103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5136

 

Introduced 2/8/2024, by Rep. Steven Reick

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 200/21-310
35 ILCS 200/21-315

    Amends the Property Tax Code. Provides that the court shall declare the sale of a property under the Property Tax Code to be a sale in error if the improvements upon the property sold have been rendered unfit for occupancy subsequent to the tax sale and prior to the issuance of the tax deed. Provides for the refund of an $80 fee paid in certain situations. Removes specified exceptions when certain interest shall not be paid when the sale is in error. Effective immediately.


LRB103 38139 HLH 68271 b

 

 

A BILL FOR

 

HB5136LRB103 38139 HLH 68271 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Property Tax Code is amended by changing
5Sections 21-310 and 21-315 as follows:
 
6    (35 ILCS 200/21-310)
7    Sec. 21-310. Sales in error.
8    (a) When, upon application of the county collector, the
9owner of the certificate of purchase, the holder of a 5% lien
10issued pursuant to Section 21-240, or a municipality which
11owns or has owned the property ordered sold, it appears to the
12satisfaction of the court which ordered the property sold that
13any of the following subsections are applicable, the court
14shall declare the sale to be a sale in error:
15        (1) the property was not subject to taxation, or all
16    or any part of the lien of taxes sold has become null and
17    void pursuant to Section 21-95 or unenforceable pursuant
18    to subsection (c) of Section 18-250 or subsection (b) of
19    Section 22-40;
20        (2) the taxes or special assessments had been paid
21    prior to the sale of the property;
22        (3) there is a double assessment;
23        (4) the description is void for uncertainty;

 

 

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1        (5) the assessor, chief county assessment officer,
2    board of review, board of appeals, or other county
3    official has made an error material to the tax certificate
4    at issue (other than an error of judgment as to the value
5    of any property), provided, however, that a sale in error
6    may not be declared upon application of the owner of the
7    certificate of purchase under this paragraph (5) if the
8    county collector provided notice in accordance with
9    Section 21-118 that the same property received a previous
10    sale in error on the same facts;
11        (5.5) the owner of the homestead property had tendered
12    timely and full payment to the county collector that the
13    owner reasonably believed was due and owing on the
14    homestead property, and the county collector did not apply
15    the payment to the homestead property; provided that this
16    provision applies only to homeowners, not their agents or
17    third-party payors;
18        (6) a voluntary or involuntary petition was filed by
19    or against the legal or beneficial owner of the property
20    requesting relief under the provisions of 11 U.S.C.
21    Chapter 7, 11, 12, or 13, and the bankruptcy case was open
22    on the date the collector's application for judgment was
23    filed pursuant to Section 21-150 or 21-155 or the date of
24    the tax sale;
25        (7) the property is owned by the United States, the
26    State of Illinois, a municipality, or a taxing district;

 

 

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1    or
2        (8) the owner of the property is a reservist or
3    guardsperson who is granted an extension of his or her due
4    date under Sections 21-15, 21-20, and 21-25 of this Act.
5    (b) When, upon application of the owner of the certificate
6of purchase only, it appears to the satisfaction of the court
7which ordered the property sold that any of the following
8subsections are applicable, the court shall declare the sale
9to be a sale in error:
10        (1) A voluntary or involuntary petition under the
11    provisions of 11 U.S.C. Chapter 7, 11, 12, or 13 has been
12    filed subsequent to the tax sale and prior to the issuance
13    of the tax deed, and the bankruptcy case was open on the
14    date the petition for a sale in error was filed.
15        (2) The improvements upon the property sold have been
16    substantially destroyed or rendered unfit for occupancy
17    subsequent to the tax sale and prior to the issuance of the
18    tax deed; however, if the court declares a sale in error
19    under this paragraph (2), the court may order the holder
20    of the certificate of purchase to assign the certificate
21    to the county collector if requested by the county
22    collector. The county collector may, upon request of the
23    county, as trustee, or upon request of a taxing district
24    having an interest in the taxes sold, further assign any
25    certificate of purchase received pursuant to this
26    paragraph (2) to the county acting as trustee for taxing

 

 

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1    districts pursuant to Section 21-90 of this Code or to the
2    taxing district having an interest in the taxes sold.
3        (3) There is an interest held by the United States in
4    the property sold which could not be extinguished by the
5    tax deed.
6        (4) The real property contains a hazardous substance,
7    hazardous waste, or underground storage tank that would
8    require cleanup or other removal under any federal, State,
9    or local law, ordinance, or regulation, only if the tax
10    purchaser purchased the property without actual knowledge
11    of the hazardous substance, hazardous waste, or
12    underground storage tank. The presence of a grease trap on
13    the property is not grounds for a sale in error under this
14    paragraph (4). This paragraph (4) applies only if the
15    owner of the certificate of purchase has made application
16    for a sale in error at any time before the issuance of a
17    tax deed. If the court declares a sale in error under this
18    paragraph (4), the court may order the holder of the
19    certificate of purchase to assign the certificate to the
20    county collector if requested by the county collector. The
21    county collector may, upon request of the county, as
22    trustee, or upon request of a taxing district having an
23    interest in the taxes sold, further assign any certificate
24    of purchase received pursuant to this paragraph (4) to the
25    county acting as trustee for taxing districts pursuant to
26    Section 21-90 of this Code or to the taxing district

 

 

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1    having an interest in the taxes sold.
2    Whenever a court declares a sale in error under this
3subsection (b), the State's attorney shall promptly notify the
4county collector in writing.
5    (c) When the county collector discovers, prior to the
6expiration of the period of redemption, that a tax sale should
7not have occurred for one or more of the reasons set forth in
8subdivision (a)(1), (a)(2), (a)(3), (a)(4), (a)(5.5), (a)(6),
9(a)(7), or (a)(8) of this Section, the county collector shall
10notify the last known owner of the tax certificate by
11certified and regular mail, or other means reasonably
12calculated to provide actual notice, that the county collector
13intends to declare an administrative sale in error and of the
14reasons therefor, including documentation sufficient to
15establish the reason why the sale should not have occurred.
16The owner of the certificate of purchase may object in writing
17within 28 days after the date of the mailing by the county
18collector. If an objection is filed, the county collector
19shall not administratively declare a sale in error, but may
20apply to the circuit court for a sale in error as provided in
21subsection (a) of this Section. Thirty days following the
22receipt of notice by the last known owner of the certificate of
23purchase, or within a reasonable time thereafter, the county
24collector shall make a written declaration, based upon clear
25and convincing evidence, that the taxes were sold in error and
26shall deliver a copy thereof to the county clerk within 30 days

 

 

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1after the date the declaration is made for entry in the tax
2judgment, sale, redemption, and forfeiture record pursuant to
3subsection (d) of this Section. The county collector shall
4promptly notify the last known owner of the certificate of
5purchase of the declaration by regular mail and shall, except
6if the certificate was issued pursuant to a no-cash bid,
7promptly pay the amount of the tax sale, together with
8interest and costs as provided in Section 21-315, upon
9surrender of the original certificate of purchase.
10    (d) If a sale is declared to be a sale in error for any
11reason set forth in Section 22-35, Section 22-50, or
12subdivision (a)(5), (b)(2), or (b)(4) of this Section, the tax
13certificate shall be forfeited to the county as trustee
14pursuant to Section 21-90 of this Code, unless the county
15collector informs the county and the county clerk in writing
16that the tax certificate shall not be forfeited to the county
17as trustee. The county clerk shall make entry in the tax
18judgment, sale, redemption and forfeiture record, that the
19property was erroneously sold and that the tax certificate is
20forfeited to the county pursuant to Section 21-90, and the
21county collector shall, on demand of the owner of the
22certificate of purchase, refund the amount paid, except for
23the nonrefundable $80 fee paid, pursuant to Section 21-295,
24for each item purchased at the tax sale, pay any interest and
25costs as may be ordered under Sections 21-315 through 21-335,
26and cancel the certificate so far as it relates to the

 

 

