In the closing days of its September term, the Illinois Supreme Court heard oral argument in People ex rel. McGuire v. Cornelius, which poses a potentially important question for the tax and property law bars: what notice to the current owner of a property is sufficient to grant the court jurisdiction to finalize a tax sale?

McGuire began in 2008 when the petitioner purchased the delinquent real estate taxes for 2007 on a property in Joliet at a public tax auction. A few months later, the petitioner mailed the owner the statutorily required “Notice of Sale and Redemption Rights.” (35 ILCS 200/22-5.) According to the statute, in order to be entitled to tax deed, the buyer must provide the form to the clerk “completely filled in.” The petitioner’s form omitted the address and telephone number of the county clerk.

After one six-month extension of the redemption period, the petitioner filed its petition for a tax deed on the property. The petitioner requested the county clerk to send the owner by certified mail a completed “Notice of Expiration of Period of Redemption.” Although the required format for the form is nearly identical to the Notice of Sale, once again, the contact information for the clerk was omitted. The petitioner’s process server attempted eleven times to personally serve the Notice of Expiration on the owner, and the Notice was also published in a local newspaper in accordance with 35 ILCS 200/22-20. No one associated with the property appeared at the hearing on the petition for tax deed, and the petition was granted. Five months later, the respondent appeared, objected to the court’s jurisdiction and moved for relief from the judgment ordering the tax deed to issue. The respondent’s motion was granted and the order issuing the tax deed vacated.

The Third District of the Appellate Court affirmed. The Court concluded that because neither of the statutorily required notices were “completely filled in,” and strict compliance with the Tax Code was required in order to validate a tax sale, the sale was properly overturned for lack of the statutory notice. Justice Schmidt dissented, arguing that the technical defect did not render the tax deed void.

Counsel for the buyer led off the oral argument before the Supreme Court, arguing that the Third District had erred in finding that the flaws in the notices voided the tax deed. Counsel argued that because the only necessary jurisdiction was in rem, notice to the owner was irrelevant. At best, the flaw makes the order voidable, not void, counsel argued. Counsel argued that the phone number of the clerk is relatively easy to find – that’s not the sort of error which should rise to the level of invalidating the notice. Justice Kilbride asked whether the petitioner’s purchase was for the taxes for one year, or more. Counsel answered that the purchase was one year. Justice Kilbride asked whether the taxes were paid for 2008-2010. Counsel answered that his client had redeemed all the subsequent years’ taxes. Justice Kilbride asked whether the purchaser is obliged to notify the original taxpayer within a specific time. Counsel responded that the period of redemption on the initial take notice can be extended for a period of up to three years. Justice Kilbride asked whether there was a change in title or status between 2007 and 2011. Counsel said he didn’t know whether there was a change in the mortgage status. Justice Kilbride suggested that there was a reference in the brief to a release of the mortgage on the property. Counsel responded that the mortgage release would not have triggered anything. Justice Thomas pointed out that the statute requires that the taxpayer make payment within 90 days of the order overturning the tax deed, but the trial judge didn’t do that here. Counsel answered that there was an order at the trial court – it was raised in the motion to reconsider, but the Appellate Court didn’t address it. Justice Thomas asked whether counsel would have a vehement objection if the Court were to affirm and correct that. Counsel answered that the petitioner would ask for relief under Section 22-80 of the statute if the Court affirms. Justice Thomas noted that the Court could give the owner 90 days to pay from the date a new trial court order was signed.

Counsel for the original owner was next, and began by arguing that there was a very limited chance that his client would ever see the notice in a weekly newspaper. Justice Thomas asked counsel whether notice was insufficient. Counsel responded that the notice was designed to protect the owner’s due process rights. In a Section 22-10 notice, bold letters say that the property is being sold for delinquent taxes, and that the owner is urged to redeem immediately to avoid loss of ownership. The notice in this case had none of those warnings. Counsel argued that the mandatory forms have meaning in the statute. The property owner was never served with any of the notices. The Section 22-10 notice was never published. Chief Justice Garman noted that this was more than just a missing address and phone number then. Counsel answered yes, it goes to fundamental due process. Further, there’s a conflict of interest inherent in the statute since notice is entirely left up to the party trying to get ownership of the property. Justice Karmeier asked whether the notice complied with Section 22-10 requirements. Counsel answered that Section 22-20 notice is illustrative and not a limitation. Justice Thomas asked whether counsel had problems with the Appellate Court’s rationale. Counsel answered that because the tax buyer is making the notice, the legislature wants the property owner to be able to go straight to the county clerk. Owners shouldn’t have to ferret out the county clerk’s address and phone number. Justice Karmeier asked whether counsel argued that because the notice was missing data, that was tantamount to no notice at all – and if so, since the notice wasn’t served, what was the difference. So didn’t counsel’s case hinge on whether the Section 22-20 was sufficient? Counsel agreed, and argued that the petitioner could have and should have done more to notify the owner. Justice Thomas asked what the Court should do with the word “and” in Section 22-454. Would the Court have to read “and” as “or” in order to hold for the owner? Counsel noted that he had argued in his brief that there are instances where “and” does mean “or.” Justice Thomas noted that everyone is in agreement that the publication notice was published, and that it doesn’t require the address and phone number of the county clerk. So the Court still has to do something with the “and.” Counsel answered that in this instance, the statutory intent really should imply “or” rather than “and.” The notice that the legislature intended was the one set forth in Section 22-10, which was never published. Justice Thomas asked whether Section 22-454 doesn’t apply at all? Counsel said he wasn’t saying that; the problem was that the notice published doesn’t conform to the statute. Counsel argued that the petitioners are claiming that some notice is all that’s required, and that’s contrary to the legislative scheme and due process. Public policy in Illinois is not to aid the tax buyer in the missteps they’ve made, counsel concluded. Justice Thomas asked whether counsel’s suggestion regarding the 90 days issue was the same as the petitioner’s, and counsel responded that there was a timely tender.

As counsel for the petitioner began rebuttal, Justice Thomas asked who in their right minds would try to do a Section 22-10 notice if all they had to do was a Section 22-20 notice? Counsel answered that the statute authorizes a Section 22-20 notice only after the buyer has tried and failed to get a Section 22-10 notice served. Justice Thomas asked whether the petitioner was required to do both steps. Counsel said yes, and the owner has to show failure to comply with both prongs in order to vacate the sale. Counsel argued that there is no support at all for the proposition that the owner was not named as a party in the Section 22-20 publication notice. Therefore, Section 22-454 doesn’t support vacation of the deed order. The only other possible basis for vacation is Section 22-453, but there is no suggestion of fraud or deceit. Counsel argued that if the orders are void, then there’s a serious question how viable any tax title is. Justice Kilbride asked whether the notice missing the clerk’s office information was the Section 22-20 notice. Counsel answered that the statute sets forth eight items for publication notice. There was no suggestion that the Section 22-20 notice was defective. The question was the Section 22-10 notice which petitioner tried to serve. Justice Kilbride asked what in the record shows what the petitioner did as far as diligent attempts to serve. Counsel answered that there was no hearing, so the record merely reflects the private process server’s notes on the return of service.

We expect McGuire to be decided in four to six months.

Image courtesy of Flickr by Simon Cunningham and LendingMemo.com (no changes).