How to Prevent a Loss of Real Estate in a Tax Sale

Our county has experienced a tragic loss of one of its best businesses at a county tax sale this Wednesday.

1.  First of all, the business is not lost for another 15 months.  A tax sale results in the selling of an enforceable lien that includes a precise timetable of obligations and responsibilities for both the owner and the purchaser of the tax lien.  That lien is good for 15 months.

2.  Notice was run twice in the local paper--The Pocahontas Times.  Dozens of delinquent properties were listed including the pending tax sale.  Owners could pay the back taxes up to the day before the sale.  Many people did.  The list was much smaller at the day of the sale.  You could buy a copy to the final list for $7.00, The owners of C.J. Richardson's did not pay the back taxes.

3.  The sale consists of a bottom line amount of the taxes owed on the real estate.  Bidders may choose to bid to any amount above that.  That amount will include the back taxes plus any other $$$ the person may choose to invest in winning the bid.  The winner of the bid has certain obligations such as notice to the landowner as to the fact of the sale.  THESE ARE MANDATORY.  There is a rock solid deadline for the buyer's actions.

4.  The owner of the property that has a tax sold tax lien can redeem the property within at least a year by paying the amount of the taxes, the amount of the $$$ bid by the buyer.  The tragedy of this fact is that if a buyer bids $50,000 on a property that had tax owed of $2,000, the owner will have to pay back $50,000 plus the taxes PLUS ANY COSTS ASSOCIATED WITH THE ADMINISTRATION OF THE LIEN. 

5.  Some people will do this!  But for some the property may have been bid so high as to make it cost prohibitive.  Think of it as hammer crushing an ant.  But it likely will be a great deal for the buyer. 

6.  In any case, the 15 month period allows for an opportunity to redeem.  But you won't get the extra money back--that goes to the state.  That is the price you pay for not paying your taxes on time.

7.  During the redemption period, no property changes hands at all.  In the case of Richardson's they will continue to do business as usual.  The will continue to own the building until the end of the redemption period at which time the new owner will take possession of it.

8.  The owner may redeem the building or make alternative arrangements to dispose of the inventory.  This might include a sale to the businesses' competitor, a regular auction sale, or a gift of inventory to a family member or even a non-profit group as a tax deduction.  The buyer may choose to rent the property back to Richardsons.

9.  Richardsons could find an alternate location.

10.  Thus there are a large range of opportunities for Richardsons to continue going forward for many decades. 

We wish the family well and hope that no one else experiences this kind of loss.

I was at the sale,  I had a friend who purchased almost $100,000 worth of property.  Certain realtors will experience a huge amount of profit.  Many, many people will redeem their property as is their right provided by law.

Lesson Learned:  Read your Pocahontas Times--it is a legal newspaper which may save you some money.