Expert: Illinois’ outdated tax law leaves homeowners, taxpayers on the
hook
[November 13, 2025]
By Catrina Barker | The Center Square contributor
(The Center Square) – Illinois remains the only state that hasn’t
reformed its property tax sale system after the U.S. Supreme Court ruled
in Tyler v. Hennepin County that governments can’t keep more than what’s
owed in back taxes, a delay that’s now fueling lawsuits and could cost
taxpayers millions.
Lylena Estabine, policy researcher with the Illinois Policy Institute,
explained that if Illinois residents fall behind on their property
taxes, even by a few hundred dollars, that debt can be sold to private
investors who, if not repaid with interest, can take the homeowner’s
entire property.
“Since 2019, about 1,000 homeowners in Cook County, including 125
seniors, have lost their homes over unpaid property taxes,” Estabine
said. “Rather than reimbursing owners for their home’s value minus the
debt, investors take the entire amount. Researchers found investors in
Illinois collected $148 million more than they were owed between 2014
and 2021.”
Estabine said that in May 2022, about 37,000 Illinois properties were
listed for tax sales, and 54% of those homes owed less than $1,000 in
back taxes. In other words, thousands of homeowners faced the risk of
losing their entire homes over relatively small debts.
“That’s why it’s referred to as home equity theft,” Estabine said.“Now,
the Supreme Court recently ruled in Tyler v. Hennepin County that this
is unconstitutional because investors are taking more than they’re owed.
That violates the Fifth Amendment, which says you can’t take someone’s
property without fair compensation.”
Following Tyler, Cook County paused its tax sales, but Estabine said
“that delay isn’t going to stop the lawsuits that are already in motion
over the damages that homeowners have incurred because of this law.”
Estabine said lawmakers must act quickly, especially in Illinois, which
has the highest property taxes in the nation due in large part to
overpromised pension benefits.
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Photo: Alan Wooten / The Center Square
“It's really incumbent upon them to figure out how we can not just deal
with the issue of delinquent property taxes, which happen because
property taxes are so high, but also how we can make structural changes
that can lower the property tax rate for homeowners across the state.”
Estabine says the lawsuits are coming from multiple directions: some are
filed by homeowners seeking compensation for lost home value, others by
tax buyers whose certificates have become “worthless” because counties
cannot legally proceed with sales, and in some cases, counties
themselves are suing the state, arguing that lawmakers’ failure to
update the property tax statute has left them vulnerable to legal
liability.
“There was actually a bill introduced, House Bill 3146,” Estabine said.
“It would require counties to return any sale proceeds above what’s owed
to the original homeowner, and that would eliminate the issue. But it
didn’t pass. What passed instead was legislation allowing the tax sales
to be paused so no new issues could occur now that the property tax
sales are illegal. Really, that’s just buying time.”
If lawmakers fail to act, counties could face millions in claims,
potentially leaving taxpayers on the hook, according to Estabine.
“Without an updated statute, counties are kind of on their own figuring
out how to collect these delinquent taxes,” Estabine said. “Because the
current law is still on the books, they might not have authority to
stray from it, and that puts them in a tough situation where you’re
damned if you do, damned if you don’t.”
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