PROPERTY TAXES DUE REGARDLESS OF CITY’S EMINENT DOMAIN | KEY POINTS

1. Last month the Illinois Supreme Court reversed the Third District’s holding in MB Fin. Bank, N.A. v. Brophy, wherein the district court previously concluded that a property owner (MB Financial Bank) was entitled to a refund for monies it paid for property taxes on land which the government successfully seized in eminent domain proceedings which spanned twelve years. MB Fin. Bank, N.A. v. Brophy, 2023 IL 128252 (September 21, 2023). MB Financial relied heavily on the Illinois Supreme Court’s holding in McCausland which the Illinois Supreme Court overruled during the appeal brought by MB Financial against Brophy stating McCausland was “no longer good law.”

2. The Court explained that intervening cases since McCausland established that a “property is deemed taken in an eminent domain proceeding…on the date the government deposits the compensation award to the property owner and [thereby, on that date] acquires the title and right to possess the property.” This eliminated the relation back rule set out in McCausland that established a “taking,” for purposes of determining ownership and property value, occurred when the state filed the condemnation action.

3. The Court elaborated that “ownership” means one has “control and the right to enjoy the benefits of the property” which MB Financial had and did throughout the condemnation proceedings. The Court concluded that “filing the condemnation complaint in 2005 was not a taking” because MB Financial “remained the owners of the property until 2017” and “enjoyed the continued use of their property,” including profits generated by the apartment complex and “the same governmental services provided to all property owners in the City.” The Court officially overruled McCausland, reversed the Third District’s holding in Brophy, and remanded the matter for dismissal of MB Financial’s complaint.

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