103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3396

 

Introduced 2/8/2024, by Sen. Celina Villanueva

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 200/21-90
35 ILCS 200/21-295
35 ILCS 200/21-305
35 ILCS 200/21-306

    Amends the Property Tax Code. Provides that a property owner who sustains loss or damage by reason of the issuance of a tax deed is entitled to payment from the indemnity fund in the amount of the equity in the property described in the tax deed. Provides that a claim for equity must be filed within 90 days after the tax deed is recorded, except that, if the tax deed was issued on or after May 24, 2021 but before the effective date of the amendatory Act, then the petition for a claim for equity must be filed within 90 days after the effective date of the amendatory Act.


LRB103 39258 HLH 69410 b

 

 

A BILL FOR

 

SB3396LRB103 39258 HLH 69410 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 21-90, 21-295, 21-305, and 21-306 as follows:
 
6    (35 ILCS 200/21-90)
7    Sec. 21-90. Purchase and sale by county; distribution of
8proceeds.
9    (a) When any property is offered for sale under any of the
10provisions of this Code, the county board of the county in
11which the property is located, in its discretion, may bid, or,
12in the case of forfeited property, may apply to purchase it or
13otherwise acquire the tax lien or certificate in the name of
14the county as trustee for all taxing districts having an
15interest in the property's taxes or special assessments for
16the nonpayment of which the property is sold. The presiding
17officer of the county board, with the advice and consent of the
18board, may appoint on its behalf some officer, person, or
19entity to attend such sales, bid on tax liens or certificates,
20and act on behalf of the county when exercising its authority
21under this Section. The county shall apply on the bid or
22purchase the unpaid taxes and special assessments due upon the
23property. No cash need be paid.

 

 

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1    (b) The county, as trustee for all taxing districts having
2an interest in the property's taxes or special assessments,
3shall be the designated holder of all tax liens or
4certificates that are forfeited to the State or county. No
5cash need be paid for the forfeited tax lien or certificate.
6    (c) For any tax lien or certificate acquired under
7subsection (a) or (b) of this Section, the county may take
8steps necessary to acquire title to the property and may
9manage and operate the property, including, but not limited
10to, mowing of grass, removal of nuisance greenery, removal of
11garbage, waste, debris or other materials, or the demolition,
12repair, or remediation of unsafe structures. When a county, or
13other taxing district within the county, is a petitioner for a
14tax deed, no filing fee shall be required. When a county or
15other taxing district within the county is the petitioner for
16a tax deed, one petition may be filed including all parcels
17that are tax delinquent within the county or taxing district,
18and any publication made under Section 22-20 of this Code may
19combine all such parcels within a single notice. The notice
20may include the street address as listed on the most recent
21available tax bills, if available, and shall list the Property
22Index Number of the parcels for informational purposes. The
23county, as tax creditor and as trustee for other tax
24creditors, or other taxing district within the county, shall
25not be required to allege and prove that all taxes and special
26assessments which become due and payable after the sale or

 

 

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1forfeiture to the county have been paid nor shall the county be
2required to pay the subsequently accruing taxes or special
3assessments at any time. The county board or its designee may
4prohibit the county collector from including the property in
5the tax sale of one or more subsequent years. The lien of taxes
6and special assessments which become due and payable after a
7sale to a county shall merge in the fee title of the county, or
8other taxing district within the county, on the issuance of a
9deed.
10    The county may sell any property acquired with authority
11provided in this Section, or assign any tax certificate to any
12party, including, but not limited to, taxing districts,
13municipalities, land banks created pursuant to Illinois law,
14or non-profit developers focused on constructing affordable
15housing.
16    The assigned tax certificate shall be void with no further
17rights given to the assignee, including no right to refund or
18reimbursement, if a tax deed has not been recorded within 4
19years after the date of the assignment unless a court extends
20the assignment period as provided in this Section. Upon a
21motion by the assignee, a court may toll the 4-year deadline
22for a specified period of time if the court finds the assignee
23is prevented from obtaining or recording a deed by injunction
24or order of any court, by the refusal or inability of any court
25to act upon the application for a tax deed, by a municipality's
26refusal to issue necessary transfer stamps or approvals for

 

 

