Lawsuit Takes Aim at Cook County Property Tax Sales System: ‘It Violates Provisions of the Constitution’

When homeowners can’t, or don’t, pay their property taxes for more than a year, Cook County holds what’s called a property tax sale.

A federal lawsuit brought Thursday by two Black homeowners caught up in this system on behalf of themselves, and everyone else caught up on the system, alleges the process violates the constitution and both federal and civil rights laws.

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Governments depend on people paying their property taxes; that’s what funds schools, libraries and police. When folks don’t pay, Cook County sells the overdue taxes to a private entity that pays the bill.

The homeowner then has to pay back that tax buyer — not just the overdue taxes, but also some 18% in interest and fees.

If the homeowner can’t, they can lose their lien and title to their home, but also the equity they’d built in their property.

As the lawsuit points out, neither the county nor the tax buyer has to pay the homeowner for that loss of equity.

Unlike a bank mortgage foreclosure sale, where amounts realized in excess of debt owed on the property are returned to the owner, a property tax sale can ultimately result in a total loss to the homeowner of not just the home but also the entire value of the home over and above the taxes and related charges,” the suit states.

Legal Aid Chicago’s John Bouman, who is representing the plaintiffs, said distinct from the home itself, homeowners have a right to their equity.

“They own the equity too. This is what you insure when you buy homeowners’ insurance, right? It’s the value of the property. And by taking this away from people without any compensation, it violates provisions of the constitution,” he said.

He alleges several constitutional issues, including the taking of property without compensation, government interference with property rights without due process and the government unduly punishing people, which he says is exactly what this is.

“You weren’t able to pay your taxes. Fine, you’re going to lose your house but you shouldn’t also have to lose the equity in the house,” Bouman said.

People of color are most impacted.

According to the suit: “Cook County’s tax buyer program has especially pernicious and disproportional effects on communities of color.  Last year, 75% of the Cook County parcels on the tax sale list were in Latino and Black neighborhoods, even though only 52% of County residents identify as Latino, Black or as being of two or more races.”

Bouman said that’s a violation of both the federal Fair Housing Act, and Illinois’ Civil Rights Act

He said the lawsuit isn’t going after the county’s right to take action to get the taxes governments are owed, but it does seek to compensate those impacted for what he calls the “needless, punitive” part of the system: that loss of equity.

The lawsuit is filed against Cook County and Maria Pappas in her capacity as Cook County Treasurer.

Pappas is essentially compelled to go through these tax sale motions, given that it’s state law that sets up the tax sale process.

The treasurer’s office issued a statement saying, “we don’t comment on pending litigation. The matter will be handled by the Cook County State’s Attorney’s Office.”

But Pappas herself has been openly critical of the process.

Just last month in an interview with WTTW News, she condemned the process as preying on the county's most vulnerable residents and said she will press state lawmakers to make significant changes.

“It’s a legalized racket that we need to break up, and we’re going to do it,” Pappas said.

Pappas has specific ideas for changing the process, but there’s no firm legislation yet.

While criticism of the tax sale system as predatory is not new, it has not so far led to reform.

“The reason we filed the lawsuit is that this has been hanging out there for a long, long time and there hasn’t been – Treasurer Pappas has talked about it in public, the General Assembly hasn’t taken any action.  People are losing their equity year in and year out, and we wanted to stop the meter on that,” Bouman said. 

Bouman said he believes action could be forthcoming, both as he hopes the lawsuit brings more attention to the issue and because state legislators are giving more attention to issues of racial disparities.

Those who make money off the system are likely to fight against measures that take away that opportunity, and have argued here needs to be a mechanism to force people to pay their property taxes otherwise people would avoid doing so, draining governments of the funding they depend on to provide services. 

The lawsuit says both plaintiffs in the case, who are Black and live in majority Black neighborhoods, were unable to pay their taxes due to health issues that didn’t allow them to work. Bouman said Michelle Kidd lost her home in Maywood; Michael Bell has not yet been evicted from his Chicago home but did lose his title.

The community organizations Southwest Organizing Project (SWOP) and Palenque LSNA are also plaintiffs as, per the filing, the nonprofits’ “members and missions are threatened and undermined by the same failure to compensate homeowners.”

Follow Amanda Vinicky on Twitter: @AmandaVinicky

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