Have you ever attended a tax lien auction in Illinois? If so, chances are you didn’t get a fair chance to bid. New legislation is aimed at correcting the auction process by requiring that tax lien sales across the state be videotaped in the hopes that this will resolve current issues regarding fair bidding practices. Another provision of the bill is that the past due property taxes will be forfeited in the case of a tie between two bidders – which is unlikely to happen as long as the auction is properly conducted.
The problem is that some counties have been observed discouraging free bidding which would naturally decrease the interest rate paid on a tax lien certificate. Just like Arizona, Illinois uses the decreasing bid, or bid down, system at auction. Bids on a certificate begin at 18 percent and go down from there with the person who bids lowest being awarded the tax lien. Tax lien certificate sales are conducted once a year, usually in the fall.
The legislation was introduced following a story printed in the Bellville News-Democrat that uncovered a former Madison County treasurer’s actions during tax lien certificate auctions. Apparently the bid was awarded to whomever who was in attendance at the sale and was the first to vocally bid 18 percent. This system was meant to reward cronies of the County office, leaving other bidders out in the cold.
Illinois counties actually conduct tax deed sales, too. In this state, they are referred to as Scavenger Sales. Up for bid are any properties with tax lien certificates that didn’t sell during the Annual Tax Sale and whose property taxes are delinquent by at least two years. These sales are held in the summer of odd-numbered years. That means you have an opportunity this year to purchase a tax deed in Illinois; start researching now so that you can profit! You can find more information about Illinois tax defaulted auctions here.
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