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“We can’t have people losing their homes because of unfair taxes.”
– Gov. Mitch Daniels, July 2007
INDIANAPOLIS – It has become a tagline for concerned politicians and angry protesters, with the ability of government to take a person’s home, business or land now at the heart of the property tax debate.
But how often does it really happen? And are there enough safeguards in the system when it does?
“That’s one of the reasons I want to eliminate property taxes is to get this onus off our backs so we can own our homes and not have this constant government lien,” said Sen. Dennis Kruse, R-Auburn.
There are no statewide statistics on tax sales – the auction of homes, businesses, vacant lands or other property because of delinquent property taxes. And a property is eligible for the sale if the owner is behind on other payments, such as sewer-use charges, weed fees, neighborhood code order fees or a special assessment.
The best data available are from SRI Inc., a private vendor that handles tax sales for about 70 Indiana counties.
According to its information, 4,674 parcels were sold at tax sales in Indiana in 2005.
SRI does not handle some of Indiana’s largest counties, though, such as Allen and Marion.
Allen County Auditor Lisa Blosser said Allen County sold 943 properties in 2005, bringing in more than $15 million.
In all, Indiana has about 3 million parcels of land.
“It’s one process I really hate in my office,” Blosser said. “You never want to take someone’s property.”
Wabash County Auditor Jane Ridgeway said: “We don’t like to use that term, ‘take it away.’ That’s never our goal. Our goal is to collect what’s due and return the property to tax rolls.”
The process of going to a tax sale begins when an owner is three payments behind. That property is then certified to the tax sale list July 1. Various notices are required to be mailed to the owner, and county officials must list the properties in newspaper advertisements.
The owners usually have until the morning of the tax sale to pay the delinquent taxes, plus penalties, to keep their property out of the sale.
Blain Ayers had to make that trip to the Huntington County Treasurer’s Office on Wednesday to avoid losing his Charles Street home and adjacent garage in last week’s tax sale.
“My wife read it in the paper, so I called,” he said. “I’m not too happy about the situation.”
Ayers conceded he is having a hard time catching up on bills after being laid off from a previous job.
“We were able to come up with the money. But I’m not paying my car payment or house payment,” he said.
He also resents that when he called to get an amount he had to pay, he was told $2,500.
But when he showed up with the cash, officials said he owed $50.82 more to keep the home out of the sale.
“You have got to be kidding me. They’ll take my home for $50?” Ayers said later.
If a property actually goes into the sale, those who bid on it are essentially buying a lien on the property. During the next year, the lien holder isn’t allowed on the property because the owner still has one year to “redeem” the property by paying all the applicable fees and taxes.
For instance, a house with $1,000 in unpaid taxes is auctioned for $10,000. First, the $1,000 in taxes is paid to the county, which distributes it to the appropriate taxing units in the district.
The surplus of $9,000 is put into an account for the next year. If the owner redeems the property, he or she must pay all the taxes, late fees and a sizable interest rate to the lien holder on the full amount.
After a property is redeemed, the lien holder gets her money back, plus interest. This is what attracts out-of-state investment companies to bid on properties.
If the previous owner doesn’t redeem the property, the surplus money, after taxes, goes to the previous owner unless that person owes other taxes.
The Indiana Department of Local Government Finance is preparing to put auditors’ data on the Internet in October to make sure that outstanding property tax obligations in other counties are paid first before giving the previous owners the surplus from a tax sale.
According to SRI data from 2005, 62 percent of the properties were redeemed compared with 66 percent in 2002.
About 30 percent of the properties sold in 2005 ended with final deed transfers.
The rest were abandoned along the way, possibly because buyers realized they did not want the property. Or the lien holders didn’t fulfill necessary requirements to finish the process.
Allen County Treasurer Bob Lee said he believes Indiana’s system is fair and pointed out that taking away someone’s house requires three years, including 18 months’ worth of delinquency and the one-year redemption period.
Adams County Auditor William Borne said the notification is already cumbersome, noting that for those who have skipped town he has to send registered letters, have a sheriff post something on the door, plus there are courtesy notices from the treasurer.
But Kruse doesn’t agree. Last year he filed a bill to increase the notification process, but county officials defeated the proposed legislation.
“I do not like the concept of a government confiscating somebody’s home and throwing them out in the cold,” Kruse said, noting a personal phone call to the owners should not be too much to expect.
Allen County is not having a tax sale this year because of how late tax bills are being sent. But several other northeast Indiana counties are.
Huntington’s sale last Thursday consisted of 43 properties, of which 25 sold. The county received $64,000 in taxes, and the surplus money spent was $473,000.
In comparison, the county sold 54 properties last year.
Adams County has a tax sale planned for Oct. 26. Fifty-six properties were certified delinquent to the auditor but some have already paid.
Borne said over the past three years only about five properties a year have sold and most are eventually redeemed.
Wabash County’s tax sale is set for Oct. 16. More than 140 properties were certified for the tax sale though about two dozen have paid up since then.
“This year is more than we’ve ever had,” said Wabash County Treasurer LuAnn Layman, who has been there for 15 years. “Oftentimes the same people repeat. But this year there are some new ones.”
This year’s high tax bills can’t be blamed quite yet, because owners involved in an upcoming tax sale had to be delinquent several payments before 2007. Officials in various counties saw no specific trends either.
According to SRI, a few hundred more properties were sold at tax sale in 2002 than 2005, and Allen County’s numbers have varied as well.
Allen County sold 642 properties in 2006 compared with 943 in 2005 and 449 in 2003.
“It’s always hard,” Ridgeway said. “It would be much easier if people would just pay their taxes.”
nkelly@jg.net
