Property tax foreclosures illegally stripped Cook County homeowners of their equity, federal judge rules
A federal judge ruled in a class action lawsuit that the way Cook County handles unpaid property taxes violates the U.S. Constitution, a win for homeowners who lost their properties — and their built-up equity — in tax sales.
U.S. District Judge Matthew F. Kennelly wrote that the county's annual tax sales have resulted in violations of the Fifth Amendment's prohibition against taking property without just compensation and the Eighth Amendment's ban on excessive fines.
In his opinion issued Monday, Kennelly said it was "obvious" that the way the tax sales were set up could cause harm.
"Cook County arguably had every piece of information needed to know that its failure to compensate property owners created a high risk of constitutional violations," Kennelly wrote.
When homeowners fall behind on their property taxes, the county can obtain a judgment and order of sale against the property to make sure the taxes, interest and penalties get paid.
Each year, the county holds a tax sale so buyers, often private investors, can compete for the right to pay the taxes, fees and penalties to the county. If the homeowner doesn’t pay their debt back within 2½ years, the tax sale buyer can go to court to obtain a tax deed and take the property free and clear. When that happens, the original homeowner loses their property and any equity they've built up.
Homeowners could try to recoup some of their loses through the Cook County Tax Sale Indemnity Fund, but the special fund is chronically underfunded and there’s a six- or seven-year backlog of requests, according to the judge's ruling.
The lawsuit names Cook County Treasurer Maria Pappas, whose office administers the annual tax sales, as the defendant.
Pappas' office declined to comment, citing ongoing litigation to determine whether the county is financially liable for the homeowners' losses.
The class action lawsuit represents "more than 1,700" people who lost their homes in tax sales in recent years, according to Lawrence Wood, supervisory attorney at the nonprofit Legal Action Chicago and one of the attorneys for the plaintiffs.
Wood said the judge's decision effectively halts tax sales in Cook County because the county has been put on notice that it has violated people's constitutional rights.
"This is an incredibly important ruling, and it's very positive for us. The judge was very clear that this was a violation," Wood said.
The original complaint was filed in December 2022.
The lawsuit said the tax sale program "has especially pernicious and disproportionate effects on communities of color," with more than 75% of the parcels in the 2021 tax sale in majority Black and Latino neighborhoods, even though Black and Latino people make up only 52% of the county population.
Pressure has been mounting for a statewide legislative solution. Pappas and others have pushed for reforms that would ensure homeowners are fairly compensated after a property tax foreclosure. Cook County’s fall tax sale was delayed until March 2026, in hopes that legislation can be passed.
A 2025 investigation by the Investigative Project on Race and Equity and Injustice Watch found the initial debt that cost people their homes was collectively $2.3 million, but the homes had a total market value of more than $108 million — with the sales representing, in many cases, a transfer of wealth from Black neighborhoods to affluent outside investors.
Plaintiff Michelle Kidd, a bus driver, bought her Maywood home in 2011 and didn't have a mortgage. Kidd became disabled and fell behind on her taxes in the mid-2010s, according to the complaint.
Cook County sold the tax lien on her home in April 2017 for $2,340.44, which was the amount of unpaid taxes, interest and fees. When Kidd was unable to repay the outstanding debt before an October 2019 deadline, the tax buyer was able to obtain a tax deed to her home.
Kidd got nothing for the property, which was valued at $166,220, according to the judge's ruling.
The other plaintiff, Goyce H. Rates, inherited her Evanston home in 2014 but failed to pay property taxes on two parcels of land on which her home sits.
The parcels' tax liens were sold by Cook County in May 2019 to two buyers for $9,025.45, the total of unpaid taxes, interest and fees. Rates couldn't pay the money back in time, and she lost her home that was valued at $389,060.
The judge's order left open the question of whether the county is financially liable for the homeowners' losses, and if so, how they should be compensated. Briefings on that are due Friday with a status hearing set for Dec. 16.