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1recording, or by the refusal of the clerk to execute the deed.
2If an assigned tax certificate is void under this Section, it
3shall be forfeited to the county and held as a valid
4certificate of sale in the county's name pursuant to this
5Section 21-90. The proceeds of any sale or assignment under
6this Section, less all costs of the county incurred in the
7acquisition, operation, maintenance, and sale of the property
8or assignment of the tax certificate, including all costs
9associated with county staff and overhead used to perform the
10duties of the trustee set forth in this Section, shall be
11distributed to the taxing districts in proportion to their
12respective interests therein.
13    Under Sections 21-110, 21-115, 21-120, and 21-190, a
14county may bid or purchase only in the absence of other
15bidders.
16    (d) Any owner of property that is sold under any provision
17of this Code who sustains loss or damage by reason of the
18issuance of a tax deed to any county, municipality, or county
19land bank under Section 21-445 or 22-40, if that tax deed is
20issued to the county, municipality, or land bank, shall be
21entitled to the equity in the property described in the tax
22deed. For purposes of this subsection, equity shall be
23calculated as follows: (i) the fair cash value of the subject
24property on the date the tax deed is issued, less (ii) the
25amount that would have been needed to redeem such property,
26less (iii) any other taxes paid by the tax deed grantee to

 

 

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1obtain the tax deed, less (iv) the amount needed to pay any
2mortgages or liens on the property, and less (v) an
3administrative fee of $500 for the county conducting the tax
4sale and issuing the tax deed.
5    If the tax deed is issued on or after the effective date of
6this amendatory Act of the 103rd General Assembly, then the
7petition for a claim for equity under this subsection (d) must
8be filed within 90 days after the tax deed is recorded. If the
9tax deed is issued on or after May 24, 2021 but before the
10effective date of this amendatory Act of the 103rd General
11Assembly, then the petition for a claim for equity under this
12subsection (d) must be filed within 90 days after the
13effective date of this amendatory Act of the 103rd General
14Assembly.
15    The county, municipality, or county land bank shall pay
16all equity claims under this subsection (d) from its general
17fund, and no moneys shall be paid to the owner under this
18subsection (d) from any county indemnity fund established by
19Section 21-295 for any claim brought under this subsection
20(d).
21(Source: P.A. 102-363, eff. 1-1-22; 103-555, eff. 1-1-24.)
 
22    (35 ILCS 200/21-295)
23    Sec. 21-295. Creation of indemnity fund.
24    (a) In counties of less than 3,000,000 inhabitants, each
25person purchasing any property at a sale under this Code shall

 

 

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1pay to the County Collector, prior to the issuance of any
2certificate of purchase, an indemnity fee set by the county
3collector of not more than $20 for each item purchased. A like
4sum shall be paid for each year that all or a portion of
5subsequent taxes are paid by the tax purchaser and posted to
6the tax judgment, sale, redemption and forfeiture record where
7the underlying certificate of purchase is recorded.
8    (a-5) In counties of 3,000,000 or more inhabitants, each
9person purchasing property at a sale under this Code shall pay
10to the County Collector a nonrefundable fee of $80 for each
11item purchased plus an additional sum equal to 5% of the taxes,
12interest, and penalties paid under Section 21-240. In these
13counties, the certificate holder shall also pay to the County
14Collector a fee of $80 for each year that all or a portion of
15subsequent taxes are paid by the tax purchaser and posted to
16the tax judgment, sale, redemption, and forfeiture record. The
17changes to this subsection made by this amendatory Act of the
1891st General Assembly are not a new enactment, but declaratory
19of existing law.
20    (b) The amount paid prior to issuance of the certificate
21of purchase pursuant to subsection (a) or (a-5) shall be
22included in the purchase price of the property in the
23certificate of purchase and all amounts paid under this
24Section shall be included in the amount required to redeem
25under Section 21-355, except for the nonrefundable $80 fee for
26each item purchased at the tax sale as provided in this

 

 

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1Section. Except as otherwise provided in subsection (b) of
2Section 21-300, all money received under subsection (a) or
3(a-5) shall be paid by the Collector to the County Treasurer of
4the County in which the land is situated, for the purpose of an
5indemnity fund. The County Treasurer, as trustee of that fund,
6shall invest all of that fund, principal and income, in his or
7her hands from time to time, if not immediately required for
8payments of indemnities under subsection (a) of Section
921-305, in investments permitted by the Illinois State Board
10of Investment under Article 22A of the Illinois Pension Code.
11The county collector shall report annually to the county clerk
12on the condition and income of the fund. The indemnity fund
13shall be held to satisfy judgments obtained against the County
14Treasurer, as trustee of the fund. No payment shall be made
15from the fund, except upon a judgment of the court which
16ordered the issuance of a tax deed.
17(Source: P.A. 100-1070, eff. 1-1-19; 101-659, eff. 3-23-21.)
 
