It was standing room only when about 50 showed up at the Lawrence County Commission chambers for an informational meeting Monday morning on next week’s tax lien sale.
Explaining the procedures and law for the sale that will be on the front staircase of the courthouse were Ironton attorney Mark McCown and County Treasurer Stephen Burcham.
“This is the first time for the county to try this,” Burcham said. “It will help clean up properties in Lawrence County …houses that have been abandoned.”
About two years ago the Ohio legislature extended the provision of the law that regulates tax lien sales to all 88 counties. Previously only the 12 largest counties in the state could hold such sales.
“Basically, it is to help the school districts as most of you know the taxes go to our schools,” he said.
Next week the tax liens on 300 delinquent parcels totaling approximately $611,000 in back taxes go on the auction block. However, the winners of these parcels won’t leave the courthouse owning more property. In fact, they may never own the land; rather they have become the first tax lien holder on the parcels.
“You buy the right to collect those taxes that the people owe the county,” McCown told the audience.
The successful bidder pays only the back taxes on the property, plus administrative costs, penalties and interests. What the bidding does is determine the interest rate the lien buyer may receive if the property owner redeems the parcel.
“You can foreclose against their property,” McCown said. “You are not buying property at this sale.”
Owners have a year in which to pay all taxes and get their property back. If they do or if mortgage holders redeem the property, they must pay the lien sale buyer the amount of back taxes, administrative fees and penalties, plus a specified interest rate on those taxes.
That interest rate starts at 18 percent annually and goes down by a quarter of a percent increments during the bidding
To participate in next week’s sale, potential bidders must register with the treasurer’s office, preferably this week, by providing a tax identification number and $500 in cash. Personal checks or cashier checks will not be accepted.
Making the deposit in cash is required by the statute.
“You get your money back if you don’t buy anything,” McCown said.
Lien buyers must also put down at least 10 percent of the total amount owed in cash by the close of the business day and pay the balance within five business days. This is also according to statute.
McCown also recommended that buyers record their liens in the recorder’s office.
“When we search titles, we look for liens on them,” he said. “You want to make sure in the recorder’s office that you are owed the money.”
If the property owner doesn’t redeem the property, the tax lien buyer can foreclose on the property either by contacting the county prosecutor’s office or through a private law firm.
“You cannot foreclose for at least a year,” McCown said. “You must file foreclosure within six years. After six years that tax certificate is canceled.”
The property will then go into a foreclosure auction twice. If it is not sold during the second sale, the lien bidder becomes the new owner.
“There is no guarantee you will make money,” McCown said.
Most parcels in the upcoming sale have a tax bill ranging from $1,000 to $4,500. However there are a few with pricier tags ranging from $9,019 to $22,102.
“This is a buyer beware,” Burcham said. “You have to know what you are bidding on.”
The sale begins at 10 a.m. Monday.