63. Interesting Facts About County Private Tax Sales

In Pennsylvania when a property is real estate tax delinquent and placed on the county's annual Upset Sale Tax Sale list for two years the property then is placed on the county's list of properties eligible for private tax sale or judicial sale.

If a person seeks to use the private sale mechanism, they make application to bid to the county Tax Claim Bureau. The Tax Claim Bureau checks to see that the bidder is not tax delinquent for other properties or in violation of the building  and maintenance code for other properties the bidder may have. Only delinquent taxes are forgiven. Any liens or mortgages remain.

Public notice that a private tax sale is proceeding is limited to the County Bar association's legal journal publication: http://www.palegalads.org. One searches upon the words, "private tax sale."

The private tax sale published in the specialized legal journal publication gives the property Parcel ID number, address and the name in the record of the current owner. It also gives the date for the completion of the administration of the private tax sale. It does not give the name of the applicant / bidder.

All too often the applicant bidder acquires a property for a couple of hundred dollars, unobserved, below the radar so as to speak.

All too often the group of applicant bidders in a county are repetitive from year to year. Often they rent defective properties or do a minimum to make a property habitable. They typically rent to persons of limited means or persons seeking a place to conduct unlawful activities of one sort or another. Drugs? Prostitution? Hiding firearms? Hiding stolen merchandise? Unlicensed liquor? Immoral entertainment? Dog fighting and betting?

The property address may be used for fraudulent purposes. Nonexistent business expenses declared on income taxes? Nonexistent tenants created to launder money? Fraudulent values to secure a loan? Maildrop or parcel delivery drop for unlawful purposes?

Another consideration is whether or not the applicant bidder is a straw buyer for the tax delinquent owner to continue possession and control and continue tax delinquency? There is nothing to preclude the applicant bidder from continuing a pattern of tax delinquency. The straw buyer could just enable the tax delinquent owner to continue their course of conduct.

Or, the property is simply used for the excessive  rental returns for a building with band aid improvements that cost a token amount.
Given the very low acquisitions costs, the motivation of the applicant bidder may simply be that. Tax delinquency erased despite the possibility of liens  / mortgages remaining is not a barrier as it may be a couple of years for the lien holder or the mortgagor to catch up to the applicant  bidder.

Learning the names of applicant bidders before the completion of a private tax sale requires that a detailed right to know request be submitted to the County Tax Claim Bureau.

Now in comparison, a judicial tax sale eliminates all real estate tax liens, mortgages and private lien- loans.  But, the applicant must commit to the fees incurred to have deeds searched  and all parties of interest notified as to a judicial tax sale being scheduled. That's about $1000.00 in costs. Unlike the private tax sale, the judicial tax sale has greater transparency and is an actual competitive, in-person auction. Instead of token amounts as in a private tax sale, competitive bidding often is in the tens of thousands or more dollars. Unfortunately, the buyer is not assured in a judicial tax sale that proper notice to parties and deed search was conducted. Attorney incompetence / negligence might later rear its existence when a title insurance company finds the defect. No title insurance. Not new mortgage.
.

62. Owner of Derelict Property Resides in Well Maintained Home

 

Abandoned, blighted burned hulk harms real estate values, health and welfare, continuing fire risk.

It is a sad observation that often owners of abandoned and blighted properties in Sharon, PA own attractive and pleasant residences. In looking at the former bar and grill known as the Zoo on Madison and N. Water Streets (1 N 48), Sharon, PA, an address in nearby Masury, Ohio is given for the owner by Mercer County records. The place burned a few years ago and is now a hulk. The delay in demolition is the quagmire of chasing insurance proceeds, if there was any insurance, and the ability to evade building and maintenance code enforcement and the Pennsylvania Crimes Code. The expense and complexity of placing a lien on the owner's Ohio residence is in the picture as well. Does anyone know if the owner has property or banking accounts in Pennsylvania? Existing Pennsylvania law allows for a lien upon against other property in Pennsylvania.That could be a way to recover demolition costs. Could a creative and energetic attorney  be able to figure a way to attach out of state properties owned by the owner of the Zoo property?  It has to be particularly annoying for the adjacent home owners who have fine and appealing residences. Every abandoned and blighted property in Sharon lowers real estate values, affects the health and welfare of the City and is a fire risk. It creates opportunities for crime. Maybe the simplest approach would be to the Pennsylvania Abandoned and Blighted Conservatorship Act and deny the owner possession and control, abate, remediate and sell?

A view of the Ohio owner's well maintained home in an appealing neighborhood.

Another view of the Ohio owner's residence. A search  found no abandoned and blighted properties within a couple of miles of the owner's well maintained residence in Ohio.

N Water Street and Madison Street

Degradation of the community

Tall masonry walls public safety threat as there is a probability for collapse.

