Category Archives: Real estate tax

Watch mail for Cook Co. suburban tax reassessments

Every three years, Cook County does the triennial reassessment of real estate tax bills.

Notices were just mailed to Barrington township. Evanston township notices were mailed July 15, 2010 and Barrington on July 8, 2010. These will be followed shortly by notices sent to other northwest suburban townships like Palatine, Schaumburg, Wheeling and Elk Grove.

Why does this matter?

Because this will be your only chance to protest your taxes for the next three years, that’s why.

The key thing here is to watch your mail for the reassessment notice because you only have 30 days from the date the reassessment notice is sent to protest your assessment.

The new assessments will affect the 2010 tax bill issued in the Fall of 2011.

How to protest Cook Co. real estate taxes now

Real estate taxes have remained level or increased while home prices have tanked. With lower home values, clients reasonably expect that they will be able to lower their real estate taxes to reflect the lower home prices. Cook County real estate taxes can be protested at two levels, the Cook County Assessor and the Board of Review. The Board of Review is now open in many Cook County townships and it may be worth filing a petition to lower your taxes. Here’s some background on how to undertake such a venture:

Can I protest taxes myself?

Yes, you can file a lack of uniformity complaint yourself with the Board of Review. The website is here and the forms and decent explanations are on the site. A lack of uniformity complaint means that you are claiming that you are not taxed uniformly with your neighbors.

How do I know when it is time to protest my taxes?

The Board of Review is currently accepting tax complaints. It opens by township. Palatine, Wheeling and Elk Grove townships are open right now, but won’t be for long. If your township is “closed” it is too late and you will have to wait until next year.

Do you handle real estate tax assessment cases?

No, I don’t. This is a specialty area of the law. I usually hire an attorney of my own to try to reduce the taxes on my house in Palatine. In my case, two out of three times, the tax bill was reduced and I was happy to pay someone to take care of the case for me.

What attorney should I hire to protest my taxes?

Most attorneys who handle real estate tax protests send mailings to homeowners when the assessor and board or review is accepting complaints. Some clients think that because the attorney sent a mailing then the attorney is somehow suspect, but that is not the case. All tax protest attorneys send mailings. Most times you sign a retainer agreement and send it in with no or a small payment of $50.00. The fee agreement pays the attorney 50% of the first year’s tax savings. This is a contingency fee agreement, so if the taxes are not reduced, you pay nothing. Richard Shapiro in Evanston, (847) 869-8686, and Christopher Walsh in Chicago, 312-372-1155,  are two attorneys I have referred clients to in the past. You will not meet with or talk to the attorney in most cases. The case is all handled through the mail.

Check your Cook Co. 09 tax exemptions online

If you bought a home in 2009, refinanced your mortgage in 2009 or recorded a deed into your living trust in 2009 please be sure to check to make sure that the county didn’t take away your homeowner’s exemption.  This video,  Tax Exemptions , explains that the county was yanking the homeowner’s exemptions of homeowners who refinanced. If that is the case, you must apply for a certificate of error to replace the exemption for 2009.

The Cook County Assessor’s website will now tell you if your 2009 exemptions (senior, senior freeze, homeowner’s and long-term occupant) are in place. Just click this link and enter the PIN for your property.

Generally,  homeowner’s do not need to re-apply for the homeowner’s exemption every year, unless the property was sold the prior year (or one of the other activities above happened). The senior freeze must be applied for every year.

On the subject of real estate taxes, there is a seminar at 7:30 pm on March 31 at the Village of Palatine Council Chambers on “How to Appeal your Real Estate Taxes Before the Board of Review” that may be worthwhile if you feel (like everyone) that you are over taxed.

Cook Co. 09 senior freeze and homeowner exemption forms are here

The forms to apply for the Cook County homeowner’s exemption for real estate taxes and for the senior freeze are now available on the Cook County Assessor’s website.

The senior freeze has to be applied for every year and the applicant has to be 65 or older and have an income of less than $55,000.00.

The homeowner’s exemption does not require an annual application. However, anyone who bought real estate in 2008 should fill out the homeowner’s exemption application (one time only) because the homeowner’s exemption drops off after a sale and must be re-applied for after the closing.

Cook County tax first installment 5% higher

I got my first installment of 2009 tax bill in my mailbox on Saturday. To be honest, I didn’t even open it. The first installment of taxes was always 50% of the last tax bill. There are no big increases in the first installment. It’s kind of dull.

Many are complaining (rightfully) that the installments are too close together. Another thing to complain about is this: The first installment is now larger than in previous years. It’s now 55% of last year’s tax bill.

Foreclosure and deficiency judgments

One sign of a terrible economy,  to me, is how many times per week I discuss with a client how foreclosure works. Clients are worried about foreclosure, but they are especially fearful that the foreclosing lender will obtaining a deficiency judgment against them.  If you check any real estate advice website like Trulia, there are many, many people asking about the effects of foreclosure and how deficiency judgments work. (Update: Illinois courts are now entering deficiency judgments routinely on first mortgages. This post discusses the increase in deficiency judgments.)  Here’s how  deficiency judgments work in Illinois:

Are deficiency judgments allowed in Illinois?

Yes.

What is a deficiency judgment?

If a property is foreclosed, it is sold at a sheriff’s sale. If the property owner owed $100,000 on his mortgage when he was foreclosed, and the property is sold at the sheriff’s sale for $80,000, then the lender can get a deficiency judgment for $20,000.00. This means a court order is entered saying that the owner owes the lender $20,000.00. (As discussed below, obtaining a judgment and actually collecting the judgment are two different things.)

When is a deficiency judgment entered?

