When local governments accuse someone of failing to pay property tax bills, a lien may be attached to the property in question. This means that the government can seize the property if the owner fails to pay the outstanding taxes or negotiate a repayment plan. This can be a confusing and scary experience for homeowners trying to navigate their financial situation and the complexities of tax law.
Over the last few years, various news outlets have taken a closer look into the practice of local governments selling tax liens to private companies. Under this arrangement, taxpayers are often forced to pay very high fees and interest rates or risk losing their property.
According to a recent report from the Washington Post, many local governments offer few protections against abuse from the private companies that buy up the liens. The problem here is that financially distressed individuals may be forced out of their homes if they are unable to meet the demands of the private companies. Without any oversight, individuals could be treated unfairly.
On a federal level, there is no system to monitor or track the transactions between local government entities and private companies looking to profit.
In some circumstances, investigations have uncovered corruption on the part of local governments selling liens to investigators. For example, a number of city or county lien auctions have been rigged in favor of certain parties.
When dealing with a tax lien, it may be helpful to take a look at how Minnesota's local laws address issues of repossession and private sales. This step may be crucial to safeguarding a person's rights and ability to work through a tax dispute.
Source: Washington Post, "Local laws do little to protect homeowners," Alexia Campbell, Danielle DeCourcey and Ted Mellnik, Dec. 8, 2013