift is finally exposed they complain about how much their property taxes went up without ever acknowledging that they have been riding at a reduced rate for years.

susan
1 year ago

yes.. with this qualifier: assessments occur on 3 or 4 year cycles. if everyone is fairly assessed, it should not matter if everyone is equally underassessed. Because, the tax rate will impact equally on all properties.
tax rate is derived thus: levy divided by EAV. If EAV is fairly, uniformly underassessed, the property tax rate will reflect uniform burden

Pensions Paid First
1 year ago
Reply to  susan

Agreed Susan. As long as it’s uniform then it’s more likely to be fair. While I don’t believe property taxes are the best way to collect revenue, if it has to be done then it should be a burden to all equally.

susan
1 year ago

that is the one unambiguous wording in statutes, and township assessment officer classes emphasis: UNIFORMITY OF ASSESSMENT.

The problem is, when that is violated, the burden of chasing down equitable relief falls upon the victims who are uniformly assessed but burdened with unfair rates because of NON uniform assessments of others…without any practical means of relief.
Any ideas?

susan
1 year ago
Reply to  JackBolly

another factor may be evasion of excise tax on properties over $1 million value.

JackBolly
1 year ago

Folks in the home rental property biz understand the racket that has been constructed by the government here in IL. People with large numbers of Section8 properties are well connected to the banks and tax collector offices, always on the prowl for foreclosures and auctions of tax delinquient properties. This predatory practice is fully legal in IL. A mortgage foreclosure though is totally different from the county auctioning property for past due taxes. Legal, yes. Disgusting, unethical, and amoral, Yes! And I would argue unconstitutional.

Not a Senator's Son
1 year ago

At any time a government can set the tax you MUST PAY, they waltz in and take your private property for their tax bill this is theft.
Read this again please. AT ANY TIME.

Elected or appointed government employees making laws for the masses that levy tax and then strip the citizen of their property is a crime. Any way you stack this up.

Not a Senator's Son
1 year ago
Reply to  Mark Glennon

“Entitled”. I don’t like that word. I prefer to suggest we call ownership what it is. If a lender must repossess due to failure to pay and the law provides for this that is fine. However the owner must be allowed 100% of what is their portion or it is theft.

Willowglen
1 year ago

Not a senator – I agree with you, but the 8th Circuit has ruled that states have a wide berth when it comes to property laws. The 6th says otherwise. I could be wrong, but my money is on the Court ruling that the keep the equity approach is unconstitutional. This outcome would appeal to both conservatives and progressives on the court – for the same reasons that Reason and the StarTribune are of the same mind. Query how this would impact Chicago. Sure, the City would lose the claim to existing equity but it strikes me that there are… Read more »

debtsor
1 year ago
Reply to  Mark Glennon

There is already a process in place for Residential foreclosures that sell at judicial auctions. The excess amount gets deposited with the Clerk of Court and the owner has to petition the court to get their money. If there’s no bidder other than the judgment creditor, then the property goes back to the bank. It should be a similar process with the tax sale court which IIRC is also run out of the same building.

OldJoe
1 year ago

Spot on. In Illinois you never really own your home — you just rent it from the government. Property taxes are so high that you then pay for your “rented” home twice. Once with the mortgage and once again to city hall.

Regardless of what happens with this court case there’ll soon be a “shortage” of Illinois real estate buyers. Stated differently; nobody is gonna want to get on our treadmill.

Not a Senator's Son
1 year ago
Reply to  OldJoe

100% you are correct. This is why I’m busting my rump to get out of this state.

