By Christie Pool
Hoping to collect on hundreds of thousands of dollars in back taxes, the county tax office conducted a series of tax lien sales during the past three months to dismal results, with investors only purchasing liens on 22 of the 90 properties offered up.
According to Tax Commissioner Sharon Troglin, the county collected a total $557,717 from the October, November and December sales. During tax lien sales, the winning bidder doesn’t purchase the land or home, rather the tax debt. The purchaser’s money pays the delinquent taxes to the county on behalf of the delinquent property owner. Troglin said investors at tax lien sales purchase the right to collect past due taxes from the property owner.
Once a lien is sold at auction, the property owner has one year to pay the back taxes to the new lien holder plus 20 percent of the purchase price. Tax lien sales differ from tax deed sales because the purchaser does not acquire the deed or land ownership of the property.
If the owner can’t pay the investor back within one year plus the 20 percent interest, the investor may then work through an attorney to get title to the property. In exchange for purchasing the tax debt, the winning bidder at auction is given first lien position on title, ahead of mortgages, deeds of trust and judgments.
During the October sale, the county took 25 properties to auction, selling just three liens. Similarly, in November, 23 were taken to auction with just nine liens selling. In December, 10 out of 42 sold, Troglin said.
“Naturally we were hoping that they would all sell,” she said. “It just depends on the individuals that are there to bid. But it’s about average. We usually end up with about this many during a tax sale.”
The largest sale was $165,000 for back taxes owed on the old shoe plant on Hood Road. Troglin said the majority of taxes collected were on property, not homes. The tax commissioner also said several property owners came in to pay up prior to their parcels going to the sale. In December, she said, 11 paid prior to the sale.
“We were fortunate to have quite a few come in to pay before it went to sale,” she said. “The ones that didn’t sell will remain on the tax rolls, and next year we’ll try to take those back and see if they’ll sell. They do remain on the books and keep accruing taxes each year.”
Under the terms of the sale, Troglin said the debt must be paid within one year with 20 percent interest. If not paid, the purchaser of the tax lien may foreclose on the property, and all other liens are dissolved and do not transfer to the purchaser.
“The original owner has a year to redeem it back,” she said. “If they don’t during that year, then it becomes the property of the purchaser at the tax sale.”
If there’s a lien against the property from a bank or mortgage company, and the owner doesn’t redeem the property back, then that lien is dissolved. The tax lien purchaser may then work through an attorney to acquire the title on the property.
Troglin said her office is required to notify all interested parties, such as a bank or mortgage company, prior to any property going to sale.