How to Buy Tax Foreclosure Properties in Illinois
If a home owner is delinquent in paying his property tax bill, the Illinois county in which he lives can place a tax lien on the property for the amount of tax that he owes. At least once a year, Illinois counties hold tax lien auctions at which you can bid on a tax lien certificate that gives you legal ownership of a property whose taxes are in arrears. The delinquent taxpayer has two years to pay you the back taxes, plus interest. You profit by getting your money back with interest over the life of the lien, or by foreclosing on the property if the tax payer defaults on his payments to you.
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Things You'll Need
- Tax buyer registration form
- Deposit of $200 or more
- List of tax lien properties
- Certified check for the purchase price
Instructions
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How to Buy Tax Foreclosure Properties in Illinois
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Become a registered tax buyer by registering at the county treasurer’s office at least 10 days before the auction. You will need to fill out an application form and put down a deposit, usually around $200, as a good faith gesture that you will attend the lien auction. If you attend the auction and purchase a tax lien certificate, the deposit is applied to your purchase amount. If you attend and do not purchase anything, the county refunds your deposit. If you don’t attend the auction, the county keeps the deposit.
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Obtain a tax sale catalog or list of properties to be auctioned. They are usually available from the county treasurer’s office about four weeks before the auction. Most Illinois counties charge around $60.00 for a printed hard copy of the list, and around $50.00 for a list via email.
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Bid at the auction on the property that interests you. Your bid should include the amount of back taxes, any penalties and an interest rate not to exceed 18 percent. The bid with the highest amount offered for the property wins. Auctions are usually conducted in the traditional public, oral style with a live auctioneer. Some Illinois counties use computers and software programs designed especially for real-time auction bidding.
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Bring a certified check for the amount you plan to spend at the auction if you are a first-time buyer, per Illinois county requirements. Previous buyers of tax lien certificates can pay with a personal check, business check or cashier’s check. Be prepared to pay the taxes and any penalties on the property you purchase immediately after the auction. All sales are final.
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Obtain the deed to the property after the sale. Once you have purchased the tax lien certificate—and essentially the property—it is now your responsibility to deal with the delinquent taxpayer, who has a period of two years to pay the back taxes, plus the interest rate you determined at the auction, to you in order to keep his home. You are responsible for setting the terms of the lien repayment. You may want to consult with a lawyer who specializes in real estate matters.
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Foreclose on the home if the delinquent tax payer does not repay the tax lien plus interest under the terms of your repayment contract. You can then take physical possession of the property.
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Tips & Warnings
Keep in mind that you are purchasing a tax lien certificate that gives you ownership of a property that you can’t take physical possession of immediately, unless the delinquent tax payer immediately forfeits the property to you in lieu of paying you the back taxes plus interest. This type of property purchase is different than buying mortgage foreclosures from a bank or through a real estate agent.
Contact a lawyer who specializes in real estate matters if you have any questions about the legal aspects of purchasing a tax foreclosure property through a tax lien certificate. The county treasurer’s office cannot answer legal questions about the process.
References
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