When the county Tax Lien is more than the Property is worth?

5 Replies

I am completely confused on how the math works on City/County owned properties where the outstanding back taxes owed are worth more than the property...  (think: vacant lots / teardowns)

Is there a way to pre-negotiate with the county Tax Assessor?  % of owed maybe?

Basically, who or how are are these properties disposed of if the math does not work?

Thanks for any insights!   

The states, counties, cities are held to the laws/statutes. In Illinois I have participated in "Scavenger" sales. The county can work with cities, townships and decide to sell tax deeds (actual ownership of the land, not just a lien) for an amount less than the taxes/liens owed. You can try to negotiate for yourself, but that usually does not work since the laws may require public sale.

If you know of areas that have many parcels where the liens amounts are much greater than the parcel value, start talking with the local politicians and show them the lists of properties. Show them how selling the parcels for less than the owed amount will get the parcels back on the tax rolls by having new owners develop the properties and pay the taxes again.

Get in the local papers and media talking about the list of parcels that are not generating any tax revenue. Show the annual tax amounts the would be brought in by selling the properties. It is not easy work, but if people aren't aware of the problem, then nothing happens.

At least that is the method of selling those properties that I have seen in my area. Maybe others have seen different methods.

Here, they go to a land trust if they aren't sold at the tax sale.  Then you can go to the... commissioner I believe?  And put in an offer much lower than even the back taxes.  Typically, places that don't do the land trust thing will lower the sale amount every auction until if finally sells.  So you could just keep waiting as well.

Great feedback thanks!   Ironically some of the sales do need approved by the council, so I see what you mean by raising awareness.

This info will be specifically for Tarrant County (Fort Worth) TX.   

Did some calling around today...  There is a disconnect between Tax Dept and City Of Fort Worth on back tax obligations.  More to come when I have a straight answer.  

Taking the question at face value, and assuming you want to invest in property, how can this be worth any of your time?  Price above value always equals a walk last time I looked.

In Baltimore there are hundreds of these properties. Many sit until they rot so badly they collapse. Sometimes the taxes can be negotiated if the seller is willing to take nothing. 

How these are handled will vary by location and local laws. It doesn't surprise me that one  side of the city doesn't know what the  other side is doing. In my area even though I know it can be done, dealing with the bureaucracy makes it not worth the trouble. 

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