Monday, May 12, 2014

Palladium-Item Reports Blight Law Changes Property Tax Sales

From the Richmond Palladium-Item:

Local officials last week applauded the signing of Senate Enrolled Act 422 by Indiana Gov. Mike Pence, a piece of legislation aimed at helping county officials in the struggle with abandoned and blighted properties.

The law is designed to keep profiteers, those buying properties at county tax sales for profit and not for renovation, away from those sales. It creates a registry of those ineligible to participate in tax sales and will help local officials identify abandoned and blighted properties and speed their tax sales.

"This legislation seeks to address the growing number of abandoned homes around Indiana,” said Rep. Dick Hamm, who co-sponsored the bill. “It is our goal for individuals to purchase these properties and renovate them rather than simply collecting the interest payments on them.”

Residents who are delinquent on property taxes and whose properties are sold at tax sale have up to one year to pay the owed taxes, as well as any applicable fines and costs, to redeem the property.

Often, investors buy the properties at tax sales and hold on to them, gambling that the original owner eventually will pay the delinquent taxes. If that happens, the investor gets his money back as well as interest accrued from the time of the sale up until the original owner makes good on his tax bill.

In the meantime, the properties stand abandoned and blighted.

SEA 422 reduces the amount of interest paid to those who buy a property at a tax sale from 10 percent to 5 percent on the amount above a minimum bid and from 6 to 5 percent on refunds on certain tax sales.

"There are many who buy properties and then just collect the interest. It’s become a cottage industry,” said Tony Foster, director of Richmond’s metropolitan development office. “This will benefit the city because now we will have legitimate buyers at the tax sale.”

County Director of Development Steve Higinbotham said the new law will help clarify and make more transparent the tax sale process.