Amari & Locallo e-letter
August 2013
Amari & Locallo
Chicago Office
734 N. Wells Street
Chicago, IL 60654
Amari & Locallo
Bloomingdale Office
236 W. Lake Street, Suite 100
Bloomingdale, IL 60108
Welcome to our A & L e-letter for this month,


We are at August's end and Labor Day is upon us.   The assessment process, again, is at full speed in Cook and the Collar Counties.   The market is showing some positive signs and sales are starting to pick up.  And, it reminds us of a "Yeah-Boo" story we have to tell; when 110% may not be enough.


Let the buyer beware...


One of the pitfalls for the unwary is estimating the escrow for real estate taxes on the sale of property.  A common practice is to estimate the current year's taxes based upon the previous year's assessment at 110%.  This 110% is supposed to take into account the potential of an increase in the real estate taxes not yet paid and accepted as a credit to the buyer on closing.  Be careful.


The current year is a reassessment year...


If the year of the sale is a reassessment year and you do not know the new proposed assessment your estimate may fall short at only 110%.  The practice of estimating unknown real estate taxes is not easy and there are no workable formulas (like 110%) in reassessment years. 


The previous year's assessment may have been reduced for one year only...


In jurisdictions (like Cook) where vacancy reductions are allowed as an accommodation to an owner for unused space they are only granted year to year.  The practical reason for this being proof each year by ownership that the space is still vacant before the accommodation is again granted. 


When you are buying a vacant building and the real estate taxes are touted to be low the caution signs should go up.  Don't assume the buildings good fortune to have lower taxes.  Make sure you know why.  If there was a vacancy reduction from a previous year and you are estimating the credit to pay future taxes based only on 110% your estimate may fall short. 


Previous owner enjoyed a number of homestead exemptions...


There are a number of exemptions applied to ownership which may not apply to you.  The seller may have a senior freeze and a homeowner's exemption.   Exemptions are not automatic roll overs to the buyer. 


Incentives may have run their course...


Some industrial/commercial/ multi-unit residences enjoy incentive classifications which may roll over to the buyer but have an unexpected shelf life.  Know if an incentive is being applied and know when it will expire.


Generally speaking...


While traditionally a sales contract that suggests 110% pro-ration on unpaid real estate taxes has been adequate, they can be negotiated up or down.  If it is established that the assessment for the current year is proposed at the same value as the previous year there is more confidence in using the 110% or even sometimes 105%.  But, timing is everything and knowing the variables is key. 


Re-proration when you are not sure...


Often heard saying, "if it looks too good to be true, it's probably not", should ring in your ears when buying property that has lower than normal real estate taxes.  It is good practice to investigate not only the Treasurer's last bill but the local assessor's last assessment. That's where we can come in.


If there is any doubt you should consider putting a re-proration agreement into your contract and escrow the real estate taxes until the final bill is determined.  It could save you tons!  

About Our Law Firm 
The concentration of the Law Offices of Amari & Locallo, with offices in Chicago/Cook County and Bloomingdale/DuPage County, is representing commercial, industrial and multi-unit residential property owners throughout the State of Illinois.  As part of our comprehensive focus on client services, Amari & Locallo also maintains a national practice in the ad valorem tax field and related real estate areas.  Our personnel have experience as county tax assessors, corporate tax managers, trial lawyers and real estate transaction attorneys, which contribute a unique insight into the negotiation and process of appealing real estate taxes. 


Our comprehensive knowledge of real estate tax laws 

and procedures enables us to effectively represent the interests of our clients throughout the State of Illinois

as well as throughout the United States.

For more information, please visit our website: