A question on my own run-in with a SovCit

[fortinbras]

In trying to regulate the tinting of windows, the state (primarily the police) are interested not only in the visibility available to the car's driver, but also the visibility to any approaching policemen of how many people are in the car and whether they can see if any of them is holding a weapon. That was the reason given a few years ago when the DC govt considered banning tinted windows -- and the (persuasive) reaction from civilians was that they were just as happy if that visual information were not so readily available to potential carjackers.

[morrand]

Let me help explain it Gregg, the city takes the house for 500 bucks in back taxes, it then sells it to me for the 500, the owner has a year or two depending the state you are in. He has this time to pay off the taxes, but the investor is legal entitled to some interest on the money put out on the house. If he does not pay, I own the house for 500, then turn around and sell it, OWNER GETS NOTHING.

IANAL (and neither are you), but I know of no jurisdiction in which properties seized for back taxes are sold by any other method than public auction. That means that the only way you can buy that house for $500 is if you are the only bidder. If I come in and bid $600, I will get the house.

Ignoring for the moment the fact that the city/county/state is going to add foreclosure costs to the taxes owed, no government is going to simply call you up and sell it to you for the outstanding tax bill.

Illinois does, in fact, operate somewhat like what PD describes: the annual tax sale is priced based on the back taxes (plus statutory fees), rather than competitively bid. Instead, bidders compete to set the lowest penalty percentage (the "interest," as PD describes it). See Property Tax Code, section 21-215 (35 ILCS 200/21-215). The winning bidder pays off the taxes, and then, in due course, can apply for a tax deed. If all the procedures have been strictly followed, and the taxes haven't been paid back, the bidder then owns the property, pretty much free and clear. And, yes, in that case, the owner gets nothing. And, yes again, they will sell for $500 (even as low as $120 or so).

Big deal. This only happens once the property's been through the courts at least twice: once to declare it delinquent, and again when it's about to go to deed. It is a very strictly regulated process, designed to prevent sales from going through except as a last resort: to give an idea, there was one case that I'm not going to look up now (because I doubt you will) where the deed was lost because the buyer miscounted the days, and wound up claiming the last day to redeem was a Sunday. Suggesting this doesn't involve the due process of law is ludicrous.

[Patriotdiscussions]

Let me help explain it Gregg, the city takes the house for 500 bucks in back taxes, it then sells it to me for the 500, the owner has a year or two depending the state you are in. He has this time to pay off the taxes, but the investor is legal entitled to some interest on the money put out on the house. If he does not pay, I own the house for 500, then turn around and sell it, OWNER GETS NOTHING.

IANAL (and neither are you), but I know of no jurisdiction in which properties seized for back taxes are sold by any other method than public auction. That means that the only way you can buy that house for $500 is if you are the only bidder. If I come in and bid $600, I will get the house.

Ignoring for the moment the fact that the city/county/state is going to add foreclosure costs to the taxes owed, no government is going to simply call you up and sell it to you for the outstanding tax bill.

All that being said, the city has no responsibility, and no real interest in seeing that the homeowner receives the best price for the home. Many, if not most foreclosed homes are in pretty sad shape and don't bring much at auction, so the homeowner doesn't get very much, if anything. In addition, there may be a mortgage lender involved, who has priority over the homeowner. If a house is worth significantly more than the outstanding mortgage and tax bill, and the homeowner can't pay the mortgage or taxes, he/she would be stupid to not put the house on the market and sell it, in which case they will probably get much more, or at least be able to walk away with their credit rating intact.

None of this constitutes an unconstitutional taking of private property, nor does it prove that the property was, in fact, public property.

Some people argue that, when I take out a mortgage to buy a home, the bank owns the house until I pay off the mortgage. That is not true. The lender has a security interest in the property, but can not tell me what color to paint it, whether to put carpet or hardwood floors in the living room, or tell me that I can not sell it, or what price to ask. They CAN insist that I pay off the mortgage when I sell the house, but, as long as I pay the mortgage, they have no say in what I do with the house.

Likewise, the city/county/state has a security interest in the house, to insure that the property taxes are paid, but that does not make my house public property. Even the police, except with probable cause and/or a warrant, can not enter my house without my permission.

Correct on the auctions( in SOME states), point was, like my link stated

Guy gets house taken for 134 in back taxes, house is worth 190k, he owns it free and clear. Investor comes in, buys at auction for 500 bucks, 2 years later it costs him(owner) 5k to pay off the back taxes and interest. he cant do it, guy gets home, sells it for 130k, owner gets nothing.

And you are saying this is perfectly in line with the legal theory of private property?

So the question then becomes, is his home private property and if so, is owing 134 bucks in back taxes on a 190k home(no matter how many times it goes thru court) just compensation according to the constitution?

[Patriotdiscussions]

No one?

Surely someone believes taking private property for pennies on the dollar is what the concept of private property is built on right?

[The Observer]

No one?

Surely someone believes taking private property for pennies on the dollar is what the concept of private property is built on right?

No, everyone. It has already been explained to you by several people why your assertion is baseless and you simply wish to ignore what you were told. So at this point it is would be just a waste of electrons to tell you again. Find another place to play on the Internet.

[noblepa]

No one?

Surely someone believes taking private property for pennies on the dollar is what the concept of private property is built on right?

I don't accept your hypothesis.

If a home is worth, say, $50,000 and is foreclosed for non-payment of taxes, it will probably have more than $500 outstanding. Usually, however, houses are foreclosed when the outstanding tax bill exceeds the value of the house. If that were not the case, the owner would simply sell the house and pay the taxes. If the owner can't sell if for $50k, then it, by definition is not worth that.

So, if someone is able to buy a house for $500, or even $1,000 in back taxes, it probably isn't worth much more than that, so there's nothing to give to the homeowner.

Exactly the same thing happens when a lender forecloses for non-payment of the mortgage. If the lender forecloses and sells the house for more than is owed (plus reasonable selling costs), the lender must pay the homeowner the excess. Again, though, foreclosures usually happen when a house is worth less than the outstanding mortgage. Like the city, the lender has no obligation and little incentive to sell the house for top dollar. They are only concerned with getting what they are owed, so even in rare cases when a mansion is foreclosed, the homeowner usually gets little or nothing.

And, yes, I do consider this to be perfectly in line with the concept of private property. Foreclosures can only happen when a property owner has failed in his responsibility to the city or to a lender. in the case of property taxes, the property is, by law, collateral for the taxes. In the case of a mortgage, the homeowner has voluntarily pledged the property as collateral for the loan.

Also, IANAL, but I am very suspicious of your claim that, even after the city sells the home for the back taxes, the homeowner can come back two years later and reclaim the house by simply paying the taxes that were owed. There may be a time after the city takes possesion that the owner can do this, but not after it is sold to a disinterested third party. Who would buy a house under such conditions? I certainly wouldn't, even if you offered me the Taj Mahal for $1.

IMHO, no sane buyer would buy a foreclosed property, knowing that the homeowner could come in two years later and reclaim ownership.

[Hyrion]

No one?

Surely someone believes taking private property for pennies on the dollar is what the concept of private property is built on right?

I'm not really interested in discussing philosophy with you so if - from your perspective - you're speaking in the hypothetical: not interested.

If you're speaking from the perspective that you believe the situation you've outlined is really happening then I'll consider your question when you actually provide evidence to support the scenario you've outlined.

Edited to add: The Washington Post certainly does paint a pretty bleak picture. The situation reminds me of a post some time in the last couple months (I think) wherein some Sov Cits were using that particular method to - in effect - take over a town. I distinctly recall the article indicating that what was being targeted were newly built houses that the development company still owned and had not yet actually sold.

Assuming the WP Article is accurate - yea, the Government should do something about the situation to correct it. Of course - my humble opinion - there's also the responsibility of the families of those suffering from such things as dementia to do their best to help the aging members of their family - which makes me kind of wonder where those people are during these incidents.

[ontobserver]

Correct on the auctions( in SOME states), point was, like my link stated

Guy gets house taken for 134 in back taxes, house is worth 190k, he owns it free and clear. Investor comes in, buys at auction for 500 bucks, 2 years later it costs him(owner) 5k to pay off the back taxes and interest. he cant do it, guy gets home, sells it for 130k, owner gets nothing.

And you are saying this is perfectly in line with the legal theory of private property?

So the question then becomes, is his home private property and if so, is owing 134 bucks in back taxes on a 190k home(no matter how many times it goes thru court) just compensation according to the constitution?

Your scenario simply wouldn't happen, and like everything you post, is completely ridiculous. Unfortunately, there are people who would look at a scenario like this and not realize how badly fabricated it is.

In order for anyone to loses a $190K home that they own "free and clear" for $134 in back taxes they would have to be as dense as you are PD. Any reasonable person would find a way to get the $134 and pay the taxes. With a $190K asset which is owned "free and clear", there are numerous options, even if the back taxes were several thousands of $.

The process takes many months (and multiple times through court) with a known outcome...ample time for any reasonable person to make appropriate arrangements to come up with $134. Even once the house has been "auctioned off", there are plenty of options for getting the $5000 (over 2 years) that will let the owner get most of their equity out if they are willing to put the slightest effort into the process (that's why they are given the 2 years).

The only way anyone is going to lose a $190K house that they own "free and clear" for $134 is if they follow the advice of someone like you and not doing anything to resolve the situation. That takes a special kind of idiot. So, yes, if someone loses their $190K house that they own "free and clear" for $134 in back taxes, they are getting exactly what they deserve, but as has been pointed out, its never going to happen.

[Hyrion]

its never going to happen

I wouldn't say never - that's not a bet with very good odds.

The OPCA crowd have proven time and again they can turn what should have been a minor warning over a minor traffic infraction into a prison sentence..... some having done so with spectacular success with the length of prison time they've acquired.

Granted: under normal reasonable-world conditions, then your statement is a safe bet

[Arthur Rubin]

If there is any truth to the Washington Post article, (which I have reason to doubt), there is something strange going on in Washington DC tax sales.

Closed auction (i.e., unreasonable registration requirements), short redemption period after the tax sale, unlimited "costs". As for the tax lien being primary to the mortgage, that means the lender has a (probably) legal interest in "re"deeming the property, as well as a clear interest in attending the auction.

I have a quasi-client who lost a house he owned jointly with his late, financially incompetent, mother. He received actual cash from the tax sale, and is in the process of redeeming the house (and was asking about income tax consequences, which is how I got involved.)

[Dr. Caligari]

So the question then becomes, is his home private property and if so, is owing 134 bucks in back taxes on a 190k home(no matter how many times it goes thru court) just compensation according to the constitution?

It was already pointed out to you on this thread that "just compensation" is required only in an eminent domain case, i.e., when property is taken for "public use." When property is taken for other reasons (criminal forfeiture, tax delinquency, paying off a judgment creditor, etc., etc.), the test is not "just compensation" but rather "due process." That is why the same constitutional amendment contains both the due process and just compensation clauses-- because they apply in different contexts.

[Judge Roy Bean]

If there is any truth to the Washington Post article, (which I have reason to doubt), there is something strange going on in Washington DC tax sales.

Closed auction (i.e., unreasonable registration requirements), short redemption period after the tax sale, unlimited "costs". As for the tax lien being primary to the mortgage, that means the lender has a (probably) legal interest in "re"deeming the property, as well as a clear interest in attending the auction.

I have a quasi-client who lost a house he owned jointly with his late, financially incompetent, mother. He received actual cash from the tax sale, and is in the process of redeeming the house (and was asking about income tax consequences, which is how I got involved.)

Arthur, it's not just DC tax sales. If there is a way to make a buck by taking advantage of a situation, there are people out there more than happy to make it. Some will even go around training others to do it.

[Arthur Rubin]

Arthur, it's not just DC tax sales. If there is a way to make a buck by taking advantage of a situation, there are people out there more than happy to make it. Some will even go around training others to do it.

I know how things work in CA. In fact, in the early 1980s, I discovered the vacant lot next to my house was up for tax sale. Unfortunately, I couldn't put together enough cash for the bid; requirements at the time were to have 10% of the bid in the form of a cashier's check; winning bidders are required to put together the additional funding within a month.

I admit, I'm not just anyone, but I'm sure a lender would notice if a property they had loaned money on was subject to tax sale, even if they were not making the tax payments themselves.

[Gregg]

Let me help explain it Gregg, the city takes the house for 500 bucks in back taxes, it then sells it to me for the 500, the owner has a year or two depending the state you are in. He has this time to pay off the taxes, but the investor is legal entitled to some interest on the money put out on the house. If he does not pay, I own the house for 500, then turn around and sell it, OWNER GETS NOTHING.

