How are Illinois real property taxes typically structured with respect to the timing of payment, and why does this matter at closing?
Correct Answer
A) Illinois property taxes are paid in arrears, meaning the bill issued in a given year covers the prior year's taxes, so sellers typically owe a credit to buyers at closing for the portion of the current year they occupied the property.
Illinois property taxes are levied and paid in arrears: the tax bill issued and payable in a given calendar year covers the prior tax year. For example, taxes payable in 2024 cover the 2023 tax year. Because the seller occupied the property during the period for which the bill has not yet been issued or paid, the seller owes the buyer a credit at closing representing the seller's share of the anticipated tax liability. This proration is one of the most important closing adjustments in Illinois transactions.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Adverse possession is a legal doctrine that allows a person to claim ownership of land by occupying it continuously for a statutory period under specific conditions, without the true owner's permission.
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
The chain of title is the sequential history of all transfers of ownership for a specific property, from the original source (typically a government patent or grant) to the present owner. An unbroken chain is essential for marketable title.
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