City preparing to sell tax liens of more than 100 property owners who owe taxes
The city is preparing to sell the tax and sewer-use liens placed on more than 100 Milford properties, which total about $6 million, to any party willing to buy the debt and go after the property owner for reimbursement.
If the property owner doesn't pay up a year after the lien is sold, the lien holder can foreclose on the resident's property.
This isn't the first time the city has sold its liens. Mayor Benjamin Blake told the Board of Aldermen this week that the city does this almost every year, though it did not sell the liens last year.
The city is selling two separate lists of liens, which include about 110 properties and represent the top delinquent taxpayers in the city in terms of dollars owed. The first list will be sold in its entirety and includes liens against 57 residents and businesses that have fallen behind on their city obligations. The list totals $412,000, though that figure will likely increase with the next tax payment deadline.
The second list contains 54 properties totaling more than $5.5 million in taxes and sewer fees owed the city. This list will be sold piecemeal because the accounts have historically been hard to collect. Some go back 15 years.
Recycling Inc., for example, is on the hard-to-collect list as owing more than $25,000 in taxes. That property, once slated to become a recycling facility, has been embroiled in controversy for several years.
There are several estates on the second list also, owing a few hundred thousand dollars in taxes.
After buying the liens from the city, the winning bidder can try to collect the money from the residents and businesses for a year. If they aren't successful they can foreclose on the property to get their money.
The tax collector will be sending letters to people on the list letting them know that their liens will be sold. People can pay up before the sale takes place and their names can be removed from the list.
Selling the lists
The city is requesting that bids from companies interested in buying the liens be submitted by June 12. The city will name the winning bidder July 14.
The lien assignment documents will be completed by 3 p.m. Aug. 18, so people who want to see their names removed from the sale list will have until 2 p.m. Aug. 18 to pay all or part of their back taxes.
The city reserves the right to buy back any tax lien before the bidder starts foreclosure action.
Also, according to city documents, the company must notify the property owner with at least three separate written notices before starting foreclosure proceedings.
Companies that purchase these kinds of liens tack on a fee for collecting the delinquent dollars, Tax Collector Judy Haley explained. One resident actually paid off the company that bought her tax lien in recent years, but instead of having to pay the $20,000 that she initially owed the tax collector, she had to pay $41,000 when adding in the company's collection fee, Haley said.
Several members of the Board of Aldermen, who had to vote to send the sale out to bid, expressed concerns but ultimately voted in favor of the sale.
Alderman Susan Shaw said some people on the list may have only fallen behind only in the past six months, and noted that the agency can foreclose on these property owners.
“I have concerns about this,” Shaw said.
Alderman Nick Veccharelli asked if there is consideration for hardships, and Haley said she has in the past removed people from the list for various hardships, including medical reasons and death.
“It doesn't happen very often, but if there is a case I withdraw the name from the list in anticipation that in good faith they will do the best they can to pay,” Haley said.
Haley said she feels badly for some people on the list who have tried in the past to make payments on their account. One local woman who owns a boating business, for example, is on the list as owing about $8,000. Haley said she feels badly about selling that lien because the property owner is doing the best she can but won't likely catch up.
Another local businesswoman, however, doesn't have the tax collector's sympathy because she hasn't made any attempt to pay her back taxes, Haley said.