Check to make sure you don’t lose your home over an unpaid bill

Every year thousands of properties go to auction at tax sales throughout Maryland―and not just for owed taxes. Unpaid property taxes, water bills and other bills owed to a Maryland county or Baltimore for repairs such as alley paving can cause you to lose your home.

Baltimore’s next tax sale will occur May 18. The bidding will be online. A tax bill cannot go into the sale if it’s less than $250.

If you have any ownership in land or a house you should check the advertisements of properties that are going to tax sale to make sure you’re not on the list. People of all incomes can be affected. The list typically comes out in your local newspaper (this year, in The Baltimore Sun in mid-March and The Daily Record on April 1), and includes each property in advance of the sale.

In a tax sale, your property doesn’t go to foreclosure. Instead, a private investor may buy the right to collect your taxes from you by paying the taxes due. A few months after the tax sale, the purchaser can file papers in circuit court to foreclose your right to repay the taxes and other costs to him or her. If you don’t pay what is due, you will lose your property.

Why would anyone buy the right to pay my taxes?

First of all, it’s a great investment, in most cases. A private investor can get up to 18 percent per year by winning the tax sale certificate. Where else can a private person or company buy the right to collect your taxes from you and get interest at 18 percent?

And guess what else? If you don’t come up with the amount of the taxes, water bill, or other service, and you cannot pay the attorney’s fees, interest and other costs, you could lose your property to whoever bought the certificate.

Keep in mind that, for example, a water bill of just a few hundred dollars can easily swell, after addition of all the charges, to several thousand dollars.

This is legal? Yes.

The rights of the owner

The owner has the absolute right to pay off the certificate’s purchaser until a court signs an Order Foreclosing the Right to Redeem. This is many months after the tax sale. But costs start to add up right after the tax sale.

You must get notice!

A notice must be sent out within 60 days of the sale that meets the requirements of the Maryland Tax-Property Art., §14-817.1:

● It must be sent by first-class mail to the last known owner of the property on the collector’s tax roll at their last known address.

● It must describe four different post-tax sale scenarios.

● The holder of the certificate must send two notices and cannot file to foreclose until at least two months afterward. The first notice can’t be sent until four months after the sale. The second notice can’t be sent sooner than one week after the first. If someone acquires the certificate from the original bidder, that person must send an additional notice explaining this and can’t file a complaint until at least two months after that third notice.

● The notices have to be sent to the person who appears as the last known owner on the tax rolls and to the current holder of the mortgage or servicer or holder of a beneficial interest in the recorded Deed of Trust. The notice must be sent to the person’s last address (as obtained from the last deed or mortgage that is recorded in the land records) and to the resident agent and the principal offices of the current mortgagee of record and the Department of Assessments and Taxation.

Under Maryland law, the limits of these costs for tax sales depend on how long it’s been since the sale:

● If you didn’t realize that you owed property taxes, a water bill or other bill and the amount didn’t get paid before the tax sale, after the sale you will have to pay at least the total lien (amount of tax, water, alley repair, etc.), interest, and penalties if they apply.

● If you pay the amount (redeem) more than four months after the tax sale, but before an action is filed with a court to foreclosure the right to redeem, you will owe, in addition to the total lien:
* Interest and penalties.
* Attorney’s fees for recording the certificate of sale.
* The title search fee, which can’t exceed $250.
* Attorney’s fees, which can’t exceed $500.

● If you pay after an action to foreclose is filed with the circuit court, the amount will be the total lien at the time of sale with interest, the taxes, interests and penalties paid by the holder of the certificate, and any taxes, interest and penalties accruing after the tax sale and attorneys fees and expenses to which the holder may be entitled. Attorney’s fees may rise to $1,500, but shouldn’t exceed that amount. Other costs may also be added.

● In exceptional circumstances, more attorney’s fees and costs can be requested. The redemption amount can include reasonable amounts for repairs, approved by the court, needed to conserve or stabilize the property.

So even if you think you have nothing to worry about, I suggest you check those tax sale listings to make sure you (or your friends, family and neighbors) aren’t on the list. More information can be found at the city’s Web site where the bidding on the tax certificates will take place.

If your property does go to tax sale and you are faced with a bill that doesn’t seem right, you may want to consult with an attorney who can help you work through the amount charged.

This column is for general informational purposes only. If you need help, call your local bar association for a referral. Low-income people may qualify for free legal help in some civil cases from Maryland Legal Aid.

Louise M. Carwell is a senior attorney with Maryland Legal Aid in Baltimore, where she has practiced consumer law for more than 20 years. Carwell, a graduate of the Case Western Reserve University School of Law in Cleveland, Ohio, specializes in credit, foreclosure prevention, consumer protection, and bankruptcy. She regularly trains lawyers and paralegals at Legal Aid and speaks to community groups and judges on consumer issues. In addition, Carwell teaches at the University of Baltimore School of Law and the University of Maryland University College.

Are you a credit-wise consumer with a question? Send it to Louise Carwell, Esq., c/o Exhibit A,  wayne.countryman at exhibitAnews.com