# Tyler v. Hennepin County & the Illinois Fix (HB4537) This article explains the U.S. Supreme Court's ruling on "home equity theft" (a term coined by Pacific Legal Foundation) in property tax sales, why Illinois is the focus of reform, and how Illinois House Bill 4537 (HB4537) would change the state's tax-sale system. > Status: current as of May 31, 2026. [HB4537](https://ilga.gov/Legislation/BillStatus?DocNum=4537&GAID=18&DocTypeID=HB&LegId=165364&SessionID=114) passed the Senate on May 29, 2026 (56-1-1) and the House on May 31, 2026 (80-35). Pending Governor Pritzker's signature. ## The Supreme Court case **Citation:** *Tyler v. Hennepin County, Minnesota*, 598 U.S. 631 (2023). Decided May 25, 2023, unanimous (9–0), opinion by Chief Justice Roberts; Gorsuch concurrence joined by Jackson. Docket No. 22-166. **Facts.** Geraldine Tyler, a 94-year-old Minneapolis woman, owned a condominium that accumulated about $15,000 in unpaid property taxes (roughly $2,300 in base tax plus ~$12,700 in interest and penalties). Hennepin County seized the condo, sold it for $40,000, and kept the entire amount — including the ~$25,000 surplus above her tax debt. **Holding.** Tyler plausibly alleged that the County's retention of the surplus equity above her tax debt is an unconstitutional taking under the Fifth Amendment's Takings Clause. The government can collect what it is owed, but the surplus belongs to the former owner. Because the Court resolved the case on Takings grounds, it did not reach the Eighth Amendment Excessive Fines question; the Gorsuch/Jackson concurrence addressed it. **Effect.** As a constitutional ruling, it binds every state. States with "home equity theft" statutes must change them. ## Why Illinois matters - Per a Pacific Legal Foundation survey, Illinois is the only state that still has this practice on the books. - The Illinois constitution requires an annual tax sale. - Illinois's mechanism differs from Minnesota's. The Illinois county sells delinquent debt to private investors ("tax buyers"); if the owner can't redeem within roughly a 30-month window, the buyer can take the deed — capturing all the equity. - Researchers estimate Illinois tax buyers collected at least $148 million more than was owed between 2014 and 2021. - The pressure is now concrete: a December 2025 federal ruling (*Kidd v. Pappas*) found Cook County's tax-sale procedures unconstitutional, and Cook County's spring 2026 tax sale was suspended. ## The fix — HB4537 (104th General Assembly) **Vehicle-bill note.** HB4537 began as a local-government credit-card measure ("LOC GOV-CREDIT CARD AGREEMENTS" — still the displayed short title on the ILGA page). The Tyler fix was added in the Senate via **Senate Floor Amendment No. 2** (Sen. Celina Villanueva), which replaces everything after the enacting clause and rewrites the tax-sale provisions of the Property Tax Code (35 ILCS 200, Articles 21 and 22). Senate Floor Amendment No. 3 makes the judicial-tax-deed provisions prospective (apply only to tax certificates issued on or after the effective date). **Sponsors.** House lead Rep. Barbara Hernandez (with DeLuca, Cochran, Vella, González); Senate substance filed by Sen. Celina Villanueva; Senate President Don Harmon as alternate chief sponsor. **Status (as of May 31, 2026).** House passed the underlying bill 110–0 on April 8, 2026 (pre-Tyler version). Senate adopted the Tyler amendments and passed the bill 56–1–1 on May 28, 2026. House concurred and passed the amended bill 80–35 on May 31, 2026. Pending Governor Pritzker's signature. ### Core mechanism (Senate Floor Amendment No. 2) Moves Illinois from "private buyer takes the deed free and clear" toward a **county-as-trustee** model: - The county may acquire delinquent tax liens/certificates as trustee for all taxing districts (no cash needed) and may ask the court to issue a tax deed to the county **without** a judicial auction. - If it does, the Order for Issuance of Tax Deed must also order the county to offer each parcel at a **public tax deed auction within 120 days** of recording the deed. - Purpose of that auction: determine whether and how much surplus is owed to the former owner above the "judgment amount" (delinquent taxes, penalties, municipal advancements, pro rata county costs, posted costs). If nobody bids above that amount, no surplus is owed. ### Two recovery paths for the former owner 1. **Auction surplus.