Rob
1 year ago

Courts have ruled that states must compensate for property takings for such things as highway ROWs. Same thing should apply for property taxes.

jajujon
1 year ago
Reply to  OldJoe

You would think Illinois would see a shrinking buyer pool, but so many people have no clue that Illinois’ property taxes are the nation’s highest. They only find out after they’ve bought and wonder why the tax bill keeps increasing.

susan
1 year ago

On the other hand, a potentially explosively lucrative revenue source being willfully ignored: There are many many rental properties receiving homestead exemptions without qualifying the requirement that renters are “liable for the payment of property taxes”. Property Tax Relief – Homestead Exemptions”(35 ILCS 200/15-175) General Homestead Exemption (GHE)This annual exemption is available for residential property that is occupied by its owner or owners as his or their principal dwelling place, or that is a leasehold interest on which a single family residence is situated, which is occupied as a residence by a person who has an ownership interest therein, legal… Read more »

Not a Senator's Son
1 year ago
Reply to  susan

Very interesting info there susan. Thank you

susan
1 year ago

This should be pursued, but economics make that unlikely. The beneficiaries of the rental property homestead exemption are deep pockets. The potential plaintiff (a homeowner taxpayer suffering damages) would have to foot the bill to sue the County Assessor to enforce the law against these deep pockets, who may coincidentally be political allies.

Where's Mine ???
1 year ago

everybody knows in Illinois property foreclosure /confiscation has nothing to do with the cop retiring to Arizona @ 55 w guaranteed $multi-millionaire$ pension & 3% COLA. And everything to do with some mythical systemic racists disinvestment boogeymen from decades ago. The people have spoken!!

Paul Boomer
1 year ago

Poor Taxpayer hiding under a different name, you meant to say Punta Gorda, Fl but that would have given your real identity away.

Pensions Paid First
1 year ago
Reply to  Paul Boomer

I think he’s just starting to spout PT’s manifesto. Where’s Mine used to comment under NB-Chicago.

Aaron
1 year ago

Illinois really suffers from the real estate tax situation. All you gotta do is drive through the state and see that Illinois is 20 years behind other states in taking care of everything. Even the private home owners are afraid of washing the side of their house because the tax man will be there tomorrow to raise your taxes. Nobody even thinks of improvements. It’s pathetic, embarrassing and hilarious!

Not a Senator's Son
1 year ago
Reply to  Aaron

Fortunate Son Some folks are born, silver spoon in hand
Lord, don’t they help themselves? Yoh
But when the tax man comes to the door
Lord, the house look a like a rummage sale, yeah

State_pension_millionaires
1 year ago

Let’s hope. Massive property taxes in Il have resulted in Il falling among the bottom of 100 metros in terms of home appreciation over the past 10 years (WirePoints-I think I have that about right). So that means the state of IL “took” (in the form of extreme property taxes and political malfeasance) about a ie 50% increase in house price, (which would have been all tax free) over the past 10 years. So we can’t move out of state cause our homes did not appreciate anywhere near many other states, due largely to Il Political CIG (Corruption; Incompetence; and… Read more »

Rob of NC
1 year ago

My wife & I were born & raised in Chicago, near Walt Disney’s birthplace. When we got married we bought a house near Belmont/Harlem in 88’. We lived there until 98’ when my daughter turned 5. We paid $114K & sold for $165K. Taxes were $2100 in 88” & $3K in 98’. We moved to Grayslake where are taxes were $4K on a $176K home. In 2005 3-4 of my neighbors in our cul-de-sac got divorced. Most sold for around $280K & averaged $6700 in RE taxes, including me. When we sold in May of 2025 our home was worth… Read more »

Rob of NC
1 year ago

State_pension_millionaires, the days of moving from Illinois to anywhere in the southeast or southwest after selling your home & having money to spare afterward are over. Home prices pretty much everywhere have outpaced the home prices in Illinois. I wonder how many monthly pensions we contributed to all those years. And most went down to Florida where they can live like kings, thanking the Illinois taxpayer. What a shame.

Pensions Paid First
1 year ago
Reply to  Rob of NC

And most went down to Florida where they can live like kings”

Why are so many of you averse to facts? The last report in 2019 showed that 18% of pensioners left the state and 82% stay in Illinois. When broken down further, 3.5% of pensioners have moved to Florida.

