Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Reason Magazine (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Baltimore's Tax Sales Are Robbing People of Their Equity

% of readers think this story is Fact. Add your two cents.


The Edmondson Community Organization in Baltimore | Illustration Lex Villena; ID 50872210 © Angeles Medrano Zamora | Dreamstime.com; Google Maps

Each year, the Edmondson Community Organization (ECO)—a nonprofit in Baltimore dedicated to revitalizing the city’s Midtown-Edmondson area—reviews an obscure list of properties released by the government. The task is to see how many are situated within the organization’s neighborhood boundaries. The fewer, the better.

The owners of the properties that do appear have fallen behind on their property taxes and, as a result, are poised to lose their real estate in an annual tax sale conducted by the government. After poring over the list, the ECO knocks on those doors to deliver the queasy news and alert the occupants to what is about to happen.

The issue is one ECO knows intimately. A few years back, the organization accrued a $2,543 property tax debt on its community center. So in 2018, the city sold that lien for $5,115 to a California-based investor, who then foreclosed on and sold the ECO’s building for $139,500. In return, the ECO got a check for the difference between its debt and the lien purchase price: $2,572.

In other words, all told, the organization paid six figures to compensate for the $2,543 it owed the government, in what a new federal lawsuit alleges is a pervasive practice in Baltimore that illegally deprives people of their equity in violation of the Fifth Amendment’s Taking Clause as the city attempts to satisfy modest tax debts.

Every spring, Baltimore bureaucrats conduct a mass auction online to sell off liens like the ECO’s. Sometimes the unlucky debtors have fallen just hundreds of dollars behind on their taxes.

For that, they may lose their property and the vast majority of equity tied up in it. Following an investor’s purchase, an owner has a certain period to satisfy the amount of the lien, along with interest and fees, to keep their property. That’s a tall order when considering these parties were struggling to pay the original debt, much less the new total, which has since ballooned. In the case that debtors are unsuccessful, the investor has effectively purchased the property for the amount they paid for the lien.

In the ECO’s case, that meant an investor bought their building for about 2,600 percent less than what it ultimately sold for. The ECO, in turn, was left with a fraction of what their property was worth.

That Baltimore’s process robs property owners of huge chunks of equity is not just a regrettable side effect, the ECO’s lawsuit alleges; it’s baked into the nature of the city’s approach. “The City understands there that there is a finite pot of investor capital available to purchase all the liens,” reads the complaint. “This creates a perverse incentive for the City to minimize the winning bids”—a.k.a. to depress prices—”to spread that finite pot across the highest number of liens.” 

Some of the moving parts of Baltimore’s approach do seem to imply that the government is not merely unconcerned with owners retaining some of their equity but that they are actively seeking to keep bids low. The more glaring examples included in the ECO’s suit show that the city charges a high-bid premium that punishes investors making offers above a certain threshold and opts to fulfill the law’s advertising requirement in part by listing properties in The Daily Record, a business and legal newspaper that is not targeted at the general community. (The ECO says this violates state law, which stipulates that such a sale must be advertised twice in general-circulation newspapers.)

“There’s a limited amount of investor money out there,” says Maryland Legal Aid’s chief legal and advocacy director Somil Trivedi, who is representing the ECO, “and the city has structured a system to spread that money across as many liens as possible instead of getting as much equity back for their citizens.”

The ECO is not alone, according to the suit, but is one of many victims. You don’t have to travel far to find others. “In the same tax sale in which a bidder purchased a lien on ECO’s building, 68 properties in Midtown-Edmondson were also subject to the tax sale,” states its complaint. “The winning bids on those properties totaled only 22% of the assessed value of the properties—a dramatic loss of generational wealth for the owner of each Midtown-Edmondson property that was lost in the sale.”

