HB3421ham001 104TH GENERAL ASSEMBLY

Rep. Sonya M. Harper

Filed: 3/24/2025

10400HB3421ham001 LRB104 11219 HLH 23296 a

AMENDMENT TO HOUSE BILL 3421

AMENDMENT NO. ______. Amend House Bill 3421 by replacing everything after the enacting clause with the following:

"Section 3. The State Finance Act is amended by adding Section 5.1030 as follows:

(30 ILCS 105/5.1030 new)

Sec. 5.1030. The Equity Fund.

Section 5. The Property Tax Code is amended by changing Sections 21-90, 21-295, 21-305, 22-40, and 22-55 and by adding Sections 22-100 and 22-101 as follows:

(35 ILCS 200/21-90)

Sec. 21-90. Purchase and sale by county; distribution of proceeds.

(a) When any property is offered for sale under any of the provisions of this Code, the county board of the county in which the property is located, in its discretion, may bid, or, in the case of forfeited property, may apply to purchase it or otherwise acquire the tax lien or certificate in the name of the county as trustee for all taxing districts having an interest in the property's taxes or special assessments for the nonpayment of which the property is sold. The presiding officer of the county board, with the advice and consent of the board, may appoint on its behalf some officer, person, or entity to attend such sales, bid on tax liens or certificates, and act on behalf of the county when exercising its authority under this Section. The county shall apply on the bid or purchase the unpaid taxes and special assessments due upon the property. No cash need be paid.

(b) The county, as trustee for all taxing districts having an interest in the property's taxes or special assessments, shall be the designated holder of all tax liens or certificates that are forfeited to the State or county. No cash need be paid for the unpaid taxes and special assessments due on the property. All fees due under Section 21-295 shall be paid pursuant to that Section forfeited tax lien or certificate.

(c) For any tax lien or certificate acquired under subsection (a) or (b) of this Section, the county may take steps necessary to acquire title to the property and may manage and operate the property, including, but not limited to, mowing of grass, removal of nuisance greenery, removal of garbage, waste, debris or other materials, or the demolition, repair, or remediation of unsafe structures. When a county, or other taxing district within the county, is a petitioner for a tax deed, no filing fee shall be required. When a county or other taxing district within the county is the petitioner for a tax deed, one petition may be filed including all parcels that are tax delinquent within the county or taxing district, and any publication made under Section 22-20 of this Code may combine all such parcels within a single notice. The notice may include the street address as listed on the most recent available tax bills, if available, and shall list the Property Index Number of the parcels for informational purposes. The county, as tax creditor and as trustee for other tax creditors, or other taxing district within the county, shall not be required to allege and prove that all taxes and special assessments which become due and payable after the sale or forfeiture to the county have been paid nor shall the county be required to pay the subsequently accruing taxes or special assessments at any time. The county board or its designee may prohibit the county collector from including the property in the tax sale of one or more subsequent years. The lien of taxes and special assessments which become due and payable after a sale to a county shall merge in the fee title of the county, or other taxing district within the county, on the issuance of a deed.

The county may sell any property acquired with authority provided in this Section, or assign any tax certificate to any party, including, but not limited to, taxing districts, municipalities, land banks created pursuant to Illinois law, or non-profit developers focused on constructing affordable housing, subject to Sections 21-295 through 21-305.

The assigned tax certificate shall be void with no further rights given to the assignee, including no right to refund or reimbursement, if a tax deed has not been recorded within 4 years after the date of the assignment unless a court extends the assignment period as provided in this Section. Upon a motion by the assignee, a court may toll the 4-year deadline for a specified period of time if the court finds the assignee is prevented from obtaining or recording a deed by injunction or order of any court, by the refusal or inability of any court to act upon the application for a tax deed, by a municipality's refusal to issue necessary transfer stamps or approvals for recording, or by the refusal of the clerk to execute the deed. If an assigned tax certificate is void under this Section, it shall be forfeited to the county and held as a valid certificate of sale in the county's name pursuant to this Section 21-90. The proceeds of any sale or assignment under this Section, less all costs of the county incurred in the acquisition, operation, maintenance, and sale of the property or assignment of the tax certificate, including all costs associated with county staff and overhead used to perform the duties of the trustee set forth in this Section, shall be distributed to the taxing districts in proportion to their respective interests therein.

Under Sections 21-110, 21-115, 21-120, and 21-190, a county may bid or purchase only in the absence of other bidders.

(Source: P.A. 102-363, eff. 1-1-22; 103-555, eff. 1-1-24.)

(35 ILCS 200/21-295)

Sec. 21-295. Creation of indemnity fund.

