Here we go again: a $91,000 loss on asset acquisition due to poor validation of Cook county, Illinois taxes. I will discuss a real example from our review of due diligence performed by a 3rd party due diligence provider. In my first Bulletproof book, I discussed the importance of verifying the taxes for current and prior years. In Cook county, prior year taxes are sold to investors as a tax certificate for each prior delinquent year. Cook county is unique in the way that the treasurer does not show the full delinquent tax amount for prior years online. To get a true payoff, a Redemption Certificate is typically ordered for each tax year. The treasurer charges $10 to $15 per delinquent tax year to receive a payoff. In addition, the treasurer reports if consecutive years post tax sale were also paid by a tax sale investor and must be paid off with penalty. Properties with delinquent taxes are typically scheduled for a scavenger sale to investors which is where the certificates are purchased. Typically, the lender or servicer is NOT notified of a sale, so they should be proactive in monitoring for tax sale events in order to have a chance to redeem.
My recommendation is that as soon as you see an indication on the tax card that a Tax Certificate was sold for prior years, you should check for redemption and possibly order a Redemption Certificate from the treasurer
. Here are a few examples of red flags in Cook County.