County Repo: Not repossession, but trying to get property back on the tax rolls
Want to purchase land for practically a song? For years, the Washington County Tax Claim Bureau was prepared each business day to accept over-the-counter, minimum bids of $500 for properties contained in what is known as the “county repository,” a sort of bottom-of-the-barrel collection of houses, commercial structures, trailers and vacant lots for which taxes went unpaid for years.
“It’s always been, come in the office. All year long, people were coming in, coming in, coming in, putting bids in,” said Debbie Bardella, Washington County recorder of deeds and director of the tax revenue department. “There’s never been an auction.”
Or, rather, until 10 a.m. Sept. 8.
As with previous over-the-counter sales, the minimum bid for most properties in the county repository will be $500, except for those that were part of a recent judicial sale.
“While it may seem counterintuitive to attempt to auction a property off for a price that we couldn’t fetch at auction a few months ago, in the case of the repository sale, the purchaser has the added benefit of having the assessed value automatically reduced as a reflection of the purchase price,” Washington County Chief Assessor Bradley Boni wrote in an email.
The temporary reduction lasts until the countywide reassessment takes effect in 2017 or until the buyer sells the property, or constructs a building or other structure.
No one knows what to expect, but “We may get some more action,” said Blane Black, solicitor for the Washington County revenue department. “I think an auction will generate more interest. The idea is to get ’em back on the tax rolls.”
Since 1947, Pennsylvania counties have the ability to establish property repositories under the Real Estate Tax Sale Law. Monroe County in the Pocono Mountains explains the repository this way: “In order to establish a procedure to minimize the number of properties that the county holds because of delinquent tax claims, the list of repository for unsold properties was created. Any property that remains unsold after the upset sale and the judicial sale will appear on this list.”
These auctions differ from sheriff sales, which are convened in Washington County for properties on which mortgagees are in arrears. Here is a brief set of definitions from the Washington County Tax Claim Bureau, starting with the term “upset sale.”
If one fails to pay real estate taxes to any or all of the taxing bodies – county, municipality or school district – for two years, his or her property can be sold at what is known as the “upset sale.”
While a person could be upset to find his or her name on the a list that carries the warning, “your property is about to be sold without your consent for delinquent taxes,” the term “upset,” in this case, has nothing to do with emotional turmoil.
The dictionary definition of “upset price” is the lowest price at which an item of property may be auctioned or sold at public sale. The term comes from a no-longer-in-use verb meaning “to establish.” Property offered here is commonly described as being “sold for back taxes.”
Purchasing property through an upset sale means the buyer is responsible for the bid price as well as satisfying any liens or judgments that are attached to the parcel, such as a mountain of unpaid sewer bills. This year’s upset sale is scheduled for 10 a.m. Sept. 22.
If no one cares to purchase “upset sale” properties and pay those taxes, liens or judgments, the property slips into another category. These encumbrances can be removed by court order at the request of the tax claim bureau. The county will try to unload the property at what’s known as known as a “judicial sale,” commonly called a “free-and-clear sale.”
But that’s only “free and clear” to a point. Bardella cautions potential buyers that state and federal tax liens placed against the properties are not wiped away at sales the county conducts.
The opening bid for property at a judicial sale is an amount made up of costs, recording fees and transfer taxes, but no unpaid property taxes imposed by the county, municipality or school district. Costs the county incurred include the work of sheriffs’ deputies, for example, who must serve the owner with notices related to the impending sale. There are also petition-filing fees the prothonotary’s office charges for related documents. The county also incurs costs for certified mailings.
It usually takes about three years for unpaid taxes and liens to accumulate on a property before it becomes a candidate for a “free-and-clear” sale.
Black gaveled this year’s judicial sale in June.
On a rainy Wednesday in early summer, 80 or so people gathered in the public meeting room of the Courthouse Square office building watching the sale as a list, alphabetized by municipality, was projected on a screen.
Cecil Township Manager Don Genusso, participating on the municipality’s behalf, was among the successful bidders. He said the township plans to demolish the structure, which was owned by an absentee landlord.
Not everyone left the sale the proud owner of a new property. “Somebody outbid us,” said Beth Meadors of New Eagle. “We only brought $5,000. It was a nice house. We wanted it for a rental. We bought a property over in Houston at another sale.”
Her husband, Kenneth, added, “If you can get it cheap enough, you can redo it. You can afford to put money in it.”
Observers said potential bidders tend to fall into two groups: those who consistently purchase properties offered at tax claim bureau sales, or people who are trying to acquire a property that’s next door to their house.
Whatever one’s motivation, a potential buyer can drive by or walk by a home on the upset, judicial or repository sale lists, but not, as is the case for in potential real estate sold through agencies or owners, enter the dwelling.
The caveat for each property offered at any of these tax-delinquent sales is buyer beware. The property may be bought for a song, but the experience left one new owner singing the blues.
A woman who declined to give her name at the judicial sale showed digital photos of a house of horrors she purchased at a similar event. What did she find? Food rotting on dishes in a sink, a living room strewn with abandoned possessions, and a bedroom piled high with dirty diapers.
“The outside looks nice and inside is a pigpen,” she said.
In some down-on-their luck boroughs, there were more properties available than the number of people willing to offer bids.
“Charleroi Borough! Whole town, $10,000. My hometown,” auctioneer Black chided his captive audience. “Donora, same offer as Charleroi. Ten grand.”
“Five?” shot back a man in the audience.
“Do we have any interest in Donora? I go through this every year. Nothing sells,” Black replied.
Actually, a few properties did sell in both Charleroi and Donora, where the borough developed a strategy of purchasing from the repository dozens of homes for demolition performed by its own crews. Where lots are just 22 by 100 feet, Borough Manager Dennis Fisher said vacant land becomes attractive to neighbors who are willing to buy it for a garden, garage, or to extend a yard, thus accomplishing the goal of putting the property back on the tax rolls.
Making his way through the alphabetized list at the judicial sale, Black came to a property in Fallowfield Township with Washington County Tax Claim Bureau as the owner. It drew no bids.
“Nobody wants that. It’s probably a hillside,” Black said. Admittedly, there isn’t much of market for ravines.
The “most-wanted” property of the day was a three-bedroom, 2 1/2-bath split-level home built around 1960 on a half-acre lot on East McMurray Road in Peters Township, which appeared to have sold for $125,000 to KGD Properties Inc., also of Peters.
Black said after the sale that he considered the price a bargain because “a lot on East McMurray is probably worth 80, 90 thousand.”
Note the use of the term, “appeared to have sold.” The sale is now tied up in a court case, Guy Leroy of Philadelphia vs. Washington County Tax Claim Bureau. The plaintiff claims he purchased property the day before the judicial sale, but did not record the deed. In a response filed Thursday, Black said Leroy “is not a bona fide purchaser” and therefore he does not have legal standing to challenge the sale.
The tax claim bureau strongly suggests potential purchasers perform a title search before bidding on any properties. “It’s up to them to do their homework,” Bardella said. Like any of the tax claim sales, buyers must pay in cash, certified check or money order. All sales are considered final, and the tax claim bureau announces before all of its auctions there will be no refunds under any circumstances.
When Black was through wielding the gavel, just 71 of 280 properties sold.
The remainder are headed to that county repository, when he will again play the role of auctioneer.