(a) In counties of less than 3,000,000 inhabitants, each person purchasing any property at a sale under this Code shall pay to the County Collector, prior to the issuance of any certificate of purchase, a nonrefundable an indemnity fee set by the county collector of not more than $20 for each item purchased. A like nonrefundable sum shall be paid for each year that all or a portion of subsequent taxes are paid by the tax purchaser and posted to the tax judgment, sale, redemption and forfeiture record where the underlying certificate of purchase is recorded.

(a-5) In counties of 3,000,000 or more inhabitants, each person purchasing property at a sale under this Code shall pay to the County Collector a nonrefundable fee of $200 $80 for each item purchased plus an additional nonrefundable fee sum equal to 3% 5% of the taxes, interest, and penalties paid under Section 21-240. In these counties, the certificate holder shall also pay to the County Collector a nonrefundable fee of $150 $80 for each year that all or a portion of subsequent taxes are paid by the tax purchaser and posted to the tax judgment, sale, redemption, and forfeiture record. The changes to this subsection made by this amendatory Act of the 91st General Assembly are not a new enactment, but declaratory of existing law.

(b) The amount paid prior to issuance of the certificate of purchase pursuant to subsection (a) or (a-5) shall be included in the purchase price of the property in the certificate of purchase and all amounts paid under this Section shall be included in the amount required to redeem under Section 21-355, except for any the nonrefundable $80 fee for each item purchased at the tax sale as provided in this Section. Except as otherwise provided in subsection (b) of Section 21-300, all nonrefundable fees money received under subsection (a) or (a-5) shall be paid by the Collector to the County Treasurer of the County in which the land is situated, for the purpose of an indemnity fund. The County Treasurer, as trustee of that fund, shall invest all of that fund, principal and income, in his or her hands from time to time, if not immediately required for payments of indemnities under subsection (a) of Section 21-305, in investments permitted by the Illinois State Board of Investment under Article 22A of the Illinois Pension Code. The county collector shall report annually to the county clerk on the condition and income of the fund. The indemnity fund shall be held to satisfy judgments obtained against the County Treasurer, as trustee of the fund. No payment shall be made from the fund, except upon a judgment of the court which ordered the issuance of a tax deed.

(Source: P.A. 100-1070, eff. 1-1-19; 101-659, eff. 3-23-21.)

(35 ILCS 200/21-305)

Sec. 21-305. Payments from Indemnity Fund.

(a) Any owner of property sold under any provision of this Code who sustains loss or damage by reason of the issuance of a tax deed under Section 21-445 or 22-40 and who is barred or is in any way precluded from bringing an action for the recovery of the property shall have the right to indemnity for the loss or damage sustained, limited as follows:

(1) An owner who resided on property that contained 4 or less dwelling units on the last day of the period of redemption and who is equitably entitled to compensation for the loss or damage sustained has the right to indemnity. An equitable indemnity award shall be limited to the fair cash value of the property as of the date the tax deed was issued less any mortgages or liens on the property, and the award will not exceed $99,000. The Court shall liberally construe this equitable entitlement standard to provide compensation wherever, in the discretion of the Court, the equities warrant the action.

An owner of a property that contained 4 or less dwelling units who requests an award in excess of $99,000 must prove that the loss of his or her property was not attributable to his or her own fault or negligence before an award in excess of $99,000 will be granted.

(2) An owner who sustains the loss or damage of any property occasioned by reason of the issuance of a tax deed, without fault or negligence of his or her own, has the right to indemnity limited to the fair cash value of the property less any mortgages or liens on the property. In determining the existence of fault or negligence, the court shall consider whether the owner exercised ordinary reasonable diligence under all of the relevant circumstances.

(3) In determining the fair cash value of property less any mortgages or liens on the property, the fair cash value shall be reduced by the principal amount of all taxes paid by the tax purchaser or his or her assignee before the issuance of the tax deed.

(4) If an award made under paragraph (1) or (2) is subject to a reduction by the amount of an outstanding mortgage or lien on the property, other than the principal amount of all taxes paid by the tax purchaser or his or her assignee before the issuance of the tax deed and the petitioner would be personally liable to the mortgagee or lienholder for all or part of that reduction amount, the court shall order an additional indemnity award to be paid directly to the mortgagee or lienholder sufficient to discharge the petitioner's personal liability. The court, in its discretion, may order the joinder of the mortgagee or lienholder as an additional party to the indemnity action.

(b) Indemnity fund; subrogation.