18    (35 ILCS 200/21-305)
19    Sec. 21-305. Payments from Indemnity Fund.
20    (a) Any owner of property that is sold under any provision
21of this Code who sustains loss or damage by reason of the
22issuance of a tax deed on or after May 24, 2021 under Section
2321-445 or 22-40 shall be entitled to the equity in the property
24described in the tax deed. For purposes of this subsection,
25equity shall be calculated as follows: (i) the fair cash value

 

 

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1of the subject property on the date the tax deed is issued,
2less (ii) the amount that would have been needed to redeem such
3property, less (iii) any other taxes paid by the tax deed
4grantee to obtain the tax deed, less (iv) the amount needed to
5pay any mortgages or liens on the property, and less (v) an
6administrative fee of $500 for the county conducting the tax
7sale and issuing the tax deed.
8    If the tax deed is issued on or after the effective date of
9this amendatory Act of the 103rd General Assembly, then the
10petition for a claim for equity under this subsection (a) must
11be filed within 90 days after the tax deed is recorded. If the
12tax deed is issued on or after May 24, 2021 but before the
13effective date of this amendatory Act of the 103rd General
14Assembly, then the petition for a claim for equity under this
15subsection (a) must be filed within 90 days after the
16effective date of this amendatory Act of the 103rd General
17Assembly.
18    (a-5) (a) Any owner of property sold under any provision
19of this Code who sustains loss or damage by reason of the
20issuance of a tax deed under Section 21-445 or 22-40 and who is
21barred or is in any way precluded from bringing an action for
22the recovery of the property and who fails to bring a petition
23to recover the equity within the time frame provided in
24subsection (a) shall have the right to indemnity for the loss
25or damage sustained, limited as follows:
26        (1) An owner who resided on property that contained 4

 

 

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1    or less dwelling units on the last day of the period of
2    redemption and who is equitably entitled to compensation
3    for the loss or damage sustained has the right to
4    indemnity. An equitable indemnity award shall be limited
5    to the fair cash value of the property as of the date the
6    tax deed was issued less any mortgages or liens on the
7    property, and the award will not exceed $99,000. The Court
8    shall liberally construe this equitable entitlement
9    standard to provide compensation wherever, in the
10    discretion of the Court, the equities warrant the action.
11        An owner of a property that contained 4 or less
12    dwelling units who requests an award in excess of $99,000
13    must prove that the loss of his or her property was not
14    attributable to his or her own fault or negligence before
15    an award in excess of $99,000 will be granted.
16        (2) An owner who sustains the loss or damage of any
17    property occasioned by reason of the issuance of a tax
18    deed, without fault or negligence of his or her own, has
19    the right to indemnity limited to the fair cash value of
20    the property less any mortgages or liens on the property.
21    In determining the existence of fault or negligence, the
22    court shall consider whether the owner exercised ordinary
23    reasonable diligence under all of the relevant
24    circumstances.
25        (3) In determining the fair cash value of property
26    less any mortgages or liens on the property, the fair cash

 

 

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1    value shall be reduced by the principal amount of all
2    taxes paid by the tax purchaser or his or her assignee
3    before the issuance of the tax deed.
4        (4) If an award made under paragraph (1) or (2) is
5    subject to a reduction by the amount of an outstanding
6    mortgage or lien on the property, other than the principal
7    amount of all taxes paid by the tax purchaser or his or her
8    assignee before the issuance of the tax deed and the
9    petitioner would be personally liable to the mortgagee or
10    lienholder for all or part of that reduction amount, the
11    court shall order an additional indemnity award to be paid
12    directly to the mortgagee or lienholder sufficient to
13    discharge the petitioner's personal liability. The court,
14    in its discretion, may order the joinder of the mortgagee
15    or lienholder as an additional party to the indemnity
16    action.
17    A petition of indemnity under this subsection (a-5) must
18be filed within 10 years after the date the tax deed was
19issued.
20    (b) Indemnity fund; subrogation.
21        (1) Any person filing a claim under subsection (a) or
22    (a-5) claiming indemnity hereunder shall petition the
23    Court which ordered the tax deed to issue, shall name the
24    County Treasurer, as Trustee of the indemnity fund, as
25    defendant to the petition, and shall ask that judgment be
26    entered against the County Treasurer, as Trustee, in the