** If the winning bid exceeds the tax-deed judgment, the county trustee deposits the surplus with the county treasurer within 30 days, and within 60 days notifies interested parties that the previous owner may file a claim. 2. **Surplus equity fund (new §21-302) — the backstop.** A former owner who loses equity through a tax deed can petition to recover from a county-held surplus equity fund. The award is capped at the property's value as of the date the tax deed was issued, less any mortgages or liens, and further reduced by the taxes the buyer paid and anything already recovered at auction. Retroactive lookback: for tax deeds recorded in the 2 years before the effective date, claims can be filed within 2 years after the effective date. If the fund runs short, the county must cover the balance within 12 months of the court order. ### Key specifics - **Surplus equity fee (funds the fund, §21-296).** - Cook County (≥3M inhabitants): tax buyer pays a nonrefundable fee of 5% of total taxes/interest/penalties per certificate, capped at $1,000, plus $80 for each year of subsequent taxes paid. - Counties under 3M: fee set by the collector at up to $20 per item, plus a like sum per year. - **Fund administration (§21-296, §21-301).** The treasurer holds the fund as trustee and invests it under the Public Funds Investment Act. The county board sets the balance to maintain; excess sweeps to the county general fund once all potential claims are paid. - **Redemption timeline (§21-350).** Appears to extend the general redemption period to 3 years (from 2.5). Vacant, commercial/industrial, and 7-or-more-unit properties remain at 1 year. - **Existing indemnity fund (§21-305).** Retains an equitable-indemnity path for owner-occupants of 4-or-fewer-unit homes, with awards capped at fair cash value less liens and not exceeding $99,000 (higher only on proof of no fault/negligence). ### Two proposed design features - Cook County phases in. For the first 6 tax sales after the effective date, Cook does not take all properties; starting with the 7th sale and after, the county shall acquire all properties offered for the total tax amount due. In the interim, an optional pilot lets Cook acquire up to 100 homestead-exempt, lowest-tax-amount parcels per annual sale, with annual reporting to the General Assembly (§§21-191, 21-192). - Language access. Auction and surplus notices in Cook must appear in English, Spanish, Polish, and Mandarin Chinese. ## Related articles - [[Annual tax sale]] - [[Scavenger Sale]] ## Sources - [*Tyler v. Hennepin County* syllabus / opinion (U.S. Supreme Court)](https://www.supremecourt.gov/opinions/22pdf/22-166_8n59.pdf) - [SCOTUSblog case file](https://www.scotusblog.com/cases/case-files/tyler-v-hennepin-county-minnesota/) - [Justia (598 U.S. ___)](https://supreme.justia.com/cases/federal/us/598/22-166/) - [HB4537 Bill Status (ILGA)](https://ilga.gov/Legislation/BillStatus?DocNum=4537&GAID=18&DocTypeID=HB&LegId=165364&SessionID=114) - [HB4537 Senate Floor Amendment No. 2 (full text)](https://ilga.gov/legislation/billstatus/fulltext?LegDocId=211251&DocName=10400HB4537sam002&GA=104&LegID=165364&SessionId=114&SpecSess=00&DocTypeId=HB&DocNum=4537&GAID=18) - [HB4537 Senate Floor Amendment No. 2 (PDF)](https://ilga.gov/documents/legislation/104/HB/PDF/10400HB4537sam002.pdf) - [Coalition / SB 3940 context (Chicago Sun-Times)](https://chicago.suntimes.com/2026/02/12/plans-are-underway-to-get-rid-of-cook-countys-property-tax-sales-in-the-coming-years) - [HB4537 passes General Assembly, heads to governor (Chicago Sun-Times, May 31, 2026)](https://chicago.suntimes.com/real-estate/2026/05/31/illinois-lawmakers-legislation-homeowners-equity-property-taxes-debt-tax-foreclosure) - [HB4537 enrolled bill text (ILGA)](https://ilga.gov/Legislation/BillStatus/FullText?LegDocId=206711&DocName=10400HB4537enr&DocNum=4537&DocTypeID=HB&LegID=165364&GAID=18&SessionID=114&SpecSess=&Session=) - [Pacific Legal Foundation — Home Equity Theft](https://pacificlegal.org/case/tyler-v-hennepin-county/) (source of the "home equity theft" phrase; PLF represented Geraldine Tyler)