In Illinois, tax lien auctions will now be taped as part of an initiative to “guarantee fairness” at local tax auctions. The bill, proposed by state senator Bill Haine, includes legislation to require that all tax sales be videotaped and that will prevent bidding from culminating in a tie[1]. Illinois auctions have faced scrutiny recently due to practices that allegedly “discouraged free bidding at lower rates.” Lawmakers are concerned that there is no policy in place permitting auctions to be reviewed, and believe that the mandatory tapings could help resolve the issue.

The impetus for the bill is a controversial investigative report by the Bellville News-Democrat that alleged that a former county treasurer was conducting tax auctions in such a way that liens could be arbitrarily awarded to bidders at higher interest rates than might have been appropriate[2]. In Illinois, bidders “bid down” the interest rate on the liens and the lowest bidder gets the lien. However, in Madison County, Fred Bathon allegedly was simply starting the bidding and then awarding liens to whomever appeared to have shouted out “18 percent! [the max interest charged in Illinois on tax liens]” first.

Interestingly, in addition to increasing transparency of the process through taping, the new legislation allows for taxes to be “forfeited” if there is a tie between two bidders.

Do you think that this is a good bill or should the Madison County case be handled individually rather than through statewide legislation?

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[1] http://www.bnd.com/2011/02/11/1586935/legislation-seeks-to-tighten-up.html

[2] http://www.bnd.com/2011/02/10/1585369/reporters-to-receive-award-for.html