2013 COOK COUNTY SCAVENGER SALE
OPPORTUNITY FOR SOME, TRAGEDY FOR OTHERS
The Scavenger Tax Sale is here once again and the Cook County Treasurer will auction off thousands of tax delinquent properties to the highest bidder, more often then not for the minimum bid of $250. However, as a result of new legislation the Scavenger Sale will now offer properties that are THREE YEARS OR MORE tax delinquent as opposed to TWO YEARS OR MORE delinquent. This represents a significant step backwards in the war on community abandonment. Prior to 1986 the Scavenger Sale only offered property FIVE YEARS OF MORE delinquent. This led to an enormous build up of tax delinquent property. The sale took weeks to complete where now it's barely a week . In 1985 Illinois legislature passed House Bill 1412. This law changed eligibility from FIVE YEARS to TWO YEARS of delinquency. The legislative intent was to significantly reduce abandonment by using the SCAVENGER TAX SALE as a tool. Its effectiveness is questionable, yet the level of tax delinquency has been reduced. The forces behind this reduction may prove to be more related to market valuation and accessibility to capital. The problem of residential abandonment still looms large in many communities where it threatens the health, safety and welfare of its residents. Given the recent legislative change, it could take almost SIX years for an abandoned property to transfer title to a new owner (taxbuyer). WE CAN DO BETTER. There is no doubt that this new change is a step in the wrong direction. We need to reduce the time from tax delinquency to tax deed, not increase it.
The Scavenger Sale is the most popular of several tax collection & enforcement procedures through which tax liens are sold to tax buyers. It is used as a sort of last resort effort to motivate owners of chronically tax delinquent (now three years or more) to pay delinquent taxes with the threat of losing their property to tax buyers. The scavenger sale is a bi-annual sale of taxes on a property that is aimed at combating chronic tax delinquency. The taxes are sold for cash bids which more often then not are a small fraction of the property's fair market value. Of course this is the attraction, but don't be deceived. These properties have been offered at three previous tax sales and had no buyers. The question is either why or why not? High tax rates and over valuation often combine to make an annual tax sale purchase unreasonable. The scavenger tax sale then offers a much much lower acquisition cost or lien to value (LTV).
Tax delinquency is on the rise again after a decade of decline. We saw tax delinquency significantly decrease as the real estate market rose to historic highest fueled by the new flood of capital in the real estate mortgage market. Then we saw tax delinquency further depressed by banks protecting their collateral during mortgage foreclosures.
Each year thousands of people lose their homes because they can not pay their ever increasing property taxes. The elderly, sick, unemployed as well as just plain ordinary folk are victims of a system that was designed to help finance local schools and government, not drive people out of their homes. The Real Estate Tax Institute (TRETI) through it’s Cook County Tax Relief Program (CCTRP) is offering real assistance to low-moderate income homeowners who by no fault of their own, are about to lose their homes for non- payment of property taxes. We believe no one should lose their home because they can’t afford to pay their taxes.
History tells us that the tax delinquency is a precursor to community abandonment. The economic recession has caused more and more property owners to fall behind on their property taxes. And tax investors across the country are stepping up in record numbers to take advantage of what many perceive as one of the best investment opportunities available today. The tax buyers take on these high-yielding investments with the hope of receiving interest payments if redemption occurs, often in excess of 36%. With interest rates at all time lows these returns are attracting more and more investors. But most scavenger sale buyers hope redemption does not occur, seeking title to the property automatically wiping out mortgages and all other liens. Tax deeds are issued free and clear of all liens and encumbrances. The idea is that tax sales give a property a fresh new start to encourage future tax payments.
The skyrocketing mortgage foreclosure rate has received lots of attention. We need to stop and think this thing through. People who are not making their house payment are probably not making their property tax payments. The tax lien foreclosure problem presents the owner with a much more difficult set of challenges than does mortgage foreclosure. For a significantly smaller liability the owner faces complete loss of any equity they may have accumulated. Mortgage foreclosure allows you to capture some portion of your equity. Interestingly enough many tax delinquent homeowners with 100% equity lose their homes for pennies on the dollar of fair market value. Mortgage foreclosure allows you a number of workout options. Tax lien foreclosures offers none. Title issues often interfere with borrowing efforts. Dysfunctional owners procrastinate to the last minute when it can often be too late to redeem or object to the issuance of a tax deed.
With the economy still faltering and the economic recovery significantly lagging in many minority populated communities, property values show signs of rebounding yet property owners continue to fall behind or abandoning their property. Washington DC has recently outlawed the taking of a persons home for back taxes. There is indeed a dark side of this business where homeowners lose their homes to a system initially designed to improve their way of living.
Under Illinois law, the Treasurer's Office is required to conduct a Scavenger Sale every two years. The 2013 Scavenger Sale, on which property taxes for three or more years are listed as delinquent and subject to sale, has been scheduled to commence on December 27, 2013. It will be conducted from 8:00 a.m. to 3:00 p.m. each scheduled day. Seat selection is first-come, first-served. At the discretion of the Treasurer's Office, these hours may be extended or shortened to accommodate the sale schedule. The sale is expected to be completed on January 7, 2014. The sale will be conducted in the Lower Level Conference Room B at 69 West Washington Street, Chicago, Illinois, 60602.
This sale includes all properties in Cook County with three or more delinquent tax years from 1993 through 2011. A list of tax-delinquent properties will be published in community newspapers by township on November 20 and 21, 2013. Lists of these properties will be available for inspection at the Cook County Treasurer's Office in the County Building at 118 N. Clark Street, Chicago, Illinois, Room 112, beginning November 22, 2013. Lists of properties will also be available for inspection in the Cook County Clerk's Office, Room 434.
The Delinquent Tax List will be available for purchase November 22, 2013, in paper form or CD, for $250. Payment must be made in Room 112 of the Treasurer’s Office. The Purchaser will be provided with a receipt, and then must bring the receipt to the Tax Sale Department, Room 112, to receive a copy of the list.
Registration for the sale will begin at 9:00 a.m. on November 22, 2013, and will end at 4:00 p.m. on December 19, 2013. There is a non-refundable $100 Registration Fee required for each buyer to participate in the Scavenger Sale. Payment must be made in Room 112 of the Treasurer’s Office. There, you will receive a receipt that must be presented when submitting registration forms to the Tax Sale Department in Room 112 of the Treasurer’s Office. The fee is strictly for registration and will not be applied to any successful bids.
All payments for anything connected with the 2013 Scavenger Sale must be made using certified or cashier’s check, money order, or cash. No business or personal checks or credit cards will be accepted. Checks must be in the exact amount of the payment due. No change will be made on a non-cash transaction. During the sale, each buy sheet must be paid with a separate cashier’s or certified check or money order in the exact amount required for that buy sheet.
Properties, on which delinquent tax liens will be sold, are sold AS IS. The delinquent taxes on the parcels offered for sale are described solely by their Property Index Number (PIN), and NOT the common street address. The Treasurer’s Office does not assume any responsibility, implied or otherwise, as to the accuracy of street addresses and/or property classifications, or to the legal status or condition of the properties. It is the responsibility of each buyer to research the property location, classification, nature and condition of any property or improvements prior to the sale. All sales are final.
CLICK HERE TO DOWNLOAD A COPY OF THE 2013 SCAVENGER SALE REGISTRATION PACKET
2013 COOK COUNTY SCAVENGER TAX SALE REGISTRATION MATERIALS.
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