D.C. Tax Lien Sales Program Sparks Outrage

September 20, 2013 — Leave a comment

Last week, the Washington Post began publishing a series of investigative installments that, for many, revealed the true impact of the District’s tax lien sales program. The Post spent 10 months examining the District’s tax lien program, which has been used by the city to recover unpaid property taxes for more than 100 years. However, the recent attention being drawn to the program has elicited public outrage from many throughout the region, from average citizens to some very prominent D.C. officials:

Mayor Gray Tweet

In the U.S. legal system, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation – in this situation tax liens were imposed to secure payment of property taxes.

The series revealed that many D.C. homeowners – including some who were paying their taxes – were nevertheless the subjects of tax liens, and in some cases the wrongfully liened properties were actually sold. It chronicled how years of these abuses and failures in the program have caused a great deal of foreclosures, with nearly 200 homes taken since 2005:

For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.

But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.

Interestingly enough, the Post found that a large amount of those hit hardest by these abuses have been the poor, the elderly, and minorities. Go figure. Those who were financially capable would incur lawyer fees and high interest rates, and fortunately for these folks, their money allowed them work towards alleviating their problems and ultimately keeping their homes. Those unable to shell out the money weren’t quite so lucky, and the investigation certainly uncovered some shocking cases:

“A 58-year-old bank employee almost lost her house in 2010 because the tax office mistakenly sent bills and notices to a wooded lot across from a strip shopping center in Virginia — 12 times.”

“A 69-year-old hat designer was given the wrong payoff amount and ended up in court to save her property, owned by her family since 1943.”

“Ninety-five-year-old Daisy Dolsey, living in a nursing home and struggling with Alzheimer’s, wasn’t so lucky: She lost her $300,000 house over a $44.79 tax debt even after she paid her taxes.”

In a recent press conference, Mayor Vincent C. Gray expressed that he would introduce emergency legislation next week to put a moratorium on the practice. There will certainly be more to follow as the story further develops over the next few weeks.

JDKatz: Attorney's At Law

JDKatz, P.C. is a full-service law firm focused on tax lawbusiness and transactional lawestate planning and elder law. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys, or visit http://www.taxattorneymd.com.

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