Sale Of Tax Liens To Speculators & Proliferation Of Vacant, Rundown Real Estate

In Fulton County, Georgia, a recent story in The Atlanta Journal Constitution on the proliferation of vacant and rundown properties highlights the role that the sale of tax liens plays in the physical deterioration of some neighborhoods:

• A contributing factor, [community development groups and tax officials] say, is the sale of tax liens. It burdens such properties with debt that exceeds their value and puts them in the hands of speculators who may sit on property as it deteriorates. As a result, many municipalities have stopped selling liens.

• Fulton County, however, still relies on the sale of tax liens as its primary method of collecting delinquent county and Atlanta city taxes, despite concerns over sometimes outrageous costs for property owners, questions about whether the practice saves the county money and negative effects on community revitalization. To a much lesser extent, Gwinnett County also sells tax liens.

• Fulton County Tax Commissioner Arthur Ferdinand continues to decline to discuss the county’s sales of tax liens or release property tax data that would support analysis of the practice. The Atlanta Journal-Constitution has sought his input since late last year. He has not returned phone calls.

• Fulton sold a lien for 2005 taxes on 55 Chester Ave. and, since 2006, taxes totaling $2,767 have not been paid. Tax liens and overdue taxes are not the only reason Chester Avenue and similar properties remain vacant and decrepit. But community development experts say liens in private hands discourage development by adding costs and legal complications to clearing land for construction.

• In Georgia, unless a property owner receives notice of a lien sale and settles the debt sooner, the legal process after a lien is sold drags out a year or more. Private companies may hold liens longer because they accumulate fees and interest, and once a property is sold, they can wait for a development project that needs the land. In the interim, the companies often don’t pay taxes on vacant properties or maintain them.

For the story, see In tax-lien limbo.

In a related Atlanta Journal Constitution story, see Senate bill tackles sales of tax liens:

• Legislation introduced in the [Georgia] Senate on Friday is meant to curb abuses of the sale of property tax liens, but broad language in the bill would obstruct tax collection by counties that do not sell liens, according to tax experts.

• Senate Majority Leader Chip Rogers, R-Woodstock, who introduced the bill, said the language will be changed to affect only the practice of selling tax liens to private companies and not the collection of taxes by the counties.

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• A series of stories by The Atlanta Journal-Constitution over the past two months(1) detailed how the sale of tax liens can
create outrageous costs for property owners and stall community revitalization efforts. The stories also raised questions about whether selling tax liens saves the county money as Fulton County Tax Commissioner Arthur Ferdinand has said.

(1) See:

• AJC Shines More Light On Fulton County Tax Lien Inflating Rackets; Investors Who May Not Be Responsible Players An Important Public Policy Concern,
• Private Investors Score Big Profits In Tax Lien Ripoffs As County Process Allows For One Homeowner's $291 Delinquent Tax Bill To Grow To $8,200.