By Andrew J. Abrams
Boodell & Domanskis, LLC
Chicago, Illinois
In Smith v. SIPI, LLC (In re Smith), 811 F.3d 228 (7th Cir. 2016), the
United States Court of Appeals for the Seventh Circuit found that a lawfully
conducted sale of real estate under Illinois’ tax sale procedures can be
avoided if the sale was not for “reasonably equivalent value” for purposes of Section
548(a)(1)(B) of the Bankruptcy Code. This
decision is significant – particularly for attorneys in Illinois and other
states that employ a similar “interest rate method” for collecting delinquent
real estate taxes – in holding that, unlike with mortgage foreclosure sales, compliance
with the Illinois tax sale procedures does not insulate a property’s tax sale
to satisfy delinquent real estate taxes from avoidance actions.