Illinois Southern District Judge Nancy Rosenstengel
EAST ST. LOUIS, ILLINOIS - A southern Illinois federal judge has joined her name to a growing list of judges ruling Illinois counties may have to pay up for seizing and selling people's homes and other property over comparatively small unpaid property taxes - and continuing to do so, even after the U.S. Supreme Court ruled the practice was unconstitutional.
On Sept. 30, U.S. District Judge Nancy Rosenstengel said she would allow a group of land owners to continue a class action lawsuit against Madison County, St. Clair County, Sangamon County, McDonough County and Henry County over the counties' continued use of so-called "tax sales" to resolve delinquent property tax collections.
The lawsuit was filed in April 2024 by a group of plaintiffs from those counties, including homeowners from Cahokia Heights, Swansea, Springfield, East Carondelet, East St. Louis and Cahokia, as well as a business from East St. Louis.
According to the complaint, filed in Southern District of Illinois federal court, all of the plaintiffs "were victims of institutionalized theft by their county government thanks to Illinois's property tax statutes."
In the ruling, Rosenstengel noted the plaintiffs had done enough to this point to back up their claims that the counties' tax collection practices could amount to unconstitutional "takings" prohibited by the U.S. Constitution's Fifth Amendment and unconstitutional "excessive fines" under the Eighth Amendment.
"... Plaintiffs have more than adequately alleged facts that demonstrate the disproportionality of the sanction to the gravity of the offense," Rosenstengel wrote. "The named Plaintiffs here each allegedly forfeited a surplus value that was between two and more than 10 time the taxes they owed."
The lawsuit was similar to others filed in northern Illinois by homeowners in the Chicago area and north central Illinois against the governments of some of Illinois' largest counties in 2023.
All of the cases trace their origins back to a U.S. Supreme Court decision that same year which observers believed would inevitably lead to court fights threatening longstanding property tax collection systems in Illinois and other U.S. states.
In that ruling, the high court ruled so-called "total forfeiture" delinquent property tax sale regimes can be considered unconstitutional takings in violation of the Constitution's Fifth Amendment.
In the decision, known as Hennepin v Tyler, the Supreme Court sided with a homeowner in Hennepin County, Minnesota, whose $40,000 condominium was seized and sold by the county over $2,300 in unpaid property taxes, plus $12,700 in penalties and interest. Hennepin County then kept the surplus from the sale, in a practice dubbed by critics as "home equity theft."
In a unanimous ruling authored by Chief Justice John Roberts, the court said the county's tax sale went too far, and the county should only be allowed to collect what is owed, with the homeowner retaining the surplus.
Some justices also said such "equity theft" also amounts to violations on the Eighth Amendment's ban on "excessive fines."
In Illinois, homeowners have for decades similarly lost their homes over thousands of dollars in unpaid property taxes under the state's Property Tax Code tax sale system.
Under the tax sale process, the unpaid taxes - known as tax debt - is sold by the county, typically to a real estate investor seeking to profit by either selling the property or keeping it and renting it to others.
Illinois law gives homeowners 30 months to redeem the property by paying off the tax lien. Throughout that redemption process, however, the debt continues to grow through the addition of interest and fees. Ultimately, the investor and county can choose to seize the property, evict the residents and sell the property for full market value, potentially reaping massive profits.
Critics in Illinois have noted this process has typically victimized those least able to absorb such a financial hit, including elderly and black homeowners living in low income communities.
Despite the Supreme Court ruling and the mounting class action lawsuits, Illinois state lawmakers and county governments have essentially ignored the shift in the legal and constitutional ground on which the state's tax collection system had been built.
As of 2025, Illinois remains the only state in the country to take no action to reform its property tax collection system to come into line with the Supreme Court's Tyler ruling.
Instead, counties have argued in court that they can't be sued, because they were acting as required by law; and because the tax sales were conducted under court orders, meaning federal courts cannot be asked to overturn those decisions.
Or they have argued the Tyler decision isn't applicable in Illinois, because people who lose their homes at tax sale are given ample opportunities to contest the tax debt, redeem the tax debt and then, after the homes are sold to satisfy the tax debt, to pursue their lost home equity from their county's so-called "indemnity fund."
And they argue they can't be sued because it is private investor buyers, not the counties or any other Illinois governments, who keep the windfall at tax sale.
Daniel Suhr
All of those arguments, however, have been rejected by federal judges hearing the cases in northern Illinois, and now, in southern Illinois, as well.
In recent months, the decisions to allow the court actions to move forward have triggered a different, but related, court fight, as county defendants have asked the federal courts to also require the Illinois state government to share in any judgments or settlements. The counties say they were only following state law, and the state's Democratic supermajority in Springfield has refused to take any action to change the law or help the counties in any way.
Illinois Attorney General Kwame Raoul, however, has recently asked the court to dismiss the counties' counterclaims, asserting the counties must be made to pay, by themselves.
Several reform proposals are pending in the Illinois General Assembly, which could come up for a vote during the fall veto session. However, to date, the proposals remain frozen amid a continuing squabble between the various government players involved and the tax buyers, all of whom are demanding the other shoulder the blame and the cost that all observers recognize will ultimately come due.
In the meantime, Rosenstengel's ruling could serve to further ratchet up the pressure, as still more Illinois counties face a potentially massive payout, should the class action plaintiffs ultimately prevail in court.
In her ruling, Rosenstengel noted the county governments have done nothing, either before the Tyler ruling or after, to adjust their tax sale practices to allow homeowners and other land owners to keep the equity in their property, once it was sold to cover delinquent property taxes, or to come up with a different collection process altogether.
She noted the plaintiffs have done enough at this point to back their contention that "the Counties 'made a policy choice, when transferring the property, not to condition the transfer on return of the surplus value to the property owner'" nor "to ensure their residents obtain just compensation," within the confines of the state's property tax laws.
The judge dismissed some of the counts in the complaint, but allowed the core constitutional claims, alleging violations of the Fifth and Eighth Amendments, to move forward.
She said she would reserve the decision on whether the lawsuit can remain a class action to be decided at a later stage in the proceedings.
Plaintiffs in the action filed in southern Illinois federal court are represented by attorneys from Chicago-based constitutional law firm Hughes & Suhr.
Attorney Daniel Suhr, one of the lead attorneys on the case, said the ruling "is a strong foundation for the plaintiffs' ultimate success in this case."
“This ruling is a major victory for taxpayers," Suhr said in a statement following Rosenstengel's ruling. "Many hardworking Illinoisans see a lifetime of savings taken from them by these unconstitutional policies from county governments.
"The U.S. Supreme Court said two years ago that these sorts of laws are unconstitutional, yet these counties have persisted with these same policies, which hit low-income and elderly residents especially hard. We appreciate this ruling and will press forward to ensure that our clients and all Illinoisans are protected from unconstitutional equity theft.”