Home equity theft, as it’s sometimes called, was once an obscure issue limited to discussion in magazines like this one. But last year it took the national stage when the Supreme Court ruled unanimously in Tyler v. Hennepin County that a local government had violated the Constitution when it seized an elderly woman’s condo over a modest tax debt, sold it, and kept the profit. Geraldine Tyler, the plaintiff in that suit, had fallen $2,300 behind on her taxes, which ultimately reached $15,000 after Hennepin County tacked on penalties, interest, and fees. The government then sold the condo for $40,000 and kept the additional $25,000.

While the ECO’s situation isn’t entirely analogous to Tyler’s—the organization was paid something—Baltimore’s scheme could still very well be unconstitutional, says Christina M. Martin, a senior attorney at Pacific Legal Foundation who represented Tyler before the Supreme Court. “If the procedure that you’re using to sell the property is designed in a totally unreasonable manner, then obviously people are going to still get robbed of more than what they owe,” she tells me. “There’s a longstanding history of courts overturning sales that have a shocking result like [the ECO's].”

Tyler, in theory, should have put an end to stories like these. But the lawsuit out of Baltimore comes as some other jurisdictions have devised creative ways to comply with the law on its face but not really in practice. After Michigan’s Supreme Court ruled the practice unconstitutional, for example, the state passed a convoluted debt collection statute that requires owners to complete a Herculean legal obstacle course to reclaim their equity. It is a difficult course to win.

“It is the government’s choice in the first place to collect property taxes, to decide what regime they want to use to enforce the collection of those property taxes, and so it can’t then complain that the regime that it chose to engage in for an amount of money that it chooses to collect is then too difficult to do constitutionally,” says Trivedi. “There are lots of jurisdictions around the country that do it differently. Some don’t even have tax sales. Some have much longer periods of negotiation and payment plans….Municipalities around the country have figured out ways to collect taxes without doing it unconstitutionally.”

The post Baltimore’s Tax Sales Are Robbing People of Their Equity appeared first on Reason.com.


Source: https://reason.com/2024/08/19/baltimores-tax-sales-are-robbing-people-of-their-equity/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.


Humic & Fulvic Liquid Trace Mineral Complex


HerbAnomic’s Humic and Fulvic Liquid Trace Mineral Complex is a revolutionary new Humic and Fulvic Acid Complex designed to support your body at the cellular level. Our product has been thoroughly tested by an ISO/IEC Certified Lab for toxins and Heavy metals as well as for trace mineral content. We KNOW we have NO lead, arsenic, mercury, aluminum etc. in our Formula.


This Humic & Fulvic Liquid Trace Mineral complex has high trace levels of naturally occurring Humic and Fulvic Acids as well as high trace levels of Zinc, Iron, Magnesium, Molybdenum, Potassium and more. There is a wide range of up to 70 trace minerals which occur naturally in our Complex at varying levels. We Choose to list the 8 substances which occur in higher trace levels on our supplement panel. We don’t claim a high number of minerals as other Humic and Fulvic Supplements do and leave you to guess which elements you’ll be getting.


Order Your Humic Fulvic for Your Family by Clicking on this Link, or the Banner Below.



Our Formula is an exceptional value compared to other Humic Fulvic Minerals because...


It’s OXYGENATED

It Always Tests at 9.5+ pH

Preservative and Chemical Free

Allergen Free

Comes From a Pure, Unpolluted, Organic Source

Is an Excellent Source for Trace Minerals

Is From Whole, Prehisoric Plant Based Origin Material With Ionic Minerals and Constituents

Highly Conductive/Full of Extra Electrons

Is a Full Spectrum Complex


Our Humic and Fulvic Liquid Trace Mineral Complex has Minerals, Amino Acids, Poly Electrolytes, Phytochemicals, Polyphenols, Bioflavonoids and Trace Vitamins included with the Humic and Fulvic Acid. Our Source material is high in these constituents, where other manufacturers use inferior materials.


Try Our Humic and Fulvic Liquid Trace Mineral Complex today. Be 100% Satisfied or Receive a Full Money Back Guarantee. Order Yours Today by Following This Link.

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

MOST RECENT
Load more ...

SignUp

Login

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.