Tax lien investors called “Sleazy” but misleading marketing mostly done by government. Post 56

Treasurer warns of ‘sleazy’ marketing scheme

The letter says the property is “now eligible to be sold” at the county’s tax lien sale Nov. 1.

It offers to pay the delinquent note and also $250 and selling expenses. Recipients are instructed to sign an attached deed, have it notarized, and mail it to Diamond Castle Properties.

Murphy said that in tax lien sales, investors can buy the tax liens on delinquent properties, but the property’s owners have four years to pay the taxes before the deed will be turned over to the lien holder. Upon such payment, the investor is reimbursed for his or her investment, plus whatever the going interest rate is.

Locally, very few properties, Murphy said, have actually ever gone to the investor. She also said that delinquent taxes on mortgaged property are typically paid by the mortgage company.

“They’re not going to let the house go just for taxes. What bothers me is (there might be) someone who might not understand, or an older person.”

Murphy said the company’s activities aren’t necessarily illegal, provided they make good on their promises. “It’s somebody preying on people,” Murphy said. “They are offering to pay somebody for their property. I don’t think it’s an illegal thing, it’s just a sleazy thing.

Stout was also concerned because it wasn’t clear how the companies were obtaining the information.

“It’s public information, but we don’t print out a list and send it out,” she said, explaining that people had to request information on specific parcels. “It’s not cart blanch: ‘I want to know everybody who will be delinquent as of this date.’ We ask them to be more specific than that.”

Murphy said anyone who receives such a letter should turn it in to the postmaster, whom she said intends to inform the postmaster general of the incidents. Under no circumstances should property owners sign or mail the deeds.

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County officials are telling half truths

The misleading and incomplete statements by the county officials are shocking but commonplace.

Throughout the country, tax collectors deny or downplay that they are taking properties from citizens.

They downplay the “taking” because it is bad publicity. They do not want government to be perceived as throwing a little old lady out on the street, just because she did not pay her property taxes, even though they do kick people out into the street – all the time.

Who, me?

Throughout the country, tax collectors hone in on a technical deficiency in an investors offering. They make a very big deal of some technical point of law that is not being strictly adhered too. Yet they strenuously deny that they do much the same.

Since tax collectors are charged with the collection of taxes, as long as they follow the law, the collection of taxes seems to be a sacrosanct act. The tax collector acts as if nothing they do seems to be wrong. They are merely “following the law.”

This article is typical.

The tax collector makes a big point in declaring that the tax lien sale will not result in the transfer of property and states that a tax lien investor must wait four years to get the property. It is as if the state is being very fair in giving the tax delinquent the very best chance to make good on their tax debt.

However, the state does “take” the property if taxes are not paid. They do not apologize! They may feel bad, but not so bad that the county government will do something that will allow a delinquent tax payer to stay in their home.

And the tax collector always points their crooked finger at the investor who is the only person that is trying to help the tax delinquent. The investor wants to make a profit, naturally, but so does the county.

It’s outrageous!

Each county will “take” that tax delinquent property and sell it to pay the taxes. In many counties, the amount over the amount of taxes due will be put into an escrow account. The previous owner (the tax delinquent) can make an application to recover that overage. However, the county does not make the recovery process easy. I know of one county in Alabama that proudly maintains that they have never paid back any of the excess proceeds from a tax deed sale.

In New York State, the government makes no pretense in its desire to “take” what it wants. Here, it is legal to “take” the property, sell it at tax deed auction and then keep the entire proceeds. According to the county tax collector, “Well, we do give them [the tax delinquent] notice. They should pay their taxes.”

Here is an example. In NY, the county can take the property after four years of non-payment and then auction it off. I saw a very nice log cabin, fully furnished go for $125,000. at auction. That was the full retail value. The taxes were about $3000 per year. After four years, adding taxes, interest and expenses the total bill is about $13,500. The county “took” the $111,500. in profit because it is not required to hand over the excess proceeds to the previous owner.

This practice has been labeled “unseemly” by a federal court.

If a regular investor were to try something like this, the county would slam the investor. That is because the county does not want anyone to compete with them in getting the profit that can be realized.

Try to fly under the radar.

In any investing efforts, I always tell my clients not to do large mailings. I do not want them to catch the eye of the tax collectors, the postmasters or any other governmental agency. I have developed techniques that still get tax delinquents to contact us while avoiding this pitfall.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Happy days,

Mitchell Goldstein - Coach Mitch
518-439-6100 until midnight EST

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