In re Cnty. Treasurer & Ex Officio Cnty. Collector of Lake Cnty.

2022 IL App (2d) 210689

222 N.E.3d 880

469 Ill.Dec. 119

IN RE Application of the COUNTY TREASURER AND EX OFFICIO COUNTY COLLECTOR OF LAKE COUNTY Illinois, for Judgment and Order of Sale Against Real Estate Returned Delinquent for the Non-Payment of General Taxes and Special Assessment for the Year 2014 and Prior Years

(FINA IP, LLC, Petitioner-Appellee v. Mark Eaton, Respondent-Appellant).

No. 2-21-0689

Appellate Court of Illinois, Second District.

Filed December 28, 2022

Mark L. Shaw and Jennifer C. Neubauer, of Shaw Law Ltd., of Waukegan, for appellant.

Terry J. Carter and Jamie L. Schmidtke, of Carter Legal Group, P.C., of Chicago, and Paul M. Bach, of Bach Law Offices, Inc., of Northbrook, for appellee.

OPINION

JUSTICE JORGENSEN delivered the judgment of the court, with opinion.

¶ 1 Petitioner, FINA IP, LLC (FINA), was assigned delinquent taxes, purchased in November 2015, on property in Lake Villa that was owned by respondent, Mark Eaton, which triggered a redemption period that (as later extended) expired on June 29, 2018. In February 2018, FINA petitioned the circuit court, under the Property Tax Code ( 35 ILCS 200/1-1 et seq. (West 2018)), to issue a tax deed, asserting it was entitled to the deed if Eaton failed to redeem on or before the deadline.

¶ 2 Less than one month before the expiration of the redemption period, on May 31, 2018, Eaton petitioned for relief under Chapter 13 of the United States Bankruptcy Code (Bankruptcy Code) ( 11 U.S.C. §§ 1301 to 1330 (2018) ), triggering an automatic stay (id. § 362) that enjoined FINA from proceeding any further in the circuit court. On June 25, 2021, on FINA's motion, the bankruptcy court lifted the stay as to FINA's claim, and FINA proceeded on its petition in the circuit court. After a hearing, on August 20, 2021, the court granted the petition, and it later denied Eaton's motion to reconsider.

¶ 3 Eaton appeals, arguing the circuit court erred by granting FINA's petition, because he paid directly to the county clerk the full redemption amount on August 16, 2021, four days before the deed was issued. We affirm.

¶ 4 I. BACKGROUND

¶ 5 A. The Relevant Provisions of the Property Tax Code

¶ 6 To better frame our discussion, we briefly summarize the relevant provisions of the Property Tax Code. Property taxes are due the year after the year in which they accrue and, in counties with fewer than 3 million people, such as Lake County, are paid in two equal installments, on June 1 and September 1. At the beginning of the year in which taxes are due, "[t]he taxes upon property, together with all penalties, interests[,] and costs that may accrue thereon, shall be a prior and first lien on the property, superior to all other liens and encumbrances." 35 ILCS 200/21-75 (West 2018). The lien attaches in favor of the county, and when the taxes are paid, the lien is extinguished. Id.

¶ 7 When the taxes are not paid, the county tax collector (in this case the county treasurer) may, within 90 days after the second installment is due, apply for a judgment and order of sale. Id. § 21-150. Within 120 days of the date the second installment is due, the circuit court must "hear and determine the matter" (id. ), and if judgment is rendered, the collector, as relevant here, may sell the property at an annual sale (id. § 21-190).¹

¶ 8 At the annual sale, persons wishing to purchase the property place bids based upon the percentage of penalty (i.e. , interest) they are willing to accept on the delinquent taxes, which is capped by statute. Id. § 21-215. The person willing to accept the lowest penalty percentage is the purchaser of the property. Id. If the purchaser pays all taxes, interest, and costs due, the county's lien is extinguished, and the county clerk must issue to the purchaser a certificate of purchase that describes the property sold and lists "the date of sale, the amount of taxes, special assessments, interest and cost for which [the property was] sold and that payment of the sale price has been made." Id. § 21-250.

