Homes Going Into Foreclosure for Tax Liens Worth Hundreds

Foreclosures, Short Sales, Tax Foreclosures
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In what amounts to a different chapter in the same book of predatory foreclosure practices, thousands of homes in the District of Columbia – and potentially elsewhere across the nation – are going into foreclosure due to tax liens that amount to only a few hundred dollars in many cases.

According to reports, nearly 200 homes have been repossessed due to tax liens by tax lien investors – many of whom come from outside of the District – since 2005, and investors plan to seize over 1,000 additional homes.

In many cases, according to one Washington Post report, the tax lien on each home was worth less than $500.

Perhaps the most high-profile case involves a 76-year-old Vietnam veteran who had his home repossessed by a company in Maryland who purchased a tax lien placed on the house for $134 in 2006. The city added $183 in penalties and the initial bill of $317 was paid, but the company responsible had already filed in court and demanded $4,999 to remove the lien.

He couldn’t pay, so he was evicted in 2011.

Tax lien investing has been around forever, but it appears there might be laws and procedures in D.C. and other areas that need to be changed in order to protect homeowners. The city is justified in levying tax liens against homeowners who are severely delinquent on property taxes, but the process has to be fair and just for everyone involved.

The Importance of Research Before Buying a Home

This story highlights the importance of doing your due diligence and researching a property thoroughly before purchasing a home for any reason.

Homes like the ones highlighted in the investigation could have a myriad of liens on them, and if you purchase a home without checking to make sure your property is in the clear, it could result in seizure or heavy legal fees at the least.

If you conduct a title check, also make sure you purchase title insurance to protect yourself against anything that might not show up in the initial search. Doing so gives you the same benefit of car insurance – financial protection in case something goes wrong.

And for those who engage in tax lien foreclosure investing, check the local jurisdiction’s laws and regulations prior to beginning. It is likely they could very well change as a result of this and other investigations into the industry.

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Yes, properties are sold for tax liens.

However, what it not recognzed or realized here is the GOVERNMENT does not generate income.

TAXES are the sole source of income for ALL GOVERNMENT AGENCIES, city, county, state, local, and federsl.

Without taxes there woud be NO FOOD STAMPS, NO WELFARE PAYMENTS, NO FREE CELL PHONES, NO SECTION 8 HOUSING ASSISTANCE, NO FHA, NO HUD, NO HIGHWAYS, NO POLICE, NO FIREMEN, NO SCHOOLS, etc., and the list goes on and on.

SO, what do you do…stop the tax lien sales…Stop collecting taxes, stop all the assistance programs, stop all government from operating…OR…continue collecting taxes and fund the government.

Yes, there can be cases that tear at your heart strings…however…I have found that in most cases there is an underlying cause…not specifically the tax liens. Lots have underlying substance abuse problems…they prefer the substances to reality.

I have done tax lien investing for over 20 years, Have NEVER deliberately taken anyone’s home and have of course made money at the same time.

AND, if you bother to read and research the issue you will find that there is MOST PROBABLY a redemption period during which the delinquent tax payer has the opportunity to redeem.

Why they choose NOT to redeem is often beyond me or reason.

The courts are very reluctant to take someone’s house for the mere mistake of not paying taxes.

Look at the S C O T U S case of Jones vd Flowers…SEVEN years later the house went back to the delinquent tax payer.

In what amounts to a different chapter in the same book of predatory foreclosure practices, thousands of homes in the District of Columbia – and potentially elsewhere across the nation – are going into foreclosure due to tax liens that amount to only a few hundred dollars in many cases.

How would you fund the government.

Perhaps the most high-profile case involves a 76-year-old Vietnam veteran who had his home repossessed by a company in Maryland who purchased a tax lien placed on the house for $134 in 2006. The city added $183 in penalties and the initial bill of $317 was paid, but the company responsible had already filed in court and demanded $4,999 to remove the lien.

He couldn’t pay, so he was evicted in 2011.

Unfortunately these cases do come up from time to time…Regretably.

Tax lien investing has been around forever, but it appears there might be laws and procedures in D.C. and other areas that need to be changed in order to protect homeowners. The city is justified in levying tax liens against homeowners who are severely delinquent on property taxes, but the process has to be fair and just for everyone involved.

It is probably as fair and just as can be…without taxes…we have NO GOVERNMENT.

The Importance of Research Before Buying a Home

This story highlights the importance of doing your due diligence and researching a property thoroughly before purchasing a home for any reason.

Homes like the ones highlighted in the investigation could have a myriad of liens on them, and if you purchase a home without checking to make sure your property is in the clear, it could result in seizure or heavy legal fees at the least.

Taxes are the MOST superior lien against a property and will WIPE from title Virtually EVER lien or encumberance…the IRS will have an automatic 120 day right of redemption…regardless of it’s position in the chain of title.

If you conduct a title check, also make sure you purchase title insurance to protect yourself against anything that might not show up in the initial search. Doing so gives you the same benefit of car insurance – financial protection in case something goes wrong.

Title insurance is NOT available for tax lien purchasing.

And for those who engage in tax lien foreclosure investing, check the local jurisdiction’s laws and regulations prior to beginning. It is likely they could very well change as a result of this and other investigations into the industry.

I doubt any major change…the government LIKES the $$$. NO taxes…no government.

The last sale I attened the competetion was so great that the county took in over $640,000.00, yep six hundred forty thousand in over bids…NONE os which is returned to the bidder…the county treasury gets all of it. FREE MONEY

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Bill H - This post was not to tear down the idea of the reason to pay property taxes nor of the government’s right to collect. The point was to show that investors can and do obtain homes at a surprising low value because of purchasing tax liens.

Yes it is a real shame that some lose their home to only thousands in back taxes. That is why there is a right of redemption. In that case, the homeowner gets their home back and the investor sits to make a hefty return on their investment due to a high interest rate.

The system is there both as a protection to the homeowner and an investment opportunity to others. Therefore, I see no need to flame this post.

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campbellsimon,

It was not and is not my intention to flame the post.

However, there were several inaccuracies or misleading bits of information and all I sought to do was to correct them.

It does not speak well of you to post inaccurately nor does it bode well for the inexperienced to read and trust in them.

I have long been an advocate of “Tell it like it is…HONESTLY…and to the best or your abilities.”