Usually, the deficiency judgment is requested in the foreclosure complaint. The judgment is entered at the foreclosure sale confirmation hearing after the sheriff’s  sale at the end of the foreclosure.

Can the lender get a deficiency judgment if I was served by publication in the foreclosure?

No. You have to be personally served by the sheriff or process server. The lender cannot get a deficiency judgment if you were served by publication (as many homeowners are). Another way to get a deficiency judgment entered against you is if you file an “appearance” in the foreclosure case.

What are the chances of the lender coming after me for a deficiency judgment?

If the property was your primary residence, the chances are slim (my  estimate, totally unsupported by facts or statistics, is 5%) that a deficiency judgment will be entered. Very few deficiency judgments are being entered in Cook County according to attorneys I know who practice in the foreclosure area. If the foreclosed property was investment property ,or the mortgage was held by a small local lender, then the chances of a deficiency judgment increase greatly.

What can the lender take from me if they get a deficiency judgment?

A deficiency judgment is like any other judgment that is entered for an unpaid medical bill or unpaid credit card. After the judgment is entered,  the judgment holder serves you with a “citation to discover assets” and you have to go to court and produce a copy of your tax return and a list of your assets.  They use this information to garnish your wages or to take any non-exempt assets from you to pay the judgment.

What assets are exempt from collection after a deficiency judgment?

These items are exempt from judgment:  Life insurance, 401ks, IRAs, $15,000 in equity in a house ($30,000 for a married couple). If your house is titled as Tenancy by the Entirety (married couples and primary residence only) and provided the judgment is only against one, not both, of a married couple, then the entire house would be exempt.  Since we are talking about a foreclosure, it is unlikely that the judgment debtor will even have a house to worry about.  85% of wages are exempt from garnishment too.

How can I get rid of a deficiency judgment?

The only way to get rid of a deficiency judgment is to file a chapter 7 or chapter 13 bankruptcy. A chapter 7 wipes it out altogether. In a chapter 13, it is partially repaid.

Can’t I just give my other assets to my relative to hold for me?

You can gift assets to a relative. But any transfer to a relative or anyone else that is not “for value” can be undone as a fraudulent transfer.  Transfers to relatives are especially suspect. In addition, there is the risk that your relative will not repay you or may get divorced or file his or her own bankruptcy.

If my lender does not ask for a deficiency judgment in the foreclosure, can my lender file suit against me for a deficiency judgment after the foreclosure?

Yes, Illinois law specifically allows a lender to file suit against a borrower after a foreclosure as a separate collection lawsuit.  With first mortgages, this is very rare and most likely will not happen, unless the lender is a small bank or the property was not your primary residence. Some lenders holding foreclosed second mortgages (especially Citibank and Wells Fargo) now hand over the loans to collection agencies to file a separate lawsuit against the homeowner for breach of contract. Read more about that here.

Can my lender file suit against me for a deficiency judgment after I sell my house in a short sale?

Yes. The best practice is to negotiate a “no deficiency”  provision in your short sale.  If you can’t  get that from the lender, then you will have to wait it out and hope that the lender does not ask for a deficiency judgment in the future. Most likely they will not pursue the borrower, but you never know for sure.

If I deed my property back to my lender in a “deed in lieu of foreclosure” can my lender get a deficiency judgment against me later?

No. The lender cannot get a deficiency judgment. Unfortunately,  a deed in lieu of foreclosure is kind of the equivalent of a unicorn; one doesn’t exactly show up in your back yard every day.

How long is a deficiency judgment last?

A judgment in Illinois is valid for 7 years from the date it is entered.

I’ve heard that in a foreclosure my lender can 1099 me for “forgiveness of debt.” Can they 1099 me and get a deficiency judgment against me too?

Usually, if a lender 1099s you, the lender will not seek a deficiency judgment. This is just how lenders operate, not the law.  By law, the lender must issue a 1099 after a foreclosure or short sale. The issuance of the 1099 does not mean that the debt is erased by the lender. It just means that the forgiven debt is taxable to you.

If the lender 1099s you and later seeks a deficiency judgment, the lender would have to issue a revised 1099, that’s all. So the issuance of a 1099 does not bar a deficiency judgment. Technically, the lender can 1099 you AND file for a deficiency judgment. You have to keep in mind that the lender could still get a deficiency judgment after a 1099 is issued. The only sure elimination of both the 1099 and deficiency judgment is to file bankruptcy before the 1099 is issued.

There are several cases that deal with this topic: In re Zaika, a PA bankruptcy court case  and AmTrust v. Fossett in AZ are a couple that summarize the law.

If the foreclosed property was your primary residence,then you have no income from the 1099 by law under the Mortgage Debt Forgiveness Act. If the property was not your primary residence, then you will have phantom income from the 1099 to deal with.

The gnarley Cook 7% Expanded Homeowner’s Exemption

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Talk about confusing. The expanded homeowner’s exemption in Cook County is really hard to understand and worse to explain. The expanded homeowner’s exemption was the county’s way of gradually phasing in the increase in the assessments from the last triennial reassessment.

Basically, the homeowner’s exemption was increased so that, for example, in Palatine, we have the following homeowner’s exemption amounts in the following years:

26,000 – 2008 tax bill issued in 09
20,000 – 2009 tax bill issued in 2010
6,000 – 2010 tax bill issued in 2011

This means that your assessed value is decreased by the amount shown. A 6,000 decrease in the assessed value translates to about a $600.00 reduction in the tax bill.

The Cook County Assessor recently added a new calculator to its website. To use it, you need your Permanent Index Number. Just type in the PIN and the calculator will break down your expanded homeowner’s exemption. It’s actually pretty well done and helpful.