Friday, October 23, 2015

Foot-Dragging Judge Unintentionally Saves Property Owner From Losing House At Tax Foreclosure; Snoozing Jurist's Failure To Promptly Sign Sale Confirmation Paperwork Allows Slow-Pay Owner Add'l Time To Scrape Up Cash For Last-Minute Property Redemption Before Deed Was Issued To Paid-In-Full Buyer

In Springfield, Ohio, the Dayton Daily News reports:
  • The Clark County Sheriff’s Office called a recent tax sale in which the buyer had to give back the house a “fluke.”(1)

    But the incident serves as a lesson for anyone bidding at sheriff’s sales that hiccups in the court system can happen, said Tom Wright, who runs real estate transactions for the Clark County Sheriff’s Office.

    Doug Swain was the only bidder on a duplex at 732-734 W. Pleasant St. at an Aug. 28 auction. He paid the minimum bid of just more than $5,000.

    The home had been owned by Inside Out Youth Homes Inc., a local non-profit with the mission of helping at-risk youth. The organization hadn’t paid property taxes on the home since 2012, according to county records.

    After paying for the property on a Friday, Swain said he was told he could access the property, change the locks and begin renovations. The paperwork would be submitted to a judge on Monday and be processed quickly, he said he was told.

    But 11 days later, a representative of Inside Out showed up at the house with a receipt for payment of the delinquent taxes, Swain said, and wanted to take back the home.

    The law says the property doesn’t actually change hands until a judge signs a confirmation of sale, which then allows the sheriff to sign over the deed, Wright said. That usually takes a couple of days, but in this instance the paperwork sat on Judge Richard O’Neill’s desk for more than a week.

    In that amount of time, Inside Out paid more than $4,500 for the delinquent property taxes, reclaiming the property. “If I had known that he had that option, I wouldn’t have gone in there,” Swain said.

    He’d already spent more than $500 working on the home, informed a tenant that he was the new landlord and collected rent from them.

    After the mix-up was discovered, the county refunded him the purchase price and Swain negotiated with Inside Out to purchase the property for $12,000 — more than twice what he originally paid.

    “The person who needs to be responsible here is the judge,” he said. O’Neill didn’t return a call for comment.

    Buyers need to be aware, Wright said, and are informed at the auction that with foreclosure sales the owner has a 30-day right of redemption. With tax sales there is no exact timeline, but the owner can still claim the property until the confirmation document gets signed by the judge.

    Wright and Clark County Assistant Prosecutor Bill Hoffman said they both remember that caveat being expressed to buyers at the Aug. 28 sale.

    County officials usually tell people they can secure the property as they see fit prior to the sale going through, and recommend they get insurance for the amount they’ve paid. Foreclosure sales require a 10 percent payment at time of purchase and tax sales require total payment up front.

    But they warn against spending money on repairs until the buyer has the deed in hand. “If it’s vacant you can clean up the property. Do some very basic things, you know, mow the grass, change the locks. But don’t do anything that’s going to cost money,” Wright said.

    This incident is the first time he’s aware of that someone has paid their delinquent taxes after the property was sold at auction, so it hasn’t been an issue before for buyers to work on their new properties as the paperwork gets completed.

    Even on foreclosure sales, it’s never happened since Wright’s been running the auctions that someone has reclaimed their property in the 30-day window.

    An Inside Out representative who didn’t want to be named said it was a staff oversight that allowed the property taxes to get behind. An employee saw people working inside the home, which alerted them to the sale and prompted them to settle the debt, the organization said.

    The treasurer’s office checked with the court before allowing the payment, Hoffman said, and discovered the judge hadn’t finalized the sale. “They checked with the clerk’s office … They didn’t just take the money,” he said.

    Several hours after that payment was made, O’Neill signed the confirmation of sale, Wright said, but it was null and void.

    “This is one of those flukes of buying a house at a tax sale or a foreclosure sale,” Sheriff Gene Kelly said. “This guy did everything right, he really did.”
Source: Springfield home returned to delinquent owner in “fluke” tax sale.
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(1) While certainly uncommon, it isn't unheard of for winning bidders at foreclosure sales to lose out on their winning bids due to unexpected snags in the court system. See, for example, Clerk's Refusal To Immediately Issue Certificate Of Sale Upon Winning Bidder's Payment Of Purchase Price Leaves Door Open For Foreclosed Florida Homeowner To Subsequently Sneak In & Save Home w/ Last Minute Tender Of Funds In Exercising Right Of Redemption.