Illinois Tax Lien Certificates

Type of Tax Sales in Illinois Counties

Illinois conducts two types of sale for delinquent property taxes. The first is an annual Tax Sale, property taxes delinquent for the preceding year. The second is the Scavenger Sale, which are properties that have been delinquent 2 or more years and not purchased at earlier Tax Sales.

When are the auctions held?

Depending on the county and type of sale, it varies. Most Sales will take place in the Fall to Spring time period.

The Tax Lien Process in Illinois

Illinois has a somewhat complicated system for issuing Tax Lien Certificates. For the first type of Sale, Tax Lien Certificates (also called Certificates of Purchase) are sold at a “Public Oral Bid Auction” where the winning bid is willing to take the lowest interest rate. The maximum interest rate or opening bid is 18%. After purchasing the certificate, the buyer must serve 2 notices that the property was sold, following Illinois State law, to the County Clerk who sends the notices to the property owner. The second notice goes out 3-5 months before the “Redemption Period” expires. The standard redemption period is 2 to 2 1/2 years in Illinois, but may vary depending on the type of property. In order to redeem the property, the owner must pay all monies owed, including interest at the rate that was bided for the first 6 months, and then increases by the same amount every 6 months thereafter.
Now let’s look at the second type of Sale, the “Scavenger Sale”. The same procedures are followed as with Tax Lien Certificates. The big difference is with the amount of interest owed after the property is sold at the sale. For the first 2 months the interest rate is 3% a month. For months 2-6 the interest rate is 12% and increases by 12% each additional 6 months until 2 years after the sale. After 2 years the interest rate is 48% plus an additional 6 % each year. No other liens against the property are extinguished once the property is sold. For both types of sales, the purchaser may choose to pay subsequent property taxes and that will be added to the amount due for redemption. Further, purchasing property at Tax Sales does not give any immediate ownership rights to the property.

Here's an example of how a TLC purchase could work in Illinois:

Delinquent Taxes: $3,000.00

Bided Interest Rate: 12.5%

Other Charges: $50.00

Recording Fee's: $150.00

If the owner redeems the property after 8 months, they must pay $3,750.00 (months 6-12 would be at 25% interest) This gives the buyer at total gain of $550.00. If the owner had redeemed after 1 year 2 months, the interest rate would have been 37.5%. So the owner would owe $4125.00. This would be a gain of $925.00.