Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home due to unpaid taxes? Even if the value of the home far exceeds the tax debt? This is mindboggling to me.
Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt.
What else could the government do, put the homeowner in debtor's prison?
The article doesn't come out and say it, but the impetus for tax sales is that foreclosure proceedings are pretty onerous and take forever. At the same time, property taxes are the primary source of revenue for the local government and must be collected. So it doesn't seem ridiculous at face value to sell the debt to private investors and let them do the collection while being able to recoup the fees involved in fore…
Tax lien certificates do work (sort of) like this in Texas. This is a real thing. Bid rigging is not uncommon, sometimes though, it just isn't necessary. In rural areas there are occasionally auctions where very few qualified buyers show up. Terms are usually cash on the barrel-head. Example terms of sale follow. http://www.co.jefferson.tx.us/taxoffice/del_tax_Sale/sale_in...
Bid-rigging seems to be the main chicanery in the article. The value of a lien on a property with high-100k equity should be some percentage of that.
I'm all for making money, but this seems predatory and downright evil. Under no circumstances should someone be able to foreclose on a property because they hold a lien for less than 1/1000th of the value of the property, then take all of the equity. According to the article, this is only allowed in a small handful of jurisdictions - most require the proceeds above the amount owed to be passed along to the owner. It'…
Read that article just makes me angry. Who the hell makes a living doing this, and still sleep at night? They must be sociopaths
Good points and agree. But I think when you get into "at best he'd owe $848" then you don't provide proper disincentive to prevent the behavior of ignoring tax bills and other notices. As an aside as someone who has gone through significant pain trying to collect money from people that owe varying amounts (over the years) it's a process that given a bigger stick (not "ordinary" penalties) would go a long way. Noting…
No reasonable person would intentionally give up their house, paid off, for a tax bill of $134, many years or not. The number of people this is happening to and (one third of them over a bill less than $1,000) suggest that something about the process is screwed up.
The owner had dementia, so may not have been able to make reasonable decisions.
Queue up the Ayn Rand acolytes in 3...2...1 It's not a coincidence that this is happening to mostly elderly people who otherwise own their properties in the clear, people who are often burdened with serious health problems. There is a simple fix. Require the liens to be paid off when there is a change of ownership. The city knows what it is owed, and that it will get the money eventually. If the city needs the money…
It's happening to elderly / vulnerable because anyone else, faced with losing their house over a $50 tax bill, would pay the tax bill. This isn't something that happens in a single day, or in the middle of the night.
I'm only familiar with the tax sale rules in one Connecticut town, but the include a provision for the (delinquent) taxpayer to pay their bill in full within 30 days of the auction to cancel the sale / lien.
Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt. What else could the government do, put the homeowner in debtor's prison?
It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.
Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of thi…
Why not just go the whole hog and tax all property. eg you buy a laptop, you have to pay the government a tax each year to keep it. Why just apply it to houses? May as well just prohibit people from owning property. Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it. Luckily in the UK, we don't have property tax, a…
In the UK you don't have property tax, and this gives rise to the concept of leasehold land. Instead of paying rent to the government you end up with people paying rent to a private company. Instead of getting better local infrastructure as a result of your rent, you enrich the family that purchased your land over 200 years ago.
Tax enforcement schemes are conceived, enacted, and executed by governments because they have a monopoly over the taxing power. If private profiteers are allowed to exploit local citizens, it is strictly because the entity holding that power has deliberately chosen to set up an enforcement scheme that arms those predators with everything they need to conduct their exploitation. The vultures, despicable as they are, would be powerless to do anything to delinquent but for being armed for the task by the enabling government. Is this abusive? Yes, it is massively abusive. But the remedy needs to go to the source of the abuse and that source is a faceless, uncaring local government that has elevated cost-savings over fairness and, when caught as it has been here, is trying to pretend that it can impose a few regulations at the edges to solve the problem. The real solution is to bring the enforcement back in-house where it historically resided and then collection procedures can be controlled and made fair to citizens. But, of course, that would vitiate the cost savings to the governmental entity from which it benefits under its current system. It should do it but don't hold your breath waiting for reform. It is much easier to blame the outside vultures (who are of course eminently blameworthy), impose a few patches to pretend to deal with the abuse, and go on with business as usual. Whichever way reform is done, if it is at all, one can only hope that it will be real and meaningful but I suspect it will not. Very sad to see the tragic consequences.
No, that's not what happened at all. Try reading again. >The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.
> No, that's not what happened at all. What part are you saying I still don't understand? The point I was trying to make is that Mr. Coleman does get some money from the sale, although unjustly much less than the house is worth. But the reporter is obscuring this simple fact.
As I read it the company kept the money from the house after seizing it.
"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." Why does that section of the 14th amendment not apply?
What makes you think the public tax sale took place without due process of law?
Straight from the article:
* Homeowners receive several warnings before their liens are put up at annual auctions.
* Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose.
The article even mentions the families getting their day in court over the post-tax-sale foreclosure.
I just realized I'm serial rage-replying on this article. You know that annoyed feeling you get when the news covers a subject you're familiar with? Well.