A federal judge has ruled in a class action lawsuit that Cook County’s “Tax Sales” violate the US Constitution, potentially putting the county on the hook for tens of millions of dollars to compensate people who lost their properties after falling behind on property taxes.
One of the attorneys for the plaintiffs, Lawrence Wood, with the non-profit Legal Action Chicago, says Judge Matthew Kennelly determined the tax sales violate two “basic constitutional principles.”
“What the court held is that the county violated the Fifth Amendment’s prohibition against taking property without providing just compensation and the county violated the Eighth Amendment’s prohibition against excessive fines,” Wood said.
The plaintiffs - roughly two thousand in the class - fell behind on property taxes and ultimately lost their properties to private investors, never having been compensated for their equity.
They did have 2 ½ years to pay what was owed before the deeds were handed over.
“The question now is, does the county have to pay damages for this, are they financially liable for the constitutional violations,” Wood said.
In some cases, he noted, investors could get properties valued at $300,000 by paying only a small fraction of the value.
The plaintiffs’ position is that the county is liable.
“They absolutely knew what would happen if they collected delinquent taxes by selling those taxes to tax purchasers who would eventually have the right to get the deed to homeowners’ properties.”
The US Supreme Court ruled for the plaintiffs in a similar case in Hennepin County, Minnesota after the Cook County lawsuit was filed in 2022.
“The US Supreme Court, in a very rare, unanimous opinion said Hennepin County violated the Fifth Amendment.”
Wood said the Eighth Amendment had been raised in that case, as well, but the court did not reach a conclusion on that.
The Cook County Treasurer, Maria Pappas, has called attention to this issue in the past.
The legislature has yet to act to change the system.
The attorneys for the plaintiffs said the legislature will now have to address this issue.