Let me explain it to you,
The homeowner owes taxes he hasn't paid (the vast majority of these properties are vacant real estate, much of it declared blighted and the reason the tax isn't paid is the house isn't worth the tax payment. There are exceptions, sure, but I know a guy with only 8 toes. Just one guy, though, its not very common.)
I BUY the tax debt from the county, and I have a lien on the house, which where I have done it, I get to charge the prime rate + 3% on, and I cannot foreclose for a year. (the article you posted was about DC, where according to it, is 6 months).
Yes, I can foreclose and the homeowner loses his equity, but its more theory than reality. If a bank has an interest in the property, they will have someone show up and bid at least what they are owed, which they get if anyone outbids them, minus the taxes that started it all. And if no bankhas an interest, unless its an 1/8 acre irregular lot with no room to build on, or something similar, lots of people are going to show up and bid on it. The homeowner, if the house is foreclosed on, does get this excess payment. I have never seen a property worth anything go for the bare minimum bid, I've seen a lot sell for more than I would pay for them, and most, to tell the truth, are bought by the bank that holds the mortgage, to protect their own interest in them. In Ohio the weekly Sheriff Sale is very well attended by professional flippers who make good money but they're not often getting anything for $500, either. Like I said, I looked at better than 10 houses for every one I was mildly interested in, of the 3 I bought, 2 of them paid the lien within the period they were allowed to do so, one of them got a legal aid free lawyer and managed to drag it out almost 18 months and in the end I got a bad return on $2500 give or take that I had tied up for almost 2 years, and then I had to pay MY lawyer, which is reason #7 that I gave up on flipping real estate, because its not as easy to make any money at it as it is, for me anyway, to make more money doing other things. Does it suck to be you if you're on the wrong side of this? You Betcha! So pay your taxes and it won't happen to you. Are there anecdotes out there about poor old veterans losing their house, well, at least the one you found, but there are a lot of other issues involved in many of these stories. This man suffered from dementia etc... and I'd put forward the root cause of that particular tragedy is elder care and not $500 in back taxes. You're complaining about extreme outliers here, and still, in most jurisdictions the excess proceeds of tax sales go, after expenses, to the homeowner. Don't like it, and neither do I frankly, do something constructive about it. Run for county commissioner and end it where you live. I'd give you soem advice first, lose the "not a SovCit but I still have a chip on my shoulder" act, you might have 20,000 U-Tube followers, but the other 359,000,000 Americans think you're a loudmouth asshat. Get out of the reverb and quit smoking your own dope long enough to realize how obtuse you really are.

The biggest problem with this system is it leaves a lot of derelict property vacant because its not worth the amount owed in taxes on it, look into the failed muni bonds issued by the hospitals in Pittsburgh, and how they defaulted because of the amount of absolutely terrible real estate that just sat, decreasing in value every day, and not worth the legal fees to foreclose on. Until the county and the state came up with new ways to erase the tax debts did some of that property finally get put back into use. Its an interesting case I read a bit about in one of Micheal Lewis' books.

[Patriotdiscussions]

No one?

Surely someone believes taking private property for pennies on the dollar is what the concept of private property is built on right?

I don't accept your hypothesis.

If a home is worth, say, $50,000 and is foreclosed for non-payment of taxes, it will probably have more than $500 outstanding. Usually, however, houses are foreclosed when the outstanding tax bill exceeds the value of the house. If that were not the case, the owner would simply sell the house and pay the taxes. If the owner can't sell if for $50k, then it, by definition is not worth that.

WTF are you babbling about? back tax sales are different then a foreclosure. No they do not take the house for back taxes after the taxes exceed the property value, where did you get this stuff at? Are you high?

So, if someone is able to buy a house for $500, or even $1,000 in back taxes, it probably isn't worth much more than that, so there's nothing to give to the homeowner.

Even the crappiest house in gary Indiana sold for 5k, seriously are you high? we are talking about a house, more then likely on a piece of land(not many floating in the sky), just the land alone is worth 1k in most of America dude, put down the crack pipe

Exactly the same thing happens when a lender forecloses for non-payment of the mortgage. If the lender forecloses and sells the house for more than is owed (plus reasonable selling costs), the lender must pay the homeowner the excess. Again, though, foreclosures usually happen when a house is worth less than the outstanding mortgage. Like the city, the lender has no obligation and little incentive to sell the house for top dollar. They are only concerned with getting what they are owed, so even in rare cases when a mansion is foreclosed, the homeowner usually gets little or nothing.

And, yes, I do consider this to be perfectly in line with the concept of private property. Foreclosures can only happen when a property owner has failed in his responsibility to the city or to a lender. in the case of property taxes, the property is, by law, collateral for the taxes. In the case of a mortgage, the homeowner has voluntarily pledged the property as collateral for the loan.

Also, IANAL, but I am very suspicious of your claim that, even after the city sells the home for the back taxes, the homeowner can come back two years later and reclaim the house by simply paying the taxes that were owed. There may be a time after the city takes possesion that the owner can do this, but not after it is sold to a disinterested third party. Who would buy a house under such conditions? I certainly wouldn't, even if you offered me the Taj Mahal for $1.

IMHO, no sane buyer would buy a foreclosed property, knowing that the homeowner could come in two years later and reclaim ownership.

This is why I am a strong believer in the do not do drugs racket.

[Gregg]

This is why I am a strong believer in the do not do drugs racket.

So, you're not high, you're just that stupid?

[Arthur Rubin]

This is why I am a strong believer in the do not do drugs racket.

So, you're not high, you're just that stupid?

Just say no -- to the war on drugs.
(Difficult if the government seizes your house because someone left drugs in it, which has been known to happen. A rational person could probably get his house back.)