So no, most did not go down to Florida. Most stay right here in Illinois.

debtsor
1 year ago

OK CNN, I found an article on that report, which was the Daily Herald’s analysis, likely calculated by the author of the article, a left wing partisan hack with a twitter feed broadcasting his inner thoughts to the world how unintelligent ht really is. But assuming the local reporter are even kind of correct, the 18% that leave the state is DOUBLE the national average of 10% and even the Daily Herald thinks Illinois probably has the highest percentage of pensioner leave of any state. And that was in 2019, and population loss has only accelerated since then. Almost a… Read more »

Pensions Paid First
1 year ago
Reply to  debtsor

So 3.5% of pensioners left the state in 2019 and now you believe “it might very well be most”. So it went from 3.5% to 50.1%? The number of Illinois pensioners went from 14k to over 200k since 2019? Your lies are not even believable. Most pensioners have not left for Florida as most (82%) still live in the state. If you have another source then provide it. It’s not like the pension funds don’t have a record of where pensioners live. As usual, you have zero facts and operate based on your pre-determined beliefs. The facts don’t support your… Read more »

debtsor
1 year ago

Come on, man! You said 3.5% of pensioners live in FL. This is true. You also said 18% of pensioners live out of state. This is also true. You didn’t put context to those numbers – the 18% of pensioners that live out of state IS PROBABLY THE HIGHEST OF ALL STATES as of 2019 and with our accellerated population loss since that time, the amount is likely higher. You fixated on the hyperbole of ‘most’ which is clearly puffery, an exaggerated descriptor at best, without acknowledging that there’s a major problem with pensioners leaving the state, because more of… Read more »

debtsor
1 year ago
Reply to  debtsor

Furthermore, I don’t know if I completely trust the Daily Herald’s analysis. The author of the article, who is also probably the guy that performed the ‘analysis’ of pension records, is a far left wing partisan hack, and not very bright. His twitter is full of comments and retweets showing how stupid and unintelligent he is. Not sure I can trust that he properly entered the figures into his excel spreadsheet you know, GIGO. My gut feeling is that the rate of pensioners leaving IL is probably higher than 18% at that time but we’ll have to rely on ‘Jake’… Read more »

debtsor
1 year ago
Reply to  debtsor

https://www.dailyherald.com/news/20190620/how-many-collecting-illinois-pensions-have-moved-to-other-states-and-how-much-did-they-take-with-them How many collecting Illinois pensions have moved to other states, and how much did they take with them?Jake Griffin 5–7 minutes Updated 6/20/2019 3:40 PM More than 71,000 people collecting public pensions from six statewide retirement plans have moved out of Illinois, taking more than $2.4 billion annually with them. That’s roughly 18% of all the pensioners in those systems, according to a Daily Herald analysis of financial data obtained through public records requests with the six pension programs. Florida leads all migration destinations with 14,030 Illinois pensioners, followed by Arizona and Wisconsin with more than 5,600 Illinois public… Read more »

Pensions Paid First
1 year ago
Reply to  debtsor

So you get called out for lying and then you just say its puffery or exaggeration. It’s a common theme for you along with many of the other commenters. Also, the article doesn’t say a problem exists with pensioners leaving Illinois. If anything it says they are leaving at the same rate as the rest of Illinois residents. “But Illinois’ higher migration rate for public pensioners mirrors the ongoing population decline in the state”. The only thing your exaggeration does is let everyone know you are not credible and you are not serious. Which is fine but I have no… Read more »

Last edited 1 year ago by Pensions Paid First
debtsor
1 year ago

Rob from NC said that most pensioners who leave move to FL. The daily herald article says “Florida leads all migration destinations” so yes, most pensioners who leave to go FL.

Rob from NC is correct.

JackBolly
1 year ago

This will be a good one. When I moved to IL back in 1989 I was shocked and horrified at the ghoulishness of opportunistic profiteers who basically worked with city hall to take peoples properties due to past due/ unpaid property tax. I understand what a lien is, but to then seize private property? Contrast IL with FL – its the exact opposite. The whole property tax perversion in IL seems like a Madigan construct – the well to do and Democratic connected essentially profiting from this tax.

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