CHICAGO, July 10, 2026 /PRNewswire/ -- Gov. JB Pritzker today signed into law landmark legislation pushed by Cook County Treasurer Maria Pappas to protect homeowners from losing their equity through property tax foreclosure.

The new law marks the most significant overhaul of Illinois' property tax foreclosure system in decades. It also brings the state into compliance with the U.S. Supreme Court's 2023 Tyler v. Hennepin decision, which held that governments can only keep the amount of foreclosure proceeds needed to pay the amount owed in delinquent taxes, penalties and fees.

For generations, Illinois property owners who fell behind on their taxes risked losing not only their homes but also any equity they'd accumulated over years of mortgage payments. Under the previous system, tax lien investors could ultimately acquire properties and keep all the owner's equity after paying off the tax debt, even when that debt represented only a small fraction of the property's value.

The new law ends that practice by ensuring that any equity remaining after taxes, interest and fees is returned to the former property owner.

"This legislation restores fairness," Pappas said. "When someone loses a property because of unpaid taxes, the government should collect what's legally owed and nothing more. Families deserve to receive the value they spent years building, not watch it disappear into the pockets of a tax buyer because of an outdated system."

The legislation, drafted by Pappas' office with input from Cook County Board President Toni Preckwinkle, other county treasurers and housing advocacy organizations, was sponsored by Sen. Celina Villanueva and Rep. Curtis Tarver, both Chicago Democrats.

A key feature of the new law is the creation of a tax-deed auction system that's been successfully implemented in other states. Under the new process, taxes, interest and fees will be paid from the proceeds of a public auction, with any remaining surplus equity returned to the former property owner.

Pappas recognized the work of her office's policy team, led by Policy Director Justin Kirvan, for helping usher the legislation through the statehouse in Springfield.

"Justin and our policy team approached this issue with determination and a clear goal of protecting homeowners," Pappas said. "Working alongside our legislative sponsors and advocates throughout Illinois, they helped build the broad support needed to deliver meaningful reform."

The law also begins a transition away from private tax buying in Cook County. Following six additional tax sales, expected to conclude by 2030, Cook County will acquire the liens against the homes of delinquent taxpayers. Removing the private profit incentive is expected to give struggling homeowners more opportunities to enter payment plans with the county before their properties are offered for auction as a last resort.

The reform is expected to better protect neighborhoods and homeowners by preserving generational wealth, increasing transparency and creating a more equitable property tax collection system that ultimately will keep more property owners on the tax rolls.

"This is a win for homeowners, communities and taxpayers across Illinois," Pappas said. "We've modernized a system that was long overdue for change while ensuring local governments continue to collect the revenue they need. It's a balanced approach that protects both taxpayers and the public interest."

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SOURCE Cook County Treasurer Maria Pappas