In re Application of the County Treasurer (IL)

Summary: Only the owner of the certificate of title may extend the period of redemption after a tax sale.

In re Application of the County Treasurer, 2012 IL App (1st) 101976 (1st D, 2012).

Facts: In 2004, MB Financial Bank (MB Bank) bought property.  Sometime after the purchase MB Bank built a commercial building on the property, in which it operated a bank branch.  In June 2006, the property was sold to GJ Venture, LLC (GJ) at a tax sale.  On the date of the sale, the property was still a vacant lot.  The original date of redemption was to expire on June 12, 2008. 

On July 11, 2006, GJ transferred its interest in the disputed property to Sabre Group, LLC (Sabre).  Three days later on July 14, 2006, the county clerk issued a certificate of purchase to GJ.

On October 10, 2006, GJ delivered a take notice to the county clerk to mail to the last assessed tax payer.  This letter informed the last tax payer that the property had been sold to GJ at a tax sale, informed them of the two year period of redemption, and stated that if the period of redemption passed, a petition for tax deed would be filed.

On April 10, 2008, GJ filed a notice stating that they were the owner and holder of certificate of sale, and that they wanted to extend the period of redemption to July 25, 2008.  On July 1, 2008, Heather Ottenfeld stated that she was the attorney for the owner and holder of certificate sale, and it wanted to extend the redemption period to November 26, 2008.  Sabre’s name appeared on neither petition.

On July 18, 2008, MB Bank was served by a sheriff with a notice of tax sale, and on July 22, 2008, MB Bank was served with summons.  On October 6, 2008, the county clerk sent MB Bank an estimate of redemption.  On December 3, 2008, MB Bank sent a check payable to the county for the grand total of the amount owed in taxes.  The county clerk sent the check back because the redemption period had passed.

On January 2, 2009, Sabre filed an application for an order directing the county clerk to issue a tax deed.  On January 29, 2009, the matter was heard in the absence of MB Bank and taken under advisement.  On February 4, 2009, Sabre assigned the certificate of purchase to CCPI, and on February 11, 2009, the court ordered the clerk to execute a tax deed.  CCPI recorded the tax deed on November 4, 2009. 

In December of 2009, MB Bank filed a motion to, among other things, declare the tax deed void based upon (I) Section 22-85 of the Revenue Code, which requires tax deeds to be taken out within a year after the period of redemption ends, and (II) 735 ILCS 5/2-1401, seeking relief from the judgment because the tax deed was procured by fraud.  CCPI filed a petition to strike and dismiss counts (I) and (II) of the motion because: (1) the pleadings constituted and impermissible collateral attack on the tax deed, (2) it was factually inconsistent, (3) it failed to sufficiently plead fraud, and (4) failed to exercise the due diligence required under Section 2-1401 of the Code of Civil Procedure. The trial court granted the petitioner’s motion finding that the extension notices were valid and there was no fraud.  MB Bank appealed.

Holding: Reversed and remanded with directions.  The appellate court rejected the argument that MB Bank was barred from a collateral attack by Section 22-45 of the Revenue Code.  Section 22-45 states that tax deeds are incontestable except by direct appeal or by a Section 2-1401 petition under Civil Procedure.  The appellate court held that it had the duty to clear void judgments, and that the collateral attack based upon Section 22-85 was that there was void order.  Section 2-1401(f) states that petitions alleging void orders are not subject to the general requirements of Section 2-1401 and therefore CCPI’s collateral attack argument lacked merit.

To determine the validity of the extensions, the appellate court looked at the language of Section 21-385, which provided that the “purchaser or his or her assignee of property sold for nonpayment of general taxes may extend the period of redemption at any time before the expiration of the original period of redemption.” 35 ILCS 200/21-385.  The appellate court rejected the argument that says the purchaser or their assignees may extend the period of redemption regardless of who owns the certificate of title.  35 ILCS 200/21-350 states that the period of redemption ends after two (2) years except when extended “by the certificate holder as provided in Section 21-385.” When Sections 21-385 and 21-350 are read together, only the owner of the certificate of title may extend the redemption period.  For these reasons, GJ’s extension request was invalid and the redemption period ended on June 12, 2008. Because the redemption period had already terminated, Sabre’s July 1, 2008 attempt to extend the redemption period was invalid. The tax deed was required to be recorded by June 12, 2009, and was actually recorded on November 4, 2009.  For those reasons, the deed at issue was void and the trial court’s holding was reversed.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 07/23/2012 - 1:28pm