LAKE FOREST — Timing of a residential property transaction altered by the illness of one of the sellers has prompted a potential hardship provision for refunds of the Lake Forest’s real estate transfer tax.
The Lake Forest City Council directed the city attorney to create an amendment to transfer tax ordinance to allow purchasers with a hardship to apply for a refund under certain circumstances April 3 at City Hall.
The council plans to consider changes to the city’s existing legislation at 6:30 p.m. April 17 at City Hall.
The aldermen were reacting to an appeal by Laura Sorensen, a Winnetka resident, on behalf of her parents, Robert Potts and Irene Potts, who have lived in Lake Forest for 50 years. Sorensen said the declining health of Robert Potts required her parents to buy a condominium two years ago before selling their home of 48 years.
Purchasers of Lake Forest real estate are required to pay a transfer tax calculated as a percentage of the sale price, according to the ordinance. City attorney Victor Filippini said the tax is rebated if the seller buys another piece of property in the city within a year.
“We created a provision to motivate people to stay in Lake Forest,” said Filippini. “If a seller purchases a new property within one year they can apply for a refund up to a specified amount.”
The timing did not work out for Robert Potts and Irene Potts, according to documentation Sorensen filed with the city. They were required to buy a condominium on Western Avenue in Lake Forest before they were able to sell their home because of Robert Potts’ declining health.
“Our family determined that it was necessary (my parents) move immediately to a new handicap-accessible, one-story residence before selling their existing home,” Sorensen wrote in a February 15 letter to City Manager Robert Kiely Jr. The move was consummated in a month.
Because of the hasty move, it took the Potts family a year to get their former residence ready to sell listing it last May, according to the letter. The transaction closed in November. Sorensen wrote in the letter “under ideal circumstances” the long-time family home would have been sold before the new residence was acquired.
Sorensen said she first appealed to Kiely but he said the only option was seeking relief from the council.
Council members expressed empathy for the Potts family but some were hesitant to act on a case-by-case basis rather than codifying a procedure.
“I’m feeling compassion,” said Alderman Jack Reisenberg. “The circumstances here lean toward making an exception. We should find a way for the council to give them relief.”
While Reisenberg articulated a desire to help the Potts family, Alderman Ray Buschmann said any relief should be part of the city code. Alderman Catherine Waldeck wanted to know if a time exception was ever granted. Filippini said that has not happened. He also said there was no hardship provision in the current ordinance.
Though the legislation does not provide for any kind of extension of the one-year requirement, it was increased to two years in 2008 and 2009 when the real estate market slowed, according to Filippini.
“As the economy improved the council returned to a one-year period,” said Filippini.