 

 

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1    amount of the equity or indemnity sought. The provisions
2    of the Civil Practice Law shall apply to proceedings under
3    the petition, except that neither the petitioner nor
4    County Treasurer shall be entitled to trial by jury on the
5    issues presented in the petition. The Court shall
6    liberally construe this Section to provide compensation
7    wherever in the discretion of the Court the equities
8    warrant such action.
9        (2) The County Treasurer, as Trustee of the indemnity
10    fund, shall be subrogated to all parties in whose favor
11    judgment may be rendered against him or her, and by third
12    party complaint may bring in as a defendant any person,
13    other than the tax deed grantee and its successors in
14    title, not a party to the action who is or may be liable to
15    him or her, as subrogee, for all or part of the
16    petitioner's claim against him or her.
17    (c) Any contract involving the proceeds of a judgment for
18equity or indemnity under this Section, between the tax deed
19grantee or its successors in title and the indemnity
20petitioner or his or her successors, shall be in writing. In
21any action brought under Section 21-305, the Collector shall
22be entitled to discovery regarding, but not limited to, the
23following:
24        (1) the identity of all persons beneficially
25    interested in the contract, directly or indirectly,
26    including at least the following information: the names

 

 

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1    and addresses of any natural persons; the place of
2    incorporation of any corporation and the names and
3    addresses of its shareholders unless it is publicly held;
4    the names and addresses of all general and limited
5    partners of any partnership; the names and addresses of
6    all persons having an ownership interest in any entity
7    doing business under an assumed name, and the county in
8    which the assumed business name is registered; and the
9    nature and extent of the interest in the contract of each
10    person identified;
11        (2) the time period during which the contract was
12    negotiated and agreed upon, from the date of the first
13    direct or indirect contact between any of the contracting
14    parties to the date of its execution;
15        (3) the name and address of each natural person who
16    took part in negotiating the contract, and the identity
17    and relationship of the party that the person represented
18    in the negotiations; and
19        (4) the existence of an agreement for payment of
20    attorney's fees by or on behalf of each party.
21    Any information disclosed during discovery may be subject
22to protective order as deemed appropriate by the court. The
23terms of the contract shall not be used as evidence of value.
24    (d) (Blank). A petition of indemnity under this Section
25must be filed within 10 years after the date the tax deed was
26issued.

 

 

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1(Source: P.A. 97-557, eff. 7-1-12.)
 
2    (35 ILCS 200/21-306)
3    Sec. 21-306. Indemnity fund fraud.
4    (a) A person commits the offense of indemnity fund fraud
5when that person knowingly:
6        (1) offers or agrees to become a party to, or to
7    acquire an interest in, a contract involving the proceeds
8    of a judgment for indemnity under Section 21-305 before
9    the end of the period of redemption from the tax sale to
10    which the judgment relates;
11        (2) fraudulently induces a party to forego bringing an
12    action for the recovery of the property;
13        (3) makes a deceptive misrepresentation during the
14    course of negotiating an agreement under subsection (c) of
15    Section 21-305; or
16        (4) conspires to violate any of the provisions of this
17    subsection.
18    (b) Commission of any one act described in subsection (a)
19is a Class A misdemeanor. Commission of more than one act
20described in subsection (a) during a single course of conduct
21is a Class 4 felony. A second or subsequent conviction for
22violation of any portion of this Section is a Class 4 felony.
23    (c) The State's Attorney of the county in which a judgment
24for equity or indemnity under Section 21-305 is entered may
25bring a civil action in the name of the People of the State of

 

 

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1Illinois against a person who violates paragraph (1), (2), or
2(3) of subsection (a). Upon a finding of liability in the
3action the court shall enter judgment in favor of the People in
4a sum equal to three times the amount of the judgment for
5indemnity, together with costs of the action and reasonable
6attorney's fees. The proceeds of any judgment under this
7subsection shall be paid into the general fund of the county.
8(Source: P.A. 91-564, eff. 8-14-99.)