61. Abandoned and Blighted Owned by Large Property Owner Sharon PA

Here is a gallery of abandoned and blighted properties owned by a large property owner in Sharon, PA. 

Every property owned in Sharon, PA is harmed by abandoned and blighted properties. They lower real estate values for the whole community. They pose risks to the health and welfare of the community. They poses potential sites for unlawful activity. They are fire risks.

Each of these properties are subject to corrective measures as provided by the Pennsylvania Abandoned and Blighted Conservatorship Act. As such; the municipality, the school district, a church, a nonprofit, any property owned within 2000 feet can file a petition for conservatorship.

629 Meek St., Acquired $22,000 06/22/10,   2 S 1

629 Meek Street

469 Meek St., Acquired for $15,000 on 10/22/10,  2 R 1.

483 Meek St., Acquired for $150 on 06/25/15,  2 R 2

327 Fourth Street

 

Acquired for One Dollar 02/09/12- 327 4th St.

 

2 N 75   327 4th St.

323 Silver Street

Acquired for $3000 06/01/13   323 Silver St

2 B 86     323 Silver St

60. Blight Remediation and Contractor Compliance Workers Compensation

Forget HomeAdvisor or Angie's List. 

In checking out home maintenance contractors, plumbers, painters, electricians, etc are they covered by Workers Compensation Insurance??? 

The uninsured contractor can create havoc with your homeowners insurance if a worker is injured at your home. Check PA Labor and Industry at: https://www.dli.pa.gov/…/Workers-Compensation-Insurance-Sea… 

The uninsured has an unfair advantage over the insured competitor. They do not have the business expense for Workers Compensation Insurance. The uninsured risks criminal prosecution for insurance fraud when an employee is injured. This precaution is often overlooked. Checking out coverage separates and identifies the unethical business person. 

The contractor registration with the Attorney General does not assure an active Workers Compensation insurance policy. But, check to see that the contractor registration is in force using:
https://www.attorneygeneral.gov/…/home-improvement-contrac…/
It may have lapsed.

Now, if the contractor employs persons of the Amish faith, there is a religious exemption for Workers Compensation. It must be documented with the Department of Labor and Industry. All too often it is not followed by the unethical business owner. They use the appearance  and dress of their Amish employees as a ruse for the unwary that they have Workers Compensation coverage for all of their other "English" employees.  See: https://www.dli.pa.gov/Businesses/Compensation/WC/compliance/Pages/default.aspx

59, Private Sale - Citizen Audit

The Mercer County Tax Claim Bureau posts a list of properties that are eligible for Judicial or Private tax sale.

The private sale clears tax liens and government fee arrearages but not private loan liens.

The list of properties are posted with the names of the current owners of record before the designated sale date. So, it appears then that the private sale scheduled for September 12, 2018,  has allowed for delinquent property owners to expunge their delinquency for a nominal amount.

While Pennsylvania Law makes it unlawful for a delinquent property owner to extinguish their delinquency themselves, the law is silent as to straw buyers. Why would someone buy a property at private sale given the risk that there remain other liens? Is it because they can do so for a few hundred dollars and they are willing to take the risk? Is it because they are not exposed to an open, competitive bidding process as there is at a Judicial Sale? Given that unscrupulous persons can seek the median rent of $617 a month, are they then wiling willing to go forward for the rent returns for very little money invested? Or, might a straw buyer be used because the property owner has the goal to evade taxes? The delinquent owners knows the status of private loans or mortgages and can manage those private liens through the straw buyer?

For a citizen to be aware  of a scheduled  private sale one has do a periodic search of the appropriate county legal journal published by the county bar association. http://www.palegalads.org/

The public record persons who have applied for the private sale is available at the court house. The straw buyer routine works because of the inconvenience involved for a citizen audit. Is the applicant restricted from purchase? Is the applicant likely part of a straw buyer tax evasion scheme? etc. Does the applicant have a history of building code violations? Is the applicant or has the applicant have a warrant issued for chronic code violations?

As the application process requires personal identification and address, this is an audit item of importance. Local applicants can be easily verified. The out of area, out of state applicants are a concern as they are difficult to hold accountable for code violations.

§ 5860.619. Restrictions on Purchases

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 72 P.S. Taxation and Fiscal Affairs

Purdon's Pennsylvania Statutes and Consolidated Statutes

Title 72 P.S. Taxation and Fiscal Affairs

Chapter 4. Local Taxation (Refs & Annos)

Delinquent Taxes in Counties, Cities of Third Class, Boroughs, Etc. (Refs & Annos)

Article VI. Sale of Property (Refs & Annos)

(e) Miscellaneous

72 P.S. § 5860.619

§ 5860.619. Restrictions on Purchases

Currentness

(a) Deeds for any property exposed for any sale under Subarticle (b) of Article VI of this act shall not be exchanged any sooner than twenty (20) days nor later than forty-five (45) days after any sale held under subarticle (b) of Article VI.¹

(b) A municipality may, within fifteen (15) days of any sale held under subarticle (b) of Article VI of this act, petition the court of common pleas to prohibit the transfer of any deed for any property exposed for any sale under subarticle (b) of Article VI which is located in that municipality to any purchaser who is proven to meet any of the criteria set forth in the municipality's petition.

