Tax sales of properties are last resort for counties

wcrenshaw@macon.comJune 9, 2013 

MarkKushinkaMug

Mark Kushinka

WARNER ROBINS -- This is not a good time of year for Houston County property owners who are behind on paying their taxes.

Last week, the county held its first public auction of the year for properties with unpaid taxes, and those will continue monthly through at least August. Generally that step isn’t taken until people are three years behind, Tax Commissioner Mark Kushinka said.

He personally places every tax sale sign at the properties, partly because he wants to see what he is selling but also because he hopes to meet with the owner and find out if the sale can be avoided.

“What I’m trying to find out is why you haven’t paid it,” Kushinka said. “A lot of them are scared to talk to me in the office, but they don’t mind talking to you on their own turf.”

If people seem to be making a good-faith effort, they can put off a tax sale if they can just pay up the first year owed on the taxes.

Bibb County is a little less lenient. Tax Commissioner Thomas Tedders said he generally waits two years before pursuing a tax sale, although it can be only one year if a large amount is owed.

But like Kushinka, he said if people just indicate they are making some kind of effort to pay up, he will work with them. What delinquent property owners don’t want to do is ignore the tax commissioner.

“Just come talk to us,” Tedders said. “We have people specially designated for that. The last thing we want to do is sell somebody’s property.”

Both counties will take partial payments, which isn’t the case for many counties, Kushinka said.

For people who live paycheck to paycheck and have trouble coming up with a big tax payment at the end of the year, Kushinka suggests starting a Christmas club account at their bank. It allows people to put in a little money from each paycheck, and it can’t be touched until usually Nov. 1.

Things to know before going to a tax sale

Houston used to only have one or two tax sales per year, but that has expanded with an increase in unpaid taxes, Kushinka said. This year the county will have monthly sales until possibly September if needed.

A tax sale can be a way to snap up a property at a bargain price, but there’s a lot people should know before attempting it.

For starters, they are not actually buying the house but the county’s lien on the house. That gives them the right to acquire the property, but after the auction they have to wait 12 months before they can even set foot on it. Up until that point, the property owner can retain it by paying the buyer the amount paid at auction, plus 20 percent.

The 20 percent is often what drives people to the tax auctions, Kushinka said. Investors see a profit potential whether the owner pays up or not before the 12 months is out.

“It’s getting to be a big business,” he said.

Not everyone who comes to an auction is a pro, however. At the June 4 auction, Kushinka said he had a lady come and buy her neighbor’s property, and that is not uncommon.

That’s why before every auction, he takes time to explain how it works for the benefit of anyone who hasn’t done it before.

Anyone who looks at the long list of legal ads before a tax sale may get the impression a lot of people aren’t paying their taxes, but that’s not quite the case. Kushinka said 97 percent of property owners have paid their 2012 taxes at this point. Tedders said for Bibb the collection rate is 96 percent, and it will typically get higher once people get a notice that a fi. fa. has been filed.

‘That you cause to be made’

Fi fa is short for the Latin term, fieri facias, which means “that you cause to be made.” In simpler terms it means you owe some money, and a levy has been placed on your property.

A fi. fa. is filed in the clerk of court’s office once a property owner is a year behind on paying taxes. It won’t be published as a legal ad until a tax sale is pursued, but once it is filed the property owner has a big problem.

Kushinka said having a fi. fa. filed is one of the worst things that can happen to a credit rating, and avoiding it is a big reason people shouldn’t fall even a year behind on their taxes.

Although the county allows three years before pursuing a tax sale, it’s not a good idea for people to think they can let their taxes slide for a while. In addition to their credit rating taking a nosedive, Kushinka said, the penalties and interest on that $800 tax bill three years ago could turn it into a $1,600 bill today.

When the properties are sold at auction, the minimum bid is the amount owed to the county, including all of the penalties and interest plus any costs such as legal advertising.

Many of the properties sold at a tax sale are abandoned or dilapidated and often don’t sell because those properties aren’t even worth the amount owed in taxes.

Kushinka said he would like to see the county consider a land bank, which offers an avenue to get the properties sold by wiping the tax slate clean. Bibb County has a land bank, which Tedders said has been effective and has helped rehabilitate some blighted properties.

“You may lose some money,” Kushinka said, “but at least you are getting it back on the tax rolls.”

To contact writer Wayne Crenshaw, call 256-9725.

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