Sweeping property tax foreclosure reforms pushed by Cook County Treasurer Maria Pappas passed Saturday in the Illinois General Assembly and now head to the governor’s desk. Once signed by Governor JB Pritzker, the reform package will be the most significant Illinois homeowner protection measure enacted in decades. House Bill 4537 will bring Illinois into compliance with the 2023 U.S. Supreme Court ruling in Tyler v. Hennepin. The court found that when governments foreclose on a property for unpaid taxes, any equity above the debt owed must be returned to the property owner. Each year, under current Illinois law, overdue taxes on homes, commercial properties, and vacant lots are sold to tax buyers. In return, the buyers receive a lien entitling them to take deed to the property – and any equity the owner has in it – if the owner doesn’t pay what’s owed within one to three years.

With this legislation, the old system will be replaced by one that returns to the former property owner any equity above what was owed. It was crafted with input from Cook County President Toni Preckwinkle, downstate county treasurers and housing advocates, and in collaboration with state Sen. Celina Villanueva (D-Chicago) and state Rep. Curtis Tarver (D-Chicago). The core reform in HB 4537 is the creation of a tax deed auction system already used successfully in many other states. Taxes, interest, and fees owed will be paid by the highest bidder. Remaining surplus equity will be returned to the former property owner by the county treasurer. The legislation requires Cook County to hold six more tax sales involving private tax buyers. After the sixth sale, expected to occur in 2030, tax buying will no longer be allowed in Cook County. Instead, the county will hold all the liens for overdue property taxes, and if the property owner doesn’t pay what’s owed within one to three years, the county can auction off the property’s deed to the highest bidder.