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Real Estate Tax Certificates: Purchase/Assignment & Forfeiture Tax Sales

Purchase/Assignment of Real Estate Tax Sale Certificates

Some people are hesitant to register and bid at an annual tax sale or scavenger tax sale, or don’t want to hold a certificate of purchase (also known as a “tax lien”) for the full redemption period. Fortunately, many tax buyers  will sell and assign tax sale certificates of purchase to parties interested in acquiring the properties. Section 21-250 of the Property Tax Code (35 ILCS 200/21-250) states, “A certificate of purchase shall be assignable by endorsement. An assignment shall vest in the assignee or his or her legal representatives, all the right and title of the original purchaser.” The assignee may record the assignment with the County Clerk. Recording the assignment is voluntary, but an assignee who fails to record his or her assignment takes the risk that notices may be sent to the original tax purchaser rather than to the assignee. 35 ILCS 200/21-251.

Generally, the purchase price will be the amount to redeem the tax sale (which can be determined via an estimate of redemption from the County Clerk) plus an additional amount to be negotiated between the parties. If the redemption period has not expired at the time of the sale/assignment, the purchaser will have to determine what additional steps need to be taken in order to seek a tax deed. Many tax buyers are now selling tax certificates after a petition for tax deed has been filed in court and after the redemption period has expired. Acquiring a tax certificate in these circumstances can result in the purchaser obtaining a tax deed to the property very quickly and avoiding the costs (transfer taxes, water certification, zoning certification, etc.) normally associated with a real estate purchase.

Forfeiture Tax Sales

If a property is offered for sale at an annual tax sale and no one bids on the property, the taxes are deemed “forfeited.” If anyone wants to purchase the forfeited taxes they may apply at the County Clerk. These tax sales are frequently called “over-the-counter sales.” The County Clerk then sends a notice to the address to which tax bills are sent advising that someone has applied to buy the forfeited taxes. The County Clerk also computes the amount needed to purchase the forfeited taxes plus accrued penalties and costs (called a forfeiture estimate of redemption). If the taxes are not paid within 30 days after the notice is mailed, the applicant may purchase the forfeited taxes by paying the entire amount of taxes, penalties and sale costs. The applicant must also pay all unpaid taxes and penalties for prior years. The penalty rate for a party redeeming a forfeiture certificate of purchase is 12% per six months or part thereof.

We frequently represent parties in these situations and can help navigate the procedures and requirements in order to obtain a tax deed. If you are interested in trying to acquire a real estate tax sale certificate as outlined above, do not hesitate to contact us for help.

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