Edwardsville, IL · Member since 2012 · 28 posts · 2 votes
I was approached by a seller who has a property he's looking to sell. It's a rental and he's pretty much washed his hands of it from what the renters tell me. He hasn't paid 2009, 2010, or the 2011 taxes and they've been sold off. The seller didn't accept what I considered a fair offer given the back taxes and repair work that will need to go into the home, so I'm wondering if it's possible to contact the current tax lien holder and see if I can buy it from them and then foreclose on the property myself. Given that we're coming up on 4 years delinquent on the taxes, I'm getting the feeling that the current lien holder has no interest in foreclosing or would have done so already. I'm a newbie to tax liens, so I'm wondering if this is even possible for me to do, and if so, what concerns should I have going into it?
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
13y
James Dunn Lots of rules for foreclosing on an IL tax lien. Quick answer - Yes, you can you purchase a tax lien from the current lien holder and then foreclose.
Look at the IL tax lien foreclosure statutes for the specifics but here are the highlights (and I haven't reviewed the statutes in a while so these comments may be outdated).
A real estate tax lien on improved property in Illinois has a 2 year redemption period for the owner of the property.
The lien holder MUST file for a tax deed (foreclosure) within one year of the end of the redemption period. By law, the tax deed must be issued and recorded within one year after the date when the redemption period expired. If this is not done, your tax lien becomes null and void, and you have no right to obtain any refund or reimbursement of any of the monies you have paid. It is very important that the tax deed foreclosure process be completed within one year after the date the redemption period expires.
The lien holder can file for an extension of the redemption period giving the property owner an extra year to pay the taxes. This should be done 30 days before the 2 year redemption period ends. You would do this only if you want to process the tax deed foreclosure but the year period after the redemption period is about to come due. By giving the owner more time, you are giving yourself more time to prepare the foreclosure.
So you want to be sure you purchase a lien that has not expired worthless. Make sure you know when the lien was originally sold. For example 2009 taxes are due in 2010. If the owner has not paid the taxes (in 2010), the lien is sold in 2011 for 2009 taxes. So 2009 taxes have a lien sold in 2011 and that would probably mean that the redemption period ends in 2013 and the lien holder has until 2014 to foreclose.
Thus, the 2009 lien holder has not had an opportunity to foreclose and may be preparing to do so now. However, many lien holders just want the interest and may have no intention on foreclosing. They would welcome the opportunity to sell you the lien. Be prepared to pay a lot in interest to buy the lien holder out.
Again, you want to double check the statutes yourself and even the dates the lien was sold and if any extension for the redemption period exists.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
13y
A couple other quick details on IL tax deed foreclosures;
Within 4 months and 15 days of the original Lien being sold, a notice must be sent to the owners and filed with the county that tells the owner that a tax lien has been sold on the property. It also lists out the date the redemption period ends. The statutes spell out exactly how this must be worded. (make sure this was sent and filed if you are buying the lien from another person)
Then another notice that the redemption period is about to end must be sent to the owner and all mortgage holders and other lien holders in the property, that states the redemption period is about to end and tax deed will be issued. This is sent no less than 3 months but no more than 6 months before the redemption period expiration date.
Lots of hoops for you (and your lawyer) to jump through...
Edwardsville, IL · Member since 2012 · 28 posts · 2 votes
13y
Thanks for the great info Jerry K.! Looks like it can be done, but it's going to be a much more difficult process than I was really looking for. I think I'll just keep following up with the seller from time to time and work on convincing him to sell before the lien holder decides to foreclose on him themselves.