Confronted by police at the doorway of his family’s former Washington Heights home — the last remaining investment of his parents — Olumide Olupitan feared this was his last stand.
For Olupitan, five years worth of property tax debt and interest as he struggled financially became insurmountable. Just before Christmas in 2019, a Cook County judge handed the deed to the three-bedroom home over to a Chicago-area financial company that bought the debt in a county tax sale.
Two months later, sheriff’s deputies posted an eviction notice on the front door. Desperate to hold onto the property, Olupitan ignored the signs and stayed one more night.
“I was going to save my house,” Olupitan told the Illinois Answers Project.
But the next day, Chicago police led him away from the property in handcuffs. He was later released without charges.
As a Black former homeowner, Olupitan, 54, is far from alone in losing his house through the tax sale process. An Illinois Answers Project analysis of tax sale results and property records, and interviews with homeowners, revealed property owners in Black majority neighborhoods on Chicago’s South and West sides are the most likely to lose their homes through the sale process. It’s a system that critics say unfairly hits Black majority neighborhoods the hardest, robbing those communities of generational wealth.
Homeowners like Olupitan have a little-known, last-resort solution — but even that has a serious problem, which has gotten only worse. Olupitan is working to file a claim with the county treasurer’s indemnity fund. It’s a state-mandated trust designed to restore lost equity to evicted taxpayers who can prove to the county’s housing court judges that they didn’t know falling behind on tax payments would actually result in losing their homes.
Even if he’s successful, he won’t be getting his money anytime soon. The fund is $22 million in debt and eight years behind in paying people.
Records from the county treasurer’s office show 230 property owners are still awaiting payment on their indemnity judgments from as far back as 2014. In some cases, the county owes homeowners as much as $760,000.
Killing the 800-pound elephant
Cook County Treasurer Maria Pappas readily acknowledges the property tax sale system is broken.
“Year after year, a disproportionate number of properties on the list are in majority Black and Latino communities,” Pappas said. “Ultimately, there’s nothing about this system that works.”
Pappas said that her office is bound by state law, and there’s nothing she can do without changes at the state level. “How is it that 22,000 people owe less than $1,000 and we’re selling their homes? This is really a matter of slaying an 800-pound elephant,” Pappas said. “I need Springfield to wake up and kill the elephant.”
During the pandemic, Pappas postponed the annual sale for two years, to try to relieve homeowners in Black and Brown neighborhoods. More than 10,000 properties were removed from the auction list during that time.
But attorneys who represent clients in indemnity fund claim cases say the delay inadvertently put some residents looking for money from the indemnity fund at a disadvantage because it is subsidized by the fees tax purchasers pay at auction.
Olupitan was one of more than 25 Cook County residents evicted from their homes in 2020, just before Gov. J.B. Pritzker instituted a state-wide eviction moratorium. The homeowners evicted that year alone lost a combined total of more than $2.5 million in equity after missing payment on property taxes that amounted to only a small fraction of that amount, property and tax records show. And more than half of those evictions were enforced in majority Black neighborhoods — like Washington Heights, Englewood and North Lawndale.
As the evicted owners found housing miles away from the neighborhoods they’d invested in, a handful of private financial companies that buy thousands of delinquent tax bills every year for an average cost of $3,700, rehabbed and resold their homes.
Illinois’ system is an outlier since other states have outright banned the taking of equity through the tax sale.
“That’s really the issue here,” said Andrew Kahrl, a Virginia researcher who’s studied tax sales for nearly a decade. “In Illinois, you have this situation, where tax buyers acquire the lien, and the potential to literally get the property and all of its value for the price of a single unpaid tax bill. It opens the door for predatory practices.”
The end of tax sale and eviction moratoriums set off an avalanche of backed-up eviction proceedings across the desk of the county’s housing court this year. Property taxes and tax sales historically bore a heavier burden in majority Black and Brown communities than their counterparts in Chicago’s predominantly white, more affluent neighborhoods. And eviction experts and community advocates wonder how this trend will continue to change the landscape of neighborhoods historically hit the hardest.
Black homeowners hit hardest
This trend of tax sale evictions clustered in vulnerable communities is no surprise to academics who say the sale is a draconian system that has plagued the county’s Black and Brown neighborhoods for as long as it’s been in effect.
“The differences are pretty stark,” said Sheila Sutton, a former researcher at Housing Action Illinois. “It’s a powerful statement. Think about what it takes to get to the point of a tax sale eviction; there are several steps involved. Disproportionately, Black folks haven’t been able to access those sorts of off-ramps along the way.”
In 2021, the housing equity advocacy group studied the 1,400 tax sale evictions enforced by the county sheriff over the last decade. More than 90% of evictions took place in neighborhoods where Black or Brown people make up the majority of residents. More than 70% of those evicted every year as a result of the tax sale process are Black.
The Illinois Answers Project reviewed property records of each of the residential properties where evictions took place in 2020 and controlled for outstanding debts like mortgages or liens. Considering any remaining financial burdens, the Illinois Answers Project found the average home equity lost after eviction was at least $135,000, while the median cost for tax purchasers to get a lien on their properties was just over $2,000.
In Englewood, a family was evicted in January 2020 for a $1,618 tax debt on a three-bedroom, two-bathroom, single family home they bought 20 years ago. The home resold four months later for $280,000.
And in Auburn Gresham, a Chicago woman now in her 80s bought her home in 1985. When Nebraska-based Greymorr Real Estate purchased the woman’s $1,385 tax debt and petitioned the county for the deed to her property, the woman lost more than $50,000 in equity, property records show.
The result of a 1970 federal lawsuit, the treasurer’s indemnity fund is intended to assist beleaguered property owners. But its coffers are historically underfunded, and pandemic era moratoriums – which ultimately kept thousands of taxpayers from potentially losing their homes – only widened the wait times for former owners hoping to move forward from their losses.
DePaul’s Institute for Housing Studies reports that disparities in homeownership continue to be the largest contributor to the racial wealth gaps in Cook County. And advocates who study evictions say that without support from government officials this cycle of loss will continue in Black and Brown communities.
“Eviction is not just a consequence of poverty, but also a cause of poverty,” said Carl Gershenson, project director of the Eviction Lab at Princeton. “It’s a trap that makes it that much harder for a neighborhood that’s already struggling to pull itself up.”
A complicated process
Illinois’ tax sale law is not widely understood by many – including by the homeowners who find themselves battling to redeem their homes, or the lawmakers responsible for the statutes that govern the annual sale’s rules.
“The only people who understand it seem to be the people who most benefit by the current system,” said Bob Palmer, policy director of Housing Action Illinois.
From the point of notification that tax debt has been listed for auction to the point of eviction, taxpayers can spend more than three years racking up interest – at rates that double every six months – and fees that amount to more than their initial debts. And the powerful lobby representing tax purchasers in Springfield has thwarted many potential reforms intended to protect taxpayers.
In cities like New York and Washington, D.C., advocacy groups successfully changed state laws to require tax buyers to take responsibility for the fees accrued throughout the process. And in Michigan, the state’s supreme court deemed the taking of equity by county treasurers as a result of tax sales unconstitutional.
For the average taxpayer, filing a claim for money from the indemnity fund requires an attorney, something many former homeowners can’t afford. The treasurer’s office doesn’t publicize its fund, and state law requires taxpayers to sue the county treasurer and present a case proving they didn’t know missing a tax bill would result in losing their property.
Because the county’s coffers are historically underfunded, and judgment payouts can take years, vulnerable taxpayers often rush to make agreements with tax buyers. In many cases, homeowners commit their eventual indemnity payments to these companies in exchange for continuing to stay in their homes.
Records from the treasurer’s office show that only seven of the indemnity payouts will go directly to homeowners. Meaning the vast majority of indemnity funds will go to payees other than taxpayers evicted from their homes, many of them tax buyers.
As of May 2022, there are 230 judgments totaling more than $22 million waiting to be paid out by the indemnity fund; some taxpayers are still waiting on payments as high as $760,000. Many find these buyback agreements to be the quickest way to return to their homes and return to normal.
People like David Suarez, who lost his property after his wife hid their tax bills from him for years. Suarez filed an indemnity claim in 2016, and he entered a buyback agreement with the tax company that bought his debt. The claim was paid out six years later.
“If I waited on the county, I’d be waiting forever,” Suarez said.
‘Our home was a safe space’
Olumide Olupitan — known in his community as “Olu” — has a lot of jobs. A self-proclaimed hustler, the contractor, community organizer and promoter is perpetually working. When he needs a good night’s sleep, he gets it at his office. He lives there.
Located at South State and 29th Streets, his office, the Continental Africa Chamber of Commerce, features family photos, artifacts of Yoruba culture and historical documents like an original copy of Langston Hughes’ funeral program. Olupitan says all of it makes it feel more like home.
That’s because they all did once fill up a three-bedroom ranch in Washington Heights where Olupitan grew up.
Its backyard marked the finish line for after-school bike races between schoolmates. Its basement entertained the likes of Minister Louis Farrakhan and Congressman Gus Savage at house parties hosted by Olupitan’s parents, David and Mary, who paid off their $119,000 mortgage in 2003.
“It was quintessential middle class living,” Olupitan recalled. He and his younger brother, Oyedele, inherited the property debt free in 2014. They hoped it would become an asset they could pass down to their children.
But for the grieving brothers, still in shock over losing their parents, tax bills turned into arguments.
Olupitan says he had no clue that the county put their tax debt up for sale until 2018 when he got a letter from a financial corporation announcing they’d pursue ownership of the property. Illinois statute requires taxpayers be notified by the treasurer’s office when their debt is listed in the annual auction — Olupitan says he never got notice.
Records from the treasurer’s office show notification was mailed to the Washington Heights address before and after the property’s debt was listed in the sale. The mail was returned after the post office marked the property as vacant. Olupitan lived on and off for years with his family at the property, which was in disrepair.
Unfamiliar with the tax sale system, Olupitan tried to represent himself in court without a lawyer but had no luck.
The financial company spent just over a thousand dollars to buy the debt in 2016. It then resold Olupitan’s childhood home for $152,000 four months after evicting him, his wife at the time and their then 10-year-old daughter.
The family packed up and moved into AirBnBs, unable to live with friends or family because of the COVID-19 pandemic. More tragedy struck when his brother, Oyedele, was murdered six months later outside of a corner store blocks away from the home they’d lost.
As Olupitan flipped through a binder of legal documents, recounting his misfortunes, he perked up as he pulled out what he called his “secret weapon” out of a laminated cover.
It was a copy of Illinois the statute that outlines the qualifications for filing an indemnity claim. He remains hopeful that all isn’t lost.
“Our home was a safe space,” Olupitan said.
Contributing: Christian Elliott
Reporting on equity issues by the BGA is supported by Joel M. Friedman, president of the Alvin H. Baum Family Fund.