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Companies invest in delinquent taxes |
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Written by Andrew Powell
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Tuesday, 09 June 2009 |
More than $17,000 in delinquent tax bills were purchased during the tax bill sale held last Thursday.
More than $17,000 in delinquent tax bills were purchased during the tax bill sale held last Thursday.
Five third-party investors took turns laying down cash for delinquent bills that are now subject to a lien and possible foreclosure procedures if the back taxes, and additional fees, are not paid within the year. 31 of the more than 700 bills deemed delinquent were sold during the sale.
By law, the sheriff could only allow the sale of 10 percent of the total amount of property taxes outstanding, $17,653 in this case. The sheriff collected around 93 percent of the taxes this year, which he gets a small commission on before dividing funds among the state and local taxing districts.
While the practice is common throughout the state, third-party purchases of tax bills has became frequent locally only in the last few years. The practice is just beginning, said one investor present during Thursday’s sale, who noted state laws make the endeavor inviting to investors.
Last year, three companies were present during the sale and bought bills, this year, five investors purchased bills.
“You are just going to see more and more each year,” the investor, who declined to give his name or company said. “The thing is, this is people that are not paying their taxes and taking money from the sheriff, county and the schools here. You may have people who haven’t paid taxes in 20 years that will now pay because of the possibility of having their property sent to foreclosure.”
State law allows for the third-party purchases which permits the investors to place a lien on the property and charge legal fees in addition to the back taxes owed. If the taxes and fees are not paid in a year, the investor can force a foreclosure in order to collect. The state, or anyone else for that matter, can undergo the same process on delinquent bills not bought and filed in the clerk’s office, which are also subjected to other fees and penalties upon filing.
In some cases, as happened here last year, investors stepped in and bought delinquent bills that had been filed with the clerk. Jo Kidd, retired County Court Clerk, said last year companies bought 75 delinquent tax bills in addition to the 20 bills, worth $20,000, bought during the 2008 tax bill sale.
“For those bills bought last year, the one year deadline is approaching and for those people that have not yet paid, you will see foreclosure proceedings beginning very soon,” one investor told The Voice.
Each of the five investors present during the sale last week, agreed to limit their purchase to $3,494 each, in order to meet the $17,653 total allowed through the sale. Each party took turns calling out the bills they wished to buy until they hit the monetary limit. Once the sale was over, Sheriff Gus Skinner and staff took immediate payment for those bills bought and began the process to issue a certificate of delinquency (which is filed with the county court clerk). From there a lien is filed, additional fees added on and the collection process initiated.
“The only thing else I can say is that for those who tax bills have been purchased, in about 50 days they will get a letter from the company who bought the bill,” the investor said. “At that time, that will be the cheapest it will ever be. As time goes by and the collection efforts continue, they could wind up owing say three to four thousands dollars more than what they started with.”
(Correction: In last week’s Voice, it was erroneously reported that the delinquent tax bill sale was to be held Friday. Actually, the sale was held Thursday morning. We apologize for the error and this reporter’s inability to accurately read a calendar.)
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