(1) Any person claiming indemnity hereunder shall petition the Court which ordered the tax deed to issue, shall name the County Treasurer, as Trustee of the indemnity fund, as defendant to the petition, and shall ask that judgment be entered against the County Treasurer, as Trustee, in the amount of the indemnity sought. The provisions of the Civil Practice Law shall apply to proceedings under the petition, except that neither the petitioner nor County Treasurer shall be entitled to trial by jury on the issues presented in the petition. The Court shall liberally construe this Section to provide compensation wherever in the discretion of the Court the equities warrant such action.

(2) The County Treasurer, as Trustee of the indemnity fund, shall be subrogated to all parties in whose favor judgment may be rendered against him or her, and by third party complaint may bring in as a defendant any person, other than the tax deed grantee and its successors in title, not a party to the action who is or may be liable to him or her, as subrogee, for all or part of the petitioner's claim against him or her.

(c) Any contract involving the proceeds of a judgment for indemnity under this Section, between the tax deed grantee or its successors in title and the indemnity petitioner or his or her successors, shall be in writing. In any action brought under Section 21-305, the Collector shall be entitled to discovery regarding, but not limited to, the following:

(1) the identity of all persons beneficially interested in the contract, directly or indirectly, including at least the following information: the names and addresses of any natural persons; the place of incorporation of any corporation and the names and addresses of its shareholders unless it is publicly held; the names and addresses of all general and limited partners of any partnership; the names and addresses of all persons having an ownership interest in any entity doing business under an assumed name, and the county in which the assumed business name is registered; and the nature and extent of the interest in the contract of each person identified;

(2) the time period during which the contract was negotiated and agreed upon, from the date of the first direct or indirect contact between any of the contracting parties to the date of its execution;

(3) the name and address of each natural person who took part in negotiating the contract, and the identity and relationship of the party that the person represented in the negotiations; and

(4) the existence of an agreement for payment of attorney's fees by or on behalf of each party.

Any information disclosed during discovery may be subject to protective order as deemed appropriate by the court. The terms of the contract shall not be used as evidence of value.

(d) A petition of indemnity under this Section must be filed within 10 years after the date the tax deed was issued.

(e) No payment from the indemnity fund shall be made if an application for Equity Fund Payment is filed or pending in any county of this State.

(Source: P.A. 97-557, eff. 7-1-12.)

(35 ILCS 200/22-40)

Sec. 22-40. Issuance of deed; possession.

(a) To obtain an order for issuance of tax deed, the petitioner must provide sufficient evidence that:

(1) the redemption period has expired and the property has not been redeemed;

(2) all taxes and special assessments which became due and payable subsequent to the sale have been paid, unless the county or its agent, as trustee pursuant to Section 21-90, is the petitioner;

(3) all forfeitures and sales which occur subsequent to the sale are paid or redeemed, unless the county or its agent, as trustee pursuant to Section 21-90, is the petitioner;

(4) the notices required by law have been given, and all advancements of public funds under the police power made by a county, city, village, or town under Section 22-35 have been paid; and

(5) the petitioner has complied with all the provisions of law entitling him or her to a deed.

Upon receipt of sufficient evidence of the requirements under this subsection (a), the court shall find that the petitioner complied with those requirements and shall enter an order directing the county clerk, on the production of the tax certificate and a certified copy of the order, to issue to the purchaser or its assignee a tax deed. The court shall insist on strict compliance with Section 22-10 through 22-25. Prior to the entry of an order directing the issuance of a tax deed, the petitioner shall furnish the court with a report of proceedings of the evidence received on the application for tax deed and the report of proceedings shall be filed and made a part of the court record.

(b) Except as provided in subsection (e), if taxes for years prior to the year or years sold are or become delinquent subsequent to the date of sale, the court shall find that the lien of those delinquent taxes has been or will be merged into the tax deed grantee's title if the court determines that the tax deed grantee or any prior holder of the certificate of purchase, or any person or entity under common ownership or control with any such grantee or prior holder of the certificate of purchase, was at no time the holder of any certificate of purchase for the years sought to be merged. If delinquent taxes are merged into the tax deed pursuant to this subsection, the court shall enter an order declaring which specific taxes have been or will be merged into the tax deed title and directing the county treasurer and county clerk to reflect that declaration in the warrant and judgment records; provided, that no such order shall be effective until a tax deed has been issued and timely recorded. Nothing contained in this Section shall relieve any owner liable for delinquent property taxes under this Code from the payment of the taxes that have been merged into the title upon issuance of the tax deed.

(c) The county clerk is entitled to a fee of $10 in counties of 3,000,000 or more inhabitants and $5 in counties with less than 3,000,000 inhabitants for the issuance of the tax deed, with the exception of deeds issued to the county pursuant to its authority under Section 21-90. The clerk may not include in a tax deed more than one property as listed, assessed and sold in one description, except in cases where several properties are owned by one person.

