Alexandrov v. LaMont

If an owner of Illinois real estate does not timely pay county property taxes, the county may “sell” the property to a tax purchaser. The tax purchaser does not receive title to the property, but receives a “Certificate of Purchase” which can be used to obtain title if the delinquent taxpayer does not redeem his property within about two years. In this case, the property owner entered bankruptcy during the redemption period. The bankruptcy court held that, if there is still time to redeem, the tax purchaser’s interest is a secured claim that is treatable in bankruptcy and modifiable in a Chapter 13 plan. The district court and Seventh Circuit affirmed, first noting that the owner’s Chapter 13 plan was a success; because the tax purchaser’s interest was properly treated as a secured claim, the owner has satisfied the obligation, 11 U.S.C. 1327. Because Illinois courts call a Certificate of Purchase a lien or a species of personal property, the court rejected the purchaser’s argument that it was a future interest or an executory interest in real property. In effect, the tax sale procedure sells the county’s equitable remedy to the tax purchaser. View "Alexandrov v. LaMont" on Justia Law