(c)(1) The petition of the municipality shall allege that the purchaser has over the last three years preceding the filing of the petition exhibited a course of conduct which demonstrates that a purchaser permitted an uncorrected housing code violation to continue unabated after being convicted of such violation; and

(i) failed to maintain property owned by that purchaser in a reasonable manner such that it posed a threat to health, safety or property; or

(ii) permitted the use of property in an unsafe, illegal or unsanitary manner such that it posed a threat to health, safety or property.

(2) A person who acts as an agent for a purchaser who sought to avoid the limitations placed on the purchase of property by this section shall be subject to the restrictions imposed by this section.

(3) Allegations under this subsection shall be proved by a preponderance of the evidence. In ruling on the petition, a court shall consider whether violations were caused by malicious acts of a current non-owner occupant and the control exercised by a purchaser in regard to his ownership interest or rights with other properties.

(d) A change of name or business status shall not defeat the purpose of this section.

(e) As used in this section:

“Municipality,” any county, city, borough, incorporated town, township, home rule municipality, optional plan municipality, optional charter municipality or any similar general purpose unit of government which may be created or authorized by statute.

“Purchaser,” any individual, partner, limited or general partner, shareholder, trustee, beneficiary, any other individual with any ownership interest or right in a business association, sole proprietorship, partnership, limited partnership, S or C corporation, limited liability company or corporation, trust, business trust or any other business association.

“Uncorrected housing code violation,” any conviction of a violation of the local building, housing, property maintenance or fire code which is not remedied within six (6) months of conviction.

“Violation,” any conviction under a building, housing, property maintenance or fire code which posed a threat to health, safety or property, but not a conviction deemed by a court to be de minimis.

Credits

1947, July 7, P.L. 1368, No. 542, § 619, added 1998, Jan. 29, P.L. 24, No. 5, § 2, effective in 60 days.

HISTORICAL AND STATUTORY NOTES

Act 1998-5 legislation

Section 3 of Act 1998, Jan. 29, No. 5 provides that the addition of this section shall apply to all sales conducted on or after the effective date of that act.

Footnotes

1

72 P.S. § 5860.610 et seq.

72 P.S. § 5860.619, PA ST 72 P.S. § 5860.619

Current through 2018 Regular Session Acts 1 to 41, 43 to 47, 51, 52, 54, 65, 66 and 72.

§ 5860.619a. Additional restrictions

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 72 P.S. Taxation and Fiscal Affairs

Purdon's Pennsylvania Statutes and Consolidated Statutes

Title 72 P.S. Taxation and Fiscal Affairs

Chapter 4. Local Taxation (Refs & Annos)

Delinquent Taxes in Counties, Cities of Third Class, Boroughs, Etc. (Refs & Annos)

Article VI. Sale of Property (Refs & Annos)

(e) Miscellaneous

72 P.S. § 5860.619a

§ 5860.619a. Additional restrictions

Currentness

(a) Within twenty (20) days following any sale under this act, a successful bidder shall be required to provide certification to the bureau that the person is not delinquent in paying real estate taxes to any of the taxing districts where the property is located and that the person has no municipal utility bills that are more than one year outstanding.

(b) As used in this section, the following terms shall have the following meanings:

“Certification,” shall mean proof via receipts of paid real estate taxes and municipal utility bills within the jurisdiction or a notarized affidavit by the bidder evidencing payment of such real estate taxes and municipal utility bills.

“Municipal utility bills,” shall mean bills for services provided by a utility which is wholly owned and operated by a municipality or municipal authority. The term shall include, but not be limited to, water, sewer and solid waste disposal utility bills.

“Municipality,” refers to any county, city, borough, incorporated town, township, home rule municipality, optional plan municipality, optional charter municipality or any similar general purpose unit of government which may be authorized by statute.

“Person,” includes a corporation; partnership; limited liability company; business trust; other association; government entity, other than the Commonwealth; estate; trust; foundation; or natural person.

Credits

1947, July 7, P.L. 1368, No. 542, § 619.1, added 1998, Dec. 21, P.L. 1008, No. 133, § 3, effective in 60 days.

HISTORICAL AND STATUTORY NOTES

Act 1998-133 legislation

Section 4 of Act 1998-133 provides that this act shall apply to all sales conducted on or after the effective date of that act.

72 P.S. § 5860.619a, PA ST 72 P.S. § 5860.619a

Current through 2018 Regular Session Acts 1 to 41, 43 to 47, 51, 52, 54, 65, 66 and 72.