Upon application, the court shall, enter an order to place the tax deed grantee or the grantee's successor in interest in possession of the property and may enter orders and grant relief as may be necessary or desirable to maintain the grantee or the grantee's successor in interest in possession.

(d) The court shall retain jurisdiction to enter orders pursuant to subsections (b) and (c) of this Section and pursuant to Sections 22-100 and 22-101. Public Act 92-223 and Public Act 95-477 . This amendatory Act of the 92nd General Assembly and this amendatory Act of the 95th General Assembly shall be construed as being declarative of existing law and not as a new enactment.

(e) Prior to the issuance of any tax deed under this Section, the petitioner must redeem all taxes and special assessments on the property that are subject to a pending tax petition filed by a county or its assignee pursuant to Section 21-90.

(f) If, for any reason, a purchaser fails to obtain an order for tax deed within the required time period and no sale in error was granted or redemption paid, then the certificate shall be forfeited to the county, as trustee, pursuant to Section 21-90.

(Source: P.A. 103-555, eff. 1-1-24; revised 8-5-24.)

(35 ILCS 200/22-55)

Sec. 22-55. Tax deeds to convey merchantable title. This Section shall be liberally construed so that tax deeds shall convey merchantable title. In the event the property has been taken by eminent domain under the Eminent Domain Act, the tax purchaser shall be entitled to the award which is the substitute for the property. Tax deeds issued pursuant to this Section are subject to Section 22-70. Nothing in Section 22-100 or Section 22-101 shall affect the merchantable title conveyed upon the recording of the tax deed. This amendatory Act of the 104th General Assembly shall be construed as being declarative of existing law and not as a new enactment.

(Source: P.A. 94-1055, eff. 1-1-07.)

(35 ILCS 200/22-100 new)

Sec. 22-100. Equity Fund collection.

(a) Each county treasurer shall transmit to the State Treasurer all Equity Fund payments paid to the county treasurer under this Section and in the county treasurer's possession after each tax sale, with a report under oath identifying the total amount of certificates of purchase sold and the amount collected for the Equity Fund from each certificate. Those amounts and the report shall be transmitted to and received by the State Treasurer by the 10th day after each tax sale. At the same time, a copy of the report shall be furnished to the Attorney General. The report shall be in a form and contain the particulars as the State Treasurer may prescribe. The State Treasurer shall give the county treasurer a receipt for the amount transmitted to the State Treasurer. Except as otherwise provided in this Section, if any county treasurer fails to pay to the State Treasurer all amounts that may be due and payable under this Section as required by this Section, the county treasurer shall pay to the State Treasurer, as a penalty, a sum of money equal to the interest on the amounts not paid at the rate of 1% per month from the time those amounts are due by the county treasurer until those amounts are paid. The sureties upon the official bond of the county treasurer shall be security for the payment of the penalty. The penalty under this Section may be recovered in a civil action against the county treasurer and his or her sureties, in the name of the People of the State of Illinois, in the circuit court within the county wherein the county treasurer is resident; and the penalty, when recovered, shall be paid into the State treasury. The civil action to recover the penalty shall be brought by the State Treasurer within 10 days after the failure of the county treasurer to pay to the State Treasurer any amounts collected by the county treasurer within the time required by this Section. Failure to bring the action within that time shall not prevent the bringing of the action thereafter. It is the duty of the State Treasurer to make necessary and proper investigation to determine what amounts should be paid under this Section.

The State Treasurer may waive penalties imposed by subsection (a) of this Section on a case-by-case basis if the State Treasurer finds that imposing penalties would be unreasonable or unnecessarily burdensome because the delay in payment was due to an incident caused by the operation of an extraordinary force, including, but not limited to, the occurrence of a natural disaster, that cannot be foreseen, that cannot be avoided by the exercise of due care, and for which no person can be held liable.

The total amount collected from the county treasurers shall be deposited into the Equity Fund, a special fund created in the State treasury.

Moneys in the Equity Fund shall be expended exclusively for the purpose of paying the amount ordered for equity surplus payments to Illinois property owners who have lost their property by a recorded tax deed, except that, whenever the State Treasurer determines that moneys in the Equity Fund exceed the amount required for the purpose of paying equity surplus payments resulting from property ownership being divested by tax deed, the State Treasurer may transfer the excess amounts from the Equity Fund to the General Revenue Fund.

The State Treasurer shall order payment of refunds resulting from orders entered on timely applications as provided in this Section from the Equity Fund only to the extent that amounts have been deposited and retained in the Fund.

