March Vol. 5, No. 2

Casenotes

Illinois

Tax Deeds

AP Properties, Inc v Rattner, 2011 IL App (2d) 110, 061, 960 NE2d 618 (2d D, 2011).

Facts: A.P. Properties has a regular practice of participating in annual tax sale auctions, where it competes with other tax buyers to acquire tax sale certificates. In the few cases where the owner does not redeem the delinquent taxes, A.P. obtains a tax deed to the property. Mitchell Rattner and Mariann Weiss (Rattner) regularly purchase tax delinquent properties just before the expiration of the redemption period so that they can obtain real estate at less than fair market value from owners who are in imminent danger of losing title.

A.P. Properties held a tax sale certificate to two properties and petitioned for a tax deed. In August 2007, Rattner purchased the two properties less than 48 hours before the redemption period expired and paid the delinquent taxes before the deadline. Therefore, A.P. Properties did not obtain a tax deed to the property.

A.P. Properties filed a complaint against Rattner, alleging tortious interference for depriving A.P. Properties of tax deeds that it would otherwise have obtained, thus interfering with A.P. Properties' business relationships and denying A.P. Properties its prospective economic advantage.

Rattner moved to dismiss the complaint because A.P. Properties failed to allege facts showing that it had a business relationship with the property owner. The trial court granted the motion to dismiss but allowed A.P. Properties to amend its complaint. In its amendment, A.P. Properties alleged unjust enrichment but did not seek recovery for tortious interference or refer to the original complaint. Rattner moved to dismiss for failing to state a cause of action. The trial court granted Rattner's motion to dismiss. A.P. Properties appealed, arguing that the trial court erred in dismissing both the original and amended complaints.

Holding: Affirmed. First, the appellate court refused to consider the merits of the tortious interference claim because A.P. Properties had forfeited that claim when it did not preserve review of the dismissal by obtaining an order dismissing it with prejudice or repleading the claim in its amended complaint. Therefore, A.P. Properties completely abandoned one substantive theory of recovery and chose a different one. The sole issue on appeal was whether the trial court erred in dismissing the claim for unjust enrichment.

Next, the appellate court found that Rattner was not unjustly enriched in this transaction. In a tax sale, a tax buyer's rights are limited and issuance of a tax sale certificate does not affect the delinquent owner's legal or equitable title to the property. A tax buyer only acquires a contingent right to possibly acquire title in the future. Rattner's act of buying tax delinquent property shortly before the redemption period does not violate any statutory or case law authority. Rattner no more exploited the delinquent owner's circumstances than A.P. Properties in trying to obtain real estate cheaply. In fact, the owners decided that they would rather sell to Rattner for something rather than forfeit the properties to a tax buyer who would pay them nothing.

Moreover, Illinois has a public policy of protecting the rights of those who purchase real estate that is sold for delinquent taxes. Illinois also has a public policy that favors redemption of tax-delinquent properties over forfeitures.

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