District of Lucerne may review procedures for buying repositories for tax evaders

A few purchase offers stand out in the latest batch of sales of the vault of tax claims before Lucerne County Council because they are noticeably over the usual $500 or $1,000.

The highest offer is $87,250 for an apartment building on Lawrence Street in Wilkes-Barre.

There are also offers for $30,050 for a property on Salem Street in West Pitstone and $25,600 for a building on Dexter Street in Hanover Township.

While most of the packages end up in storage because none of the bidders wanted to buy them in the popular tax auctions, they were valuable enough to generate competition at the auction.

However, they were still sent to the vault because the winning bidders never paid their taxes, a situation that happened more and more often.

As a result, the council’s real estate committee and tax claims operator are interested in reviewing the county’s vault procedures to determine if changes are warranted to maximize revenue.

Current Scenario

To understand what happens in this scenario under current county procedures, here is a brief overview of how the $87,250 offer for the Wilkes-Barre property reached the council, according to information from public records and tax claims operator, Elite Revenue Solutions :

The property, valued at $62,500, was listed for sale in the first phase of the sale in September 2019, when bidders must pay all past due property taxes and municipal liens and take responsibility for any outstanding mortgages and non-municipal liens associated with with their purchases.

The minimum bid was set at $16,758.75 and no one bid.

Due to issues requiring notice of the sale to the owner and/or lien holders, the property was not offered for free or judicial auction until April 2022. a bidder with no mortgages, liens, utility bills, or other past claims.

The starting bid was $2,608.48 to cover the cost of listing the property for sale, and bidding rose to a final price of $120,000 from a bidder who did not pay after the auction.

Bidders who do not pay are prohibited from participating in future county sales with overdue taxes,

Following standard procedures, Elite promptly posted a report on its website stating the properties that did not sell and which bidders did not pay.

After a five-day post-auction waiting period, County policy requires the tax claim to accept applications for property that has not sold for five days. These sealed bids must be higher than the starting bid at the auction, which in this case was $2,608.48 for the Wilkes-Barre property.

Over a five-day period, 22 sealed applications were submitted for real estate on Lawrence Street. Anabel Alvarez submitted the highest bid of $87,250, which is now under consideration by the county council.

The 1,716-square-foot, 0.13-acre residential building has three bedrooms and one bathroom, according to county appraisal documents. It was built in 1929 and last renovated in the 1960s.

If the proposal is passed by the board, the proceeds will first cover $25,582.24 in back taxes that are collectively owed to the county, Wilkes-Barre School District and Wilkes-Barre Regions, said Elite Revenue’s Sean Shamani.

Under state property tax law, any remaining surplus funds cover other real estate-related debts such as mortgages and municipal liens. If money remains after this, it will be paid to the individual or legal entity that has lost property due to overdue taxes.

Policy change

Councilman Kevin Leskevage, vice chairman of the council’s real estate committee, said he believes more public attention is needed to unsold properties so that all potential buyers are aware of the possibility of a purchase.

In addition to potentially attracting more listings, a wide-ranging listing would eliminate any perception that properties for sale are known only to those familiar with tax sales, Leskevage said.

“We need to make it more mainstream,” Leskavage said.

He also believes that every property should have a sign posted to let neighbors and passers-by know that the lots are available for purchase.

Maximizing purchase prices through competition will ultimately help the tax authorities, Leskavage said. Although the tax authorities are limited in receiving backdue taxes, the appraised value of repository items is tied to the purchase price under state law.

When properties of a repository are sold, the purchase price automatically becomes the new assessed value for tax purposes. State law states that the purchase price of repository items “should be treated as the fair market value of the property for tax purposes.”

The law was designed to encourage vault purchases because most of the properties that typically end up in vaults are dilapidated structures, shards of land, or large undeveloped lots with access problems or other obstructions, officials said. The county has approximately 1,000 vaults available for purchase at any time, more than other similarly sized counties in the state.

In accordance with the County’s repository policy, properties that are not bidded within the first five days remain available at the minimum bid, free of charge, for three months after the auction.

After three months, the minimum bid drops to $500 for vacant lots and $1,000 for structured lots. Sealed bids are accepted again within five business days in the rare event that multiple buyers are interested in a price reduction.

After that, the properties of the repository are available for purchase at any time for a minimum price of $500/$1000. A regularly updated list of available repository properties is published at luzernecountytaxclaim.com.

Lescavage said he plans to offer to drop the $500/$1,000 minimum because he believes some will offer more if the minimum is not specified. While the opposite is also possible – rates are below the current low – he said the board always has the right to reject offers if they think they are too low.

A few years ago, the council raised the minimum rate to $1,000 for vault property with structures from $500 previously.

Board member LeAnn McDermott, who chairs the real estate committee, said she would schedule discussions on the repository purchase procedures at the committee’s next meeting as she believes the matter is worthy of consideration.

Councilman Tim McGinley, also a committee member, said he wants to make sure the general public is aware of the opportunity to buy property. He suggested that the committee invite representatives of Elite Revenue to a meeting to discuss the insolvency of the auction participants and the company’s recommendation on how the council could resolve any issues through policy changes.

Councilman Carl Bienias III, the remaining member of the committee, also supports the review of the procedures, saying he believes available properties after the auction should be prominently displayed on the county’s website.

Shamani said Elite Revenue is open to policy revisions at the direction of the committee and/or board.

While properties that bidders don’t pay are already publicly listed on the Elite website after each sale, Shamani said the county may want to consider more public listings and listings on the county website. .

According to him, bidders often do not pay.

He believes this is largely due to the fact that more inexperienced bidders fail to fully explore potential purchases. Some rely on finding the property’s general address instead of county lot IDs, which are the only reliable way to check which property is for sale. Address searches can lead bidders to mistakenly believe they are buying a building listed in the out-of-county real estate database, when in fact the lot is an empty lot, he said.

At the last free auction in August, bids were received for 59 out of 65 available sites, but 10 were not paid.

In April 2022, 151 out of 173 available lots were bid on the free giveaway, but 18 were not paid.

Applications were accepted for 176 of the 210 properties at auction in August 2021, with at least 17 not paid.

The county council received the final batch of 67 vault proposals in December, but the vote has been delayed and has yet to be scheduled.

As with Wilkes-Barre real estate, the second and third largest bids also come from bidding winners who did not pay in the free auction in April 2022.

Proposed purchases are listed on the December 13 Council Working Meeting agenda at luzernecounty.org.

According to this listing, Bovo Rentals B&B LLC is offering $25,600 for properties on Dexter Street in the Borough of Hanover. The property is valued at $53,900 and bears $8,111 in back taxes.

In West Pitstone, Stanley Ray Shaffer Sr. has filed the highest sealed bid — $30,050 — for a Salem Street property that is valued at $82,900 and contains $20,021.29 in back taxes.

Contact Jennifer Learn-Andes at 570-991-6388 or tweet @TLJenLearnAndes.