This Section shall constitute an irrevocable and continuing appropriation from Illinois tax lien purchasers for the purpose of paying equity surplus payments to the divested property upon the order of the State Treasurer in accordance with the provisions of this Section and for the purpose of paying equity surplus to the divested property owner as required by the constitution and law.

(b) In counties of less than 3,000,000 inhabitants, each person purchasing any property at a sale under this Code shall pay to the county collector, prior to the issuance of any certificate of purchase, a nonrefundable Equity Fund fee of $150 for each item purchased under Section 21-240. A like nonrefundable sum shall be paid for each year that all or a portion of subsequent taxes are paid by the tax purchaser and posted to the tax judgment, sale, redemption, and forfeiture record where the underlying certificate of purchase is recorded. The $150 fee per certificate shall be paid by all certificate holders, including all trustees and governmental agencies holding certificates under Section 21-90.

(c) In counties of 3,000,000 or more inhabitants, each person purchasing property at a sale under this Code shall pay to the county collector a nonrefundable Equity Fund fee of $250 prior to the issuance of any certificate of purchase and for each item purchased under Section 21-240. In these counties, the certificate holder shall also pay to the county collector a nonrefundable fee of $200 for each year that all or a portion of subsequent taxes are paid by the tax purchaser and posted to the tax judgment, sale, redemption, and forfeiture record. The $250 fee per certificate shall be paid by all certificate holders, including all trustees and governmental agencies holding certificates under Section 21-90.

(d) The Equity Fund fees collected under subsections (b) and (c) shall be collected, disbursed, and accounted for as set forth in subsection (a).

(35 ILCS 200/22-101 new)

Sec. 22-101. Application for Equity Fund Payment.

(a) No payment shall be made from the Equity Fund, except upon a judgment on the application to the Equity Fund. Applications for Equity Fund payments shall be made to the county treasurer of the county in which the property is situated in the following form, completely filled in and submitted to the applicable county treasurer on or before one year after the tax deed is recorded, along with a nonrefundable application fee as designated by the applicable county treasurer:

APPLICATION FOR EQUITY FUND PAYMENT

Name.....................................................

Address..................................................

City State Zip...........................................

Telephone No.............................................

Email Address............................................

Date of Application......................................

I, ....... , owned or possessed ownership interest in the property commonly known as........., identified by parcel/property index number ......... until a tax deed was recorded on ......... in ........ County, Illinois. A copy of the ownership deed and tax deed are attached to this application.

....... (initial here) I agree to the County Assessor's determination of the estimated fair market value for the year in which the tax deed was recorded.

....... (initial here) I do not agree to the County Assessor's determination of the estimated fair market value for the year in which the tax deed was recorded and have provided a certified appraisal from an Illinois licensed appraiser stating the fair market value of the property lost to tax deed is $.... as of the date the tax deed was recorded. Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil Procedure, the undersigned certifies that the statements in this instrument are true and correct.

(b) Upon receipt of the application, the county collector, through the State's Attorney's office, shall review the application and request any additional necessary documents. If the application is approved, the county collector shall file a Petition for Equity Surplus in the court entering the order directing the issuance of tax deed. The court shall order the payment and determine the amount and enter an order directing the State Treasurer to pay the amount determined to the Equity Fund applicant from the Equity Fund.

(c) The county may pass an ordinance to charge an application fee of up to $500 per application for payment from the Equity Fund.

(d) The amount of the equity surplus shall be the fair market value of the property at the time the tax deed is issued, less:

(1) the lien for taxes, including all statutory fees and costs posted to the tax sale paid by the grantee; and

(2) any taxes paid by the tax purchaser after the last day of the redemption period but before the entry of the order directing the county clerk to issue a tax deed.

(e) If any owner or applicant with a valid ownership interest in the property lost to tax deed files a petition to vacate the tax deed pursuant to Section 2-1203 or 2-1401 of the Code of Civil Procedure or Section 22-85, then the one-year period set forth in subsection (a) for the filing of an application for payment from the Equity Fund shall be tolled from the date the petition to vacate the tax deed is filed through the date the circuit court issues a final judgment on the petition to vacate the tax deed.

(f) It is the intent of the General Assembly to encourage settlement and prompt administrative handling of property owners' equity surplus entitlement applications and to reduce expenses and costs incurred by claimants seeking just compensation under this Section. To that end, no attorney's fees shall be charged based on the amount of just compensation granted to the claimant under this Section. Attorney's fees shall not exceed $200 in connection with the preparation, filing, or advancement of any an undisputed application for payment from the Equity Fund. In the case of a disputed application for payment from the Equity Fund, attorney's fees shall be approved by the court granting the application upon proof of reasonable hourly attorney's fees charged for resolving the dispute.".