Home Rule and the Real Estate Transfer Tax


**Updated July 31 at end of post.**

Believe it or not, there’s at least one limit to Illinois Home Rule! Here’s a post from the blog of the Illinois Association of Realtors:

I was discussing a transaction in the home rule community of West Frankfort. “My client was surprised to learn at closing she had to pay a fee of 1 percent of the sale price to the city—which meant $1,200 out of her pocket,” the REALTOR® said.

Surprised by the transfer tax, I began researching the history of the real estate transfer tax. The Village of West Frankfort passed a referendum in 2006 making it a home rule community. In 2008, citing their home rule status, the council passed an ordinance creating a transfer fee on the transfer of leases surrounding the city-owned lake. Illinois Association of REALTORS® (IAR) Legal Counsel found that under state law before they implement a transfer tax, the question must be put on the ballot for referendum for voters to decide.

The IAR reportedly wrote a letter to the City of West Frankfort explaining this and now awaits a reply.

I’m pretty sure that if the tax were legal without a referendum, the City of DeKalb would be collecting it already.

Currently, the only municipality in DeKalb County to levy such a tax is Sycamore, but the city doesn’t do this for itself:

On March 21, 2006, the voters passed a referendum authorizing the City of Sycamore to impose a municipal transfer tax. As a Home Rule municipality, the City may impose such a tax on the transfer of real estate within its corporate boundaries. Sycamore has chosen to do so as part of a “Sycamore Solution” to offset school funding shortfalls. The funds generated by this tax will be passed along to Sycamore School District #427.

To date, the City of Sycamore has distributed $2,044,000 to the school district.*

*Obtaining this last bit is interesting from a Freedom of Information Act (FOIA) perspective.

I began by e-mailing DeKalb County clerk John Acardo, who let me know the City of Sycamore collects the tax itself. He suggested I contact the Sycamore city clerk, Candy Smith. Ms. Smith in turn informed me she would pass on my request to the city’s actual FOIA officer, who happens to be assistant city manager and treasurer Adam Orton.

How long did all of this take? It took one afternoon. I e-mailed my questions to Mr. Acardo at 12:30 p.m. yesterday and had my answer at 4 p.m.

This kind of speed is foreign to me, as I’m used to the City of DeKalb taking the length of time the law allows — apparently as actual policy. When they had seven days, they took seven days; now they have five so that’s how long it takes.


Related link: Real Estate Transfer Tax Law