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1property. The county collector shall deduct from the accounts
2of the appropriate taxing bodies their pro rata amounts paid.
3    (e) Whenever the collector declares an administrative sale
4in error under this Section, the collector must send a copy of
5the declaration of the administrative sale in error, and
6documentation sufficient to establish the reason why the sale
7should not have occurred, to the government entity responsible
8for maintaining assessment books and property record cards for
9the subject property. That entity must review the
10documentation sent by the collector, make a determination as
11to whether an update to the assessment books or property
12record cards is necessary to prevent a recurrence of the sale
13in error, and update the assessment books or property record
14cards as appropriate.
15    (f) Whenever a court declares a sale in error under this
16Section, the State's attorney must send a copy of the
17application and order declaring the sale in error to the
18county collector, the county clerk, and the government entity
19responsible for maintaining the assessment books and property
20record cards for the subject property. The collector, the
21county clerk, and the other government entity must each review
22the application and order sent by the State's attorney and
23make a determination as to whether an update to its respective
24records is necessary to prevent a recurrence of the sale in
25error, and update its records as appropriate.
26    The changes made to this Section by this amendatory Act of

 

 

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1the 103rd General Assembly apply to matters concerning tax
2certificates issued on or after the effective date of this
3amendatory Act of the 103rd General Assembly.
4(Source: P.A. 103-555, eff. 1-1-24.)
 
5    (35 ILCS 200/21-315)
6    Sec. 21-315. Refund of costs; interest on refund.
7    (a) If a sale in error under Section 21-310, 22-35, or
822-50 is declared, the amount refunded shall also include all
9costs paid by the owner of the certificate of purchase or his
10or her assignor which were posted to the tax judgment, sale,
11redemption and forfeiture record, except that if the sale in
12error is declared under Section 22-50, in counties of
133,000,000 or more inhabitants the amount refunded shall not
14include the $100 fee paid in accordance with Section 21-330.
15    (b) In those cases which arise solely under grounds set
16forth in Section 21-310, the amount refunded shall also
17include interest on the refund of the amount paid for the
18certificate of purchase, except as otherwise provided in this
19Section. Interest shall be awarded and paid to the tax
20purchaser at the rate of 1% per month from the date of sale to
21the date of payment, or in an amount equivalent to the penalty
22interest which would be recovered on a redemption at the time
23of payment pursuant to the order for sale in error, whichever
24is less. Interest shall not be paid when the sale in error is
25made pursuant to Section 22-35, Section 22-50, subdivision

 

 

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1(a)(5), (b)(1), (b)(2), or (b)(4) of Section 21-310, any
2ground not enumerated in Section 21-310, or in any other case
3where the court determines that the tax purchaser had actual
4knowledge prior to the sale of the grounds on which the sale is
5declared to be erroneous.
6    (c) When the county collector files a petition for sale in
7error under Section 21-310 and mails a notice thereof by
8certified or registered mail to the last known owner of the
9certificate of purchase, any interest otherwise payable under
10this Section shall cease to accrue as of the date the petition
11is filed, unless the tax purchaser agrees to an order for sale
12in error upon the presentation of the petition to the court.
13Notices under this subsection may be mailed to the last known
14owner of the certificate of purchase. When the owner of the
15certificate of purchase contests the collector's petition
16solely to determine whether the grounds for sale in error are
17such as to support a claim for interest, the court may direct
18that the principal amount of the refund be paid to the owner of
19the certificate of purchase forthwith. If the court thereafter
20determines that a claim for interest lies under this Section,
21it shall award such interest from the date of sale to the date
22the principal amount was paid. If the owner of the certificate
23of purchase files an objection to the county collector's
24intention to declare an administrative sale in error, as
25provided under subsection (c) of Section 21-310, and,
26thereafter, the county collector elects to apply to the

 

 

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1circuit court for a sale in error under subsection (a) of
2Section 21-310, then, if the circuit court grants the county
3collector's application for a sale in error, the court may not
4award interest to the owner of the certificate of purchase for
5the period after the mailing date of the county collector's
6notice of intention to declare an administrative sale in
7error.
8(Source: P.A. 103-555, eff. 1-1-24.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.