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How does a tax lien sale work

how does a tax lien sale work

Cook County

After delinquency lists are prepared for newspaper publication and final notices are sent by certified mail, payments must be made by certified check, cashier's check or money order. Personal and business checks are not accepted after the delinquencies have been published in area newspapers and final notices have been sent by certified mail, and cash is accepted only in person at the Treasurer's Office.

At a tax sale, the delinquent taxes are sold, not the properties. The delinquencies are liens on the properties to secure payment. A tax purchaser pays the taxes and receives a lien on the property. If the taxpayer does not pay the delinquent taxes, however, after a statutory period of time and after complying with a number of statutory requirements, the tax purchaser may petition the court for a tax deed. If the petition is granted, the tax purchaser will own the property.

The annual tax sale–legally mandated and governed by state law–is part of the Illinois property tax system. In Illinois, the property tax is the single largest source of local taxes. Selling taxes helps the various taxing bodies (schools, villages, parks, townships, libraries, public health and safety agencies, etc.) meet their financial commitments. For property owners, the financial consequence of having property taxes sold generally exceeds the cost

of paying the tax. If a property owner’s taxes are sold, fees and costs rise substantially. The combination of the high cost of redemption and the potential of losing property is the enforcement mechanism that Illinois employs—and that other states employ with similar methods. If taxes are sold, the taxing agencies receive the full amount of taxes due from the successful tax purchaser, plus county penalties and a number of county fees that have been established by state law for meeting the costs of conducting tax sales. The delinquent tax portion of the money is distributed to local taxing bodies and is available for their budgetary needs. When taxpayers eventually redeem taxes, their funds reimburse the tax purchasers. If the taxpayer fails to redeem, the certificate of tax purchase may be used to seek a tax deed or can be sold to another party who may pursue a tax deed.

A tax purchaser is a registered and qualified bidder at the tax sale, and is the legal entity to which Certificates of Purchase will be issued on successful bids. Registered tax purchasers can be a partnership, a limited liability partnership (LLP), a corporation (LLC), a charitable organization (501(c)(3)), or an individual.

Property owners may pay “in person or by agent … at any time before sale.”

Category: Taxes

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