¶ 9 The sale of the property triggers a redemption period, in which the property owner may "redeem" the property by paying the certificate amount, plus the accrued penalty (calculated by multiplying the certificate amount by a multiple of the penalty bid), the total of all taxes, special assessments, interest, and costs that became delinquent after the sale and before the expiration of the redemption period and were paid or redeemed by the holder of the certificate of purchase (together with a penalty), and certain other charges and fees (redemption amount). Id. § 21-355. The length of the redemption period depends on the type of property at issue. When, as here, the property is improved with a single-family residence, the redemption period is two years and six months. Id. § 21-350(b). However, the purchaser (or his or her assignee) may extend the redemption period, but to no more than three years from the date of sale. Id. § 21-385. The certificate of purchase, which the purchaser may assign (id. ), represents, (1) if the property owner redeems, the right to payment, via the county clerk, of the delinquent taxes and accrued penalty (id. §§ 21-345 to 21-397), or (2) if the property owner fails to redeem by the deadline, the right to petition the circuit court for an order directing the clerk to issue a tax deed (id. §§ 22-5 to 22-95).

¶ 10 If the property owner (or some other interested party) does not redeem the property before the expiration of the period, then the purchaser may obtain from the county clerk a tax deed, making it the legal owner of the property. See id. § 22-55 (a tax deed conveys merchantable title). To do so, the purchaser must comply with certain notice requirements and, at least three months but not more than six months before the expiration of the redemption period, file a petition asking the circuit court to enter an order directing the county clerk to issue the deed. Id. §§ 22-5 to 22-30, 22-40. The property owner may still redeem the property after the petition is filed, but, once the redemption period expires, the purchaser may apply to the court for an order on the petition. See id. § 22-30. Upon application, the court must direct the county clerk to issue the deed if it is satisfied that (1) "the redemption period [has] expire[d] 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"; (3) "all forfeitures and sales which occur subsequent to the sale have been redeemed"; (4) "the notices required by law have been given"; (5) "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 (6) "the petitioner has complied with all the provisions of law entitling him or her to a deed." Id. § 22-40. The purchaser must obtain the deed and record it within one year after the expiration of the redemption period; otherwise, the certificate of purchase or deed, and the underlying sale, are void, and the purchaser is not entitled to reimbursement. Id. § 22-85. However, an injunction or court order, such as the automatic stay in bankruptcy proceedings, that prevents the purchaser from doing so tolls the one-year period. Id.

¶ 11 With this basic framework in mind, we turn to the relevant facts, which are generally undisputed.

¶ 12 B. FINA Purchases Delinquent Taxes on Eaton's Property

¶ 13 Eaton was the owner of property, which was improved by a single-family residence, on Parma Avenue in Lake Villa. Eaton failed to pay the property taxes for 2014 and, on November 16, 2015, Sitesale, Ltd., purchased the delinquent taxes at an annual sale and was issued a certificate of purchase. Because the property was Eaton's residence, the sale triggered a two-year, six-month redemption period that expired on May 16, 2018. Sitesale, Ltd., later assigned the certificate to FINA, and FINA extended the redemption period to June 29, 2018.

¶ 14 C. FINA Petitions for a Tax Deed

¶ 15 On February 8, 2018, FINA petitioned the circuit court for an order directing the county clerk to issue it a tax deed. It alleged it had purchased the delinquent 2014 taxes on the property, the redemption period (as extended) would expire on June 29, 2018, and it was entitled to a tax deed in the event Eaton failed to redeem by the deadline. There is no dispute that FINA complied with all applicable notice provisions.

¶ 16 D. Eaton Petitions for Relief Under the Bankruptcy Code

¶ 17 On May 31, 2018, less than a month before the expiration of the redemption period, Eaton petitioned for relief under Chapter 13 of the Bankruptcy Code, triggering the automatic stay and preventing FINA from proceeding on its petition. On October 5, 2018, the bankruptcy court confirmed Eaton's Chapter 13 repayment plan, which provided that Eaton would pay the redemption amount and, presumably, other debts² over a period of 60 months. Accordingly, on July 13, 2018, the circuit court placed the matter on its bankruptcy call and later granted FINA's motion to toll the time to take out and record the tax deed. See In re Application of the County Treasurer & ex officio County Collector of Cook County , 309 Ill. App. 3d 181, 191, 242 Ill.Dec. 466, 721 N.E.2d 745 (1999) ( Bryant ) (though not required under section 22-85 of the Property Tax Code, the "better practice" is to file a motion to toll).

¶ 18 E. The Bankruptcy Court Grants FINA Relief From the Automatic Stay

¶ 19 On October 22, 2020, FINA filed a motion in the bankruptcy court, asking for relief from the stay. FINA alleged that, since it purchased the delinquent 2014 taxes in 2015, it (or its predecessors in interest) had paid the 2015, 2016, and 2017 taxes due on the property and the total amount due, as of Eaton's bankruptcy petition, was $14,634.11. After Eaton filed his bankruptcy petition, the 2018 and 2019 property taxes (due in 2019 and 2020), totaling $7954.71, had